Finimize - 🇬🇧 Britain's beaming

What’s going on here?

ExxonMobil has just sealed its biggest deal in six years.

What does this mean?

Exxon’s got some lofty goals to bring its net emissions down to zero by 2050 – and since it’s not about to cut oil production in any meaningful way, carbon capture is going to be the bedrock of its strategy instead. Now the oil giant is putting its money where its mouth is, with a $4.9 billion all-stock deal to acquire Denbury. And this isn’t just any acquisition: it’s a strategic move that hands Exxon the biggest network of carbon dioxide pipelines in the US, a crucial piece of the carbon capture puzzle. Plus, Denbury specializes in using carbon dioxide to coax more oil from old oil fields, all while burying more carbon in the ground than the slippery stuff will emit – something seen as a must-have if the world’s going to hit its climate goals.

Why should I care?

Zooming in: Going green for greenbacks.

Exxon isn’t just doing this for the love of Mother Earth. First off, making more bets on environmental, social, and corporate governance (ESG) strategies should help keep increasingly eco-conscious investors sweet. And there’s a financial incentive too: the US Inflation Reduction Act increased tax credits to $85 for every ton of carbon dioxide sequestered. Morgan Stanley reckons that could be highly profitable – so Exxon’s move could unlock a tidy new stream of income.

The bigger picture: Bad boy appeal.

US firms Exxon and Chevron have been sticking to their traditional oil and gas businesses, while their European energy counterparts have been busy preparing for a greener world. But it seems investors are favoring the American approach – and now UK energy giant Shell is taking note. The company’s reportedly considering selling a stake in its renewable power business, as part of a strategic shift back toward fossil fuel investments, in a bid to boost shareholder returns.

What’s going on here?

Data out on Thursday showed the unfazed British economy fared better than feared in May.

What does this mean?

The UK has been keeping economists on their toes lately – and it didn’t let them relax their strained feet in May either. See, even with a day off for royal festivities, it managed to outfox expectations, thanks to strong consumer spending and fewer strikes compared to the previous month. And sure, industrial production did take a 0.6% hit – but the downturns in manufacturing and construction weren’t as dramatic as expected. Plus, services stood firm, sidestepping the drop that economists had predicted. So when you put it all together, the UK’s economy shrank just 0.1% in May from April – a far cry from the feared 0.3% dip that had economists biting their nails.

Why should I care?

The bigger picture: Not out of the woods.

The British economy’s been teetering on a knife edge for a while now. Soaring prices and borrowing costs have been squeezing consumers and businesses, leaving the economy just 0.2% ahead of its pre-pandemic level in February 2020. And while June’s numbers are expected to look brighter – the month had no public holiday, after all – don’t be fooled by this temporary sunshine: the long-term forecast is overcast, and markets are predicting a rise in interest rates from 5% to 6.25% by year’s end to boot.

Zooming out: Slowpoke.

The Bank of England has a pretty compelling reason to keep nudging those rates upward. According to the OECD, the UK is the odd one out among G7 nations, as the only country still grappling with climbing inflation. And after a sizable rate hike last month, it looks like Brits are probably in for more hikes to come. That could mean the UK will keep marching to its own beat – while other major central banks have managed to slow or even completely pause their hiking.