LONDON’S BUSINESS NEWSPAPER
THURSDAY’S THE NEW FRIDAY OUR BUMPER LIFESTYLE SECTION GETS YOU READY FOR THE WEEKEND P19-22 THURSDAY 12 JANUARY 2023
ISSUE 3,915
CITYAM.COM
IT’S NOT EASY BEING GREEN
FIRMS AND GOVERNMENTS KICK CLIMATE CONCERNS ONTO BACK BURNER AMID ECONOMIC STORMS AND COST-OF-LIVING CRISIS JACK BARNETT AND LOUIS GOSS THE GLOBAL cost of living crisis threatens to railroad efforts to combat climate change as firms and governments prioritise their bottom lines. Soaring energy and food prices are forcing governments and private businesses to turn to cheaper, often dirtier resources to produce goods and services, the World Economic Forum (WEF) warned yesterday ahead of their Davos summit next week. As a result, “the risks of a slower and more disorderly transition” to net-zero
has “now turned into reality,” the WEF said in its annual global risks report. Russia’s invasion of Ukraine roiling international oil and gas markets has prompted Europe to inject €50bn (£44bn) into new fossil fuel projects, the report said, to meet energy needs. Other countries have reignited coal plants to boost energy supplies. Inflation, higher
interest rates and greater social security spending has stretched Western nations’ public finances, while sky high input costs for businesses risks “investments in greener production methods” being kicked into the long grass, the Geneva-based organisation said. Although gas costs have returned to their pre-Russian invasion of Ukraine levels, they are still above their long-term trend.
Global food prices remain on an upward march, prompting the WEF to warn poorer countries will bear the brunt of a cost-of-living crisis that is likely to be a fixture for the next two years. Central banks’ efforts to tame inflation with aggressive rate hikes has piled pressure on poorer countries’ finances as most of their debt is denominated in wealthier countries’ currencies. Insurers are likely to be incentivised to avoid dishing out cash to poorer countries to cover damages related to rising temperatures due to their heavy exposure to climate-related natural disasters.
FREE INSURER BRUISED
Divi pulled by Direct Line as weather hits LOUIS GOSS SHARES in Direct Line cratered yesterday after the insurer said it expects to scrap its 2022 dividend. The insurers said it was facing a “challenging and volatile operating environment”. Shares lost 26 per cent of their value yesterday and the warning dragged other insurers down too, with Aviva down just shy of four per cent. The Bromley-headquartered firm said a “prolonged period of sub-zero temperatures across the whole of the UK” in December led to a surge in claims related to burst pipes and water tanks. Inflation also saw Direct Line forced to pay out six per cent more on motor claims, as higher prices caused the cost of fulfilling such claims to increase. Soaring inflation in the cost of car parts and secondhand vehicles has driven up insurers costs and seen premiums surge north. Falling property prices also hit Direct Line’s balance sheet, causing its property investment portfolio to lose 15 per cent of its value – equivalent to £45m. The firm said it had returned £1.5bn of capital in the last five years.
Now Home REIT faces possible legal fight with tenant after reneging on rent deal EXCLUSIVE
CHARLIE CONCHIE TROUBLED social housing investor Home REIT faces a potential legal battle with its biggest tenant after reneging on a £5.5m rent relief deal it struck due to the dilapidated state of its properties, City A.M. can
exclusively reveal. Liverpool-based Big Help Group and its two sister charities, which account for nearly a fifth of Home REIT’s total rental income, withheld £6m in rent from the firm between March and the end of August in protest at the dire state of housing it provided, prompting the two
parties to strike a deal for two years’ relief worth £5.5m from September. Big Help paid its arrears as part of the deal. However, emails from Home REIT to Big Help seen by City A.M., show that the firm is now looking to scrap the original agreement due to the “exceptional circumstances” it finds itself in.
The previously undisclosed deal raises major questions over the stability of Home REIT’s financial position and the consistency of its rental income, after a slew of criticism over its business model and the reliability of its revenues in recent weeks. Big Help chief Peter Mitchell told
City A.M. yesterday he was “happy” to go to court. The revelations also sit uncomfortably next to Home REIT’s insistence it only acquires “newly refurbished” properties. A spokesman for Home REIT said after “further review” it elected not to “proceed with this proposal”.
INSIDE BARRATT WARNS OVER PROFITS P4 THINK TANKS’ CHINA WARNING P6 WALL STREET BRACES FOR RECESSION P10 MARKET PREDICTIONS P13 SPORT: TENNIS P22