Carney deserves credit for focusing on climate change as BofE governor, says ALEX BRUMMER

When, as governor of the Bank of England, Mark Carney raised climate change to the top of the agenda, there was much scepticism.

The Bank’s task was to keep inflation under control and ensure there was no repeat of the 2008-09 financial crisis that threatened to devastate the City and ushered in George Osborne’s austerity.

Carney, who left to become a UN ambassador on climate change, was right.

This year’s hurricane season in the United States, which has already claimed 200 lives in North Carolina and is hitting Florida, illustrates this point.

Indeed, Rachel Reeves’ intention to reinstate climate risk monitoring as the Bank’s objective seems sensible.

Much of the attention in financial markets in recent trading has focused on U.S. headline inflation data, which came in at 2.4 percent last month, slightly above expectations.

The cost of living does not appear threatening enough to prevent a further cut in US interest rates from the current range of 4.75 to 5 percent.

If there was any doubt about a rate cut, then the hurricanes could be the deciding factor. Oxford Economics notes that about 2.8 percent of U.S. output is in the eye of Storm Milton currently battering Florida.

The state has 1,350 miles of exposed coastline and a population of 20 million, and is large enough to slow growth.

This is not the space for a debate on the topic “Let’s just stop the oil.” However, weather events are becoming more frequent and costly.

The numbers are on an upward curve, jumping from 12 between 1961-1970 to 19 in the years 2011-2020.

The US National Oceanic and Atmospheric Administration estimates the cost at a whopping $1.3 trillion (£1 trillion) or, on average, $22.8 billion (£17.5 billion ) by storm.

Some costs are covered by federal government disaster funds.

However, there are always insurance consequences. When it comes to financial stability, the frequency and severity of storms poses serious underwriting and capital issues.

Estimates in the London insurance market suggest Milton could produce $100bn (£76.6bn) in losses for the global industry.

A charge of this magnitude would have a direct impact on Lloyd’s of London and would cause reinsurance rates to increase.

According to current estimates, Milton could be as big as Katrina in 2005, but it would not be catastrophic for an industry where the risk is well distributed.

But the same was said about derivatives built on subprime mortgages that acted like cluster bombs at the heart of the financial system.

However destructive the current season may be, its impact in the United States should be relatively contained and major insurers should be able to withstand the blow.

Sirens have been activated in the event of exceptional weather events, which could affect stability.

Lost trust

The £10.9m fine imposed by the city regulator on TSB for its mismanagement of struggling families is not looking good.

It’s a bit embarrassing for former CEOs, particularly Paul Pester, who was in charge from 2013 to 2018.

He resigned after a disastrous switch to a new computer system imposed on TSB by the new owners, Sabadell.

It won’t be entirely welcome for Debbie Crosbie, who replaced Pester and is now in charge of Nationwide and is in the process of taking control of Virgin Money.

Historically, TSB customers were lower on the income scale than larger banks.

Therefore, executives should have recognized the need to prioritize relationships with the most financially distressed customers.

It comes as Spain’s BBVA seeks to fight for control of TSB owner Sabadell with a hostile bid.

Could this be a chink in the armor?

long goodbye

It has taken Unilever a while to separate itself from Russia, which is a bit boring given its ethical claims.

He argued that he felt loyal to his staff, that he did not deserve to be punished for the Ukraine war.

The fact of no disgorgement probably made little difference. Moscow’s economy has been kept afloat in part by Western goods passing through Asia to avoid sanctions.

Worrying!