I Read The News Today, Oh Boy, 4,000 Holes In Blackburn, Lancashire

In hopefully what is a minor blip, October saw Dubai property prices dipping 1.0% to US$ 222 per sq ft, as there were lower transactions of 3.5k, (down 27.3% on the year and 9.7%, month on month). The Cavendish Maxwell’s Property Monitor report indicated that such low prices were last seen in May 2009. For the month, the sale of ready homes accounted for 62.8% of all sales, whilst off-plan made up the balance, but recorded its share declining for five months in a row. Interestingly, resale transactions took 48.8% market share, the highest level in more than three years, and well above the annual 30.1%-month average. (Resale properties are those completed units that are not part of initial developer sales). Although capital values continue to struggle, driven by excessive existing or supply coming on stream, there is evidence that the more sought-after and already established communities are, in certain cases, displaying signs of stabilisation and even marginal price rises.

October mortgage transactions, at 1.6k, were 6.7% lower month-on-month, whilst loans granted to finance villa purchases grew 9.8% on the month and 76.8% year-on-year, reflecting the increasing demand for larger homes. The two leading master developments for resale transactions, were Dubai Marina, with 7.5% of the total, followed by Emirates Living at 6%. There is no doubt that certain sectors, within the established property market, are coming off the bottom, whilst it is only a matter of time that demand catches up with a slowing supply of new units. Once oil puts its head above the parapet and prices hit US$ 55 a barrel, then the property market will once again be in the ascendancy.

For the week ending 19 November, the DLD reported over 1.1k transactions and 64 plots, valued at US$ 900 million, with 785 apartments/villas selling for US$ 384 million. The top three land transactions occurred at Nad Al Hamar and Al Thanayah Fourth, both selling for US$ 30 million each, followed by land that was sold for US$ 13 million in Al Thanayah Fourth. Most transactions for the week were found in Al Hebiah Third – with sixteen, valued at US$ 8 million – Jebal Ali First – twelve sales transactions worth over US$ 3 million – and Nad Al Shiba Third, with nine sales transactions worth over US$ 6 million. The three most expensive transactions in the week were for apartments – in Burj Khalifa (US$ 53 million), Marsa Dubai (US$ 43 million) and US$ 41 million in Business Bay.

Construction has started on Deyaar Development’s third and fourth phases, within its Midtown community, with contracts of US$ 100 million, and appointing Gammon & Billimoria as its primary contractor. Noor District, phase 3, is now open for sale with an initial 10% deposit and a ten-year Deyaar Flexi Programme; the seven-building project will comprise a range of units from studio to 3 B/R apartments – as well as a host of retail and F&B options, and other amenities, and should be completed by the end of 2022. To date, the company has completed and delivered two districts – Afnan and Dania – which is 50% of the Midtown development and constitutes a total of thirteen buildings, with more than 1.2k apartments.

According to the DED, there was a 6.0% increase in the number of new trade licences to 32.2k during the first ten months of the year; 57% were professional and 42% commercial. Of the total, the three main contributors were sole establishments (38% of the total), LLCs (32%) and civil works companies with 26%.

On Monday, there was a major surprise when President His Highness Sheikh Khalifa bin Zayed Al Nahyan approved wide-ranging changes to corporate ownership laws that will undoubtedly benefit the country by facilitating business set-ups and attracting more foreign investment. Probably the biggest takeaway from the announcement was the removal of the requirement for a local sponsor for companies that operate onshore. The last few months have seen many other changes, including positive amendments to personal and family laws and reforms to UAE visa rules, all of which are meant to make the country even more attractive for foreign investment and to encourage more people to make the country their home base.

Apart from the fact that onshore companies will no longer be required to have an Emirati national as a majority shareholder, the need to have a UAE national or a local company as registered agents, has also been eradicated. The new law sees some sectors, including oil/gas, utilities and transport exempt. In a move that will add more liquidity to the local bourses, companies may now sell 70% (up from the previous 30%) of their shares in an IPO. It is highly likely that the new law will supersede Federal Law by Decree No. 19 of 2018 regarding FDI. The new clauses will see fifty-one articles, mostly covering limited liability companies and joint stock companies in the current Commercial Companies Law, amended. In Dubai, it would appear that the Department for Economic Development will be the obvious authority to regulate participation levels of Emiratis in certain company structures.

Other amendments included permitting electronic voting at general assembly meetings and stakeholders given the right to sue a company in a civil court, over any failure of duty that results in damages. In future, companies will be able to increase their capital base through issuing bonds and converting them into shares. Another notable change now allows the appointment of board members who have the requisite expertise but are not stakeholders.

What Covid-19 and recent deregulation has done is to push Dubai at least two years ahead of schedule when it comes to deregulation and “opening up” its economy. This week’s announcement will make Dubai (and the UAE) a more “secure” place for both new companies and new residents and when added to other recent changes in the law involving property, personal status, foreign direct investment and inheritance, has made Dubai an even more attractive destination; it has also removed certain obstacles that could have been considered unwelcoming to new entrants, whether they were legal entities, families or individuals. There is no doubt that the inflow of new financial and human capital will be drawn into Dubai which in turn will boost the emirate’s growth and longer-term future.

With the Dubai government in a hurry to move all payment transactions to cashless platforms, it has formed a ‘Cashless Dubai Working Group’ to develop a roadmap for the transition. At its first meeting, the group, which encompasses various government agencies – including Dubai, Dubai’s Department of Finance (DOF), the Supreme Legislation Committee, Dubai Economy, Dubai Police, Dubai Economic Security Centre, Dubai Chamber, and Dubai Tourism and Commerce Marketing – aims to ensure a secure and seamless transition towards a cashless society. It will launch a series of ambitious initiatives, involving all community segments, to create the infrastructure and favourable conditions for eliminating the use of cash. This strategy of   full digital transition is part of the wider aim to make Dubai the world’s smartest and happiest city, in line with the directives of the UAE’s leadership and the objectives of the UAE Centennial 2071 plan.

The federal government announced a five-day weekend starting next Tuesday, 01 December to celebrate National Day and Commemoration Day. This week, both RAK and Ajman announced a 50% discount on all the traffic fines across the emirate to mark the 49th National Day. In addition, all black points along with the fines incurred, due to vehicles being impounded, will be cancelled. The aim of the exercise is evidently to bring happiness to the public and reduce their financial burdens during these troubled times.

Emaar has launched its first foray into the Sharjah property market, with its hospitality arm releasing the first phase of off-plan sales for Vida Residences Aljada. It will also be the emirate’s first ever branded residences, consisting of over 250 apartments, (from 1 -3 B/R units and penthouses) and will be owned and developed by Arada, with Vida Hotels and Resorts responsible for operations. Construction on Vida Residences Aljada, and the adjacent Vida Aljada hotel, will commence in Q2 2021 and scheduled to be completed within two years; it will be located in the heart of Aljada, Arada’s US$ 6.4 billion master community.

Amazon is on the move in the UAE and expanding its services, by increasing its storage capacity, by over 45% across its fulfilment network, and opening a new delivery station, as well as creating more than 2k new permanent and seasonal jobs. Including its own network, and third-party space, it now utilises over 2.4 million cu ft of storage capacity. On Tuesday, the tech giant began its seven-day White Friday sale in the region, offering customers up to 70% in discounts when shopping online.

To oversee the reintroduction of the 737 Max’s to the local skies, the General Civil Aviation Authority has set up a Return to Service Committee. The committee includes a range of specialists who will work with members of the US Federal Aviation Administration and the European Aviation Safety Agency, to ensure a smooth and safe transition.

Covid-19 and low interest rates have wreaked havoc on the top ten UAE banks, with Q3 net income down 3.0%, and total interest income 7.7% lower, according to Alvarez & Marsal’s latest “UAE Banking Pulse for Q3 2020.” (Of late, this firm has been receiving plenty of press including backing out of Lebanon’s enquiry into its Central Bank dealings and being the administrator in the local NMC debacle.) Also impacted was non-performing loans climbing to 3.6% and still rising. During the quarter, loans and advances remained broadly flat which was the slowest growth in the last six quarters, while Q3 deposit growth improved to 4.2%. It concluded that there is a distinct risk of an increase in NPLs and that “we expect the economic conditions in the UAE and the region generally to remain challenging in the near term, which would likely limit credit and earnings growth.” To an outsider, it sems that the only way banks’ profits will continue to head north, in an uncertain future, is either via consolidation or introducing digitalisation at a greater pace.

Monday saw the region’s largest Global Gold Convention (GGC) taking place at the Armani, Burj Khalifa. The event comprised a global combination of gold industry companies, mines, refiners, traders, authorities, government officials and regulators meeting under one platform; this was the first ‘hybrid’ industry-led event this year in Dubai in strict compliance with Covid-19 protocols and guidelines.  The main objective of this one-day meeting was to showcase the entire gamut of gold trade, with a longer-term aim of supporting the region’s non-oil sector diversification programmes.

By the end of Q3, the value of total assets of banks held by the Central Bank was 2.0% higher at US$ 886 billion, quarter on quarter, or 7.6% higher, year on year. Gross credit moved north to US$ 492 billion, by 0.8%, quarter on quarter, and 4.9% for the past twelve months. As of 30 September, total deposits of resident and non-resident customers, with banks operating in the UAE, rose by 2.2% on the quarter to nearly US$ 520 billion, of which resident deposits, (up 3.0% on the quarter), accounted for US$ 467 billion and non-resident deposits, (4.5% lower), the balance. On an annual basis, both Money Supply M1 (Currency in Circulation outside Banks plus Monetary Deposits), and M2 (M1 plus Quasi Monetary Deposits), increased by 11.0% to US$ 155 billion and by 7.9% to US$ 400 billion respectively. YTD, gold reserves held by the Central Bank have jumped 121% to US$ 2.4 billion.

The bourse opened on Sunday 22 November and, 156 points (7.2%) to the good the previous fortnight, jumped 104 points (4.5%) to close on 2,420 by Thursday 26 November. Emaar Properties, US$ 0.12 higher the previous three weeks, traded up US$ 0.06 at US$ 0.89, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 26 November saw the market trading at 280 million shares, worth US$ 66 million, (compared to 159 million shares, at a value of US$ 63 million, on 19 November).

By Thursday, 26 November, Brent, US$ 3.90 (9.7%) higher the previous fortnight, gained a further US$ 0.75 (1.7%) in this week’s trading to close on US$ 44.96. Gold, US$ 81 (4.1%) lower the previous fortnight, lost a further US$ 73 (3.9%) to close on US$ 1,806, by Thursday 26 November. (Meanwhile ADNOC – the Abu Dhabi National Oil Company – has announced the finding of a 22 billion field of recoverable barrels).

In a bid to strengthen both its global, but specifically US, presence, Bertelsmann has agreed to purchase publisher Simon & Schuster for almost US$ 2.2 billion in cash from ViacomCBS, and in the process beat Rupert Murdoch’s News Corp to the post. This was the second major acquisition, over the past twelve months, for the 185-year old German media group which took full control of Penguin Random House. The latest purchase of Simon & Schuster, with a reported revenue stream of US$ 814 million and employing 1.5k, will have to obtain US antitrust approval but that should be a formality as it will still have less than 20% country market share.

There seems to be a lot of skulduggery around the fringes of Australian public service. Over the past month, both the Australian Securities and Investments Commission and Australia Post have been in the news for the wrong reasons. The corporate regulator’s head of enforcement, deputy chairman Daniel Crennan QC, has resigned after it was revealed he received almost $70,000 in rental payments that may have exceeded public sector pay limit, whilst his boss, James Shipton, has stood aside after an adverse Audit Office report. Meanwhile Christine Holgate, chief executive of the national postal service since 2017, has resigned, after authorising a US$ 14k gift of luxury watches to four employees as a work reward which many saw to be a waste of public money.

Former politician Robert Cavallucci has been hired on nearly double the pay of the last chief executive at Football Queensland (FQ) — almost US$ 230k a year. To make matters worse, he was recruited following a two-month consultancy that earned the president of the board, (purportedly a voluntary role), Ben Richardson US$ 32k, an amount sanctioned and approved by the same board. The new CEO, used to be an assistant minister in the Newman government and latterly was managing partner at PwC Brisbane, as well as already being on the board of Football Queensland. It was in his office that Mr Richardson handed a termination letter to the previous CEO, who says he was given no reason for his sacking.

The still scandal-ridden global football body, FIFA, has banned the head of African football, Ahmad Ahmad, from the sport for five years, following an ethics investigation. The departing incumbent president of the Confederation of African Football (CAF) had intended to stand in an election in March, but this will not be happening, following charges of offering and accepting gifts and other benefits, and misappropriation of funds. He was undone by an internal whistle-blower, former CAF general secretary Amr Fahmy, who died earlier this year from cancer; he had been dismissed, after he made corruption allegations against Ahmad last year in a document sent to FIFA. An audit report by PwC concluded that “the accounting records of CAF are unreliable and not trustworthy.”

It is reported that Qantas will require passengers to be vaccinated against Covid-19 before they will be allowed to travel on an international flight, with the airline considering expanding this to its domestic market. According to its supremo, Alan Joyce, the carrier is looking into the possibility of requiring passengers to have a vaccination passport which would allow them to travel. On Monday, Qantas reinstated flights between Sydney and Melbourne after the reopening of the border between New South Wales and Victoria. Meanwhile, IATA is in the final stage of developing a Travel Pass, to be trialled in Q1 2021. The digital health document, that will prove passengers have tested negative for Covid-19, or have had a vaccine, will manage and verify the secure flow of testing or vaccine information among governments, airlines, laboratories and travellers.

According to IATA’s latest air connectivity index, Shanghai has dethroned London to become the world’s most connected city (to other cities) as the coronavirus shakes up international travel; the leading four countries are from China – Shanghai, Beijing, Guangzhou, and Chengdu. Over the past five years, London has witnessed a 67% fall in connectivity in air travel, with the report noting that the pandemic has “undone a century of progress” for connectivity between cities, with large transport hubs including London, New York and Tokyo having been hammered by the dramatic reduction in flights, in and out of their cities. The fact that air travel in China has almost returned to historic norms can be seen from the fact that during its Golden Week holiday season 425 million people travelled around the country. Whilst China is steaming ahead, other Asian countries are suffering, with the likes of Bangkok and Hong Kong both recording steep 81% drops in connectivity. For the five-year period to 2019, the UAE was the region’s most connected country and, on a global scale, came in 20^th; over that period, its connectivity only increased 22% compared to the likes of Oman, Saudi Arabia and Qatar with percentage growths of 121%, 49% and 28% respectively.

IATA’s latest estimate on the financial damage that Covid-19 has wreaked on the airline  industry can be seen from their estimate of the industry’s current debt, topping US$ 651 billion. It is encouraging governments to support the industry and estimates that bridging loans will save jobs and kick-start the recovery in the travel and tourism sector. One glimmer of hope is that, if the vaccines are successful in the near term, the sector could well turn cash positive by Q4 2021, having already lost five times more money than what occurred at the height of the 2008-2009 GFC. 2019 has seen passenger traffic slump from 4.5 billion to 1.8 billion, with a forecast passenger figure of 2.8 billion for next year.

There are reports in the FT that big 4 audit firm EY, already embroiled in the BR Shetty scandal, may have acted criminally during its work for Wirecard and is being investigated by German regulators. The German payments group self-imploded last year after revealing a multiyear and multi-million dollar fraud in what has become one of the biggest accounting scandals seen in Europe. It is apparent now that many important clients of the firm never existed, and that the auditor never checked some of the listed bank accounts. EY Germany “vehemently rejects” any suspicion that it acted criminally and noted that it “has been fully supporting the investigations of the relevant government agencies”.

It seems that internal bickering within the EU continues unabated, and this time it involves skiing. Germany is pressing for the industry to close all its ski resorts completely this season in a bid to limit the spread of Covid-19. Not surprisingly, Angela Merkel is facing opposition from other member countries who rely so much on “snow income”, led by Austria which is already gearing up for a full season of visitors; the ski sector contributes 4% to the country’s GDP and 8% of its employment during the winter months. Meanwhile, France is planning to open its resorts but keep the ski lifts shut.

 However, air cargo has done its fair share to help airlines’ finances, as the grounding of flights pushed freight prices higher. Consequently, global revenue is expected to jump 15% to US$ 117.7 billion this year, despite an 11.6% decline in volume to 54.2 million tonnes. The advent of various vaccines early next year will prove a boon for the sector and that air cargo carriers can absorb the extra demand next year. One interesting fact is that IATA estimates it will take about 7k Boeing 747 equivalents to distribute one dose of the vaccine to every person in the world today.

Bitcoin is nearing its all-time high as it edges closer to US$ 19k, having gained 40% in November alone and 160% YTD. The main drivers appear to be the demand for riskier assets, amid unprecedented fiscal and monetary stimulus, designed to counter the economic damage of the Covid-19 pandemic. It is also being helped by the facts that there is every chance that cryptocurrencies will eventually become mainstream, as well as Bitcoin being seen by some to be resistant to inflation.

The latest Institute of International Finance’s report notes that, over the past four years, global debt has risen more than nine-times to US$ 52 trillion, with worse to come, as many countries are still throwing money at the Covid-19 problem, in the hope that some of it will “stick”. Of the US$ 52 trillion, US$ 15 trillion was recorded over the first nine months of the year; total debt is estimated at US$ 272 trillion and now stands at 103% of global GDP. It is estimated that since governments have not been shy to spend money on financial policy, to reduce the negative impact of the pandemic, the ratio of government interest payments to revenues reached a near-record high of 10% in emerging markets.  Lower down the food chain, small businesses have seen margins smashed, whilst larger entities report earnings estimates hovering around 20% below pre-Covid levels. Because of massive government support in most countries, corporate insolvencies have not been as bad as would be normally expected in these circumstances. This is not to last for much longer, as the second wave takes hold and there is no doubt that low liquidity and rising corporate debt levels will manifest as future insolvencies.

One of the biggest mysteries for some time is why stock markets are exploding whilst the global economy is mired in one of the worst-ever recessions, brought on by Covid-19. Do investors know something that the rest of the world is unaware of? Economists will always talk about cycles and how economic history will always repeat itself. The common thread found for most of the major recessions – from the Wall Street Crash and the Great Depression (1929 -1939), the 1973 OPEC oil price shock, Japanese asset price bubble (1986-1992), Black Monday (1987), the 1997 Asian financial crisis and the 2008 GFC – is that the stock markets took a pounding and then some years to recover. This time, it is different – most bourses started tanking in February and hit rock bottom around the start of the fourth week in March, but what happened next beggars belief. This time, instead of taking the usual two or three years to recover to previous levels, the rebound started from day one and has continued for the past eight months, during which time the global economy headed in the other direction at the same speed.

There is only one simple answer to an event that has turned simple economics on its head and that is the sheer amount of money that global central banks and worldwide governments have injected onto the economic system to counteract the impact of Covid-19. There are two factors to consider. The first is that central banks have been printing money in a fashion never witnessed before and, at the same time, have butchered interest rates to historic low levels either just above or even below zero.  Quantitative easing sees central banks buying government debt (usually bonds) that results in lowering rates and flooding the market with “readies”, with the added effect of devaluing their currencies. Now what happens when central banks find themselves holding debt belonging to governments, (usually bonds),the public (mortgages) and corporate (loans)? Nobody really knows but what is known is that the US$ 8 trillion owned by banks after the GFC has tripled to US$ 24 trillion and, despite the red flags, more and more financial stimulus packages are being pumped into the global economic system. Basically, the world is awash with surplus cash and now a lot of that is being pumped into the global bourses, leading to a feeding frenzy. In normal times, if a Chancellor had come out and announced a 60%+ hike in unemployment, the stock market would be first to head south; likewise, an IMF warning that the economic recovery appeared to be on a slippery slope has fallen on investors’ deaf ears.

101 Economics teaches that if a government ploughs money into their economy and interest rates were lowered, the economy would improve because individuals and businesses would borrow more (at the lower rate) and invest. Both business confidence and consumer confidence would move higher, the job market would turn positive and government coffers would fill, with extra tax revenue and lower unemployment costs. This has patently not happened in 2020 – business and consumer confidence has never been lower, the job market is crashing and government coffers are being depleted at rates rarely seen before. However, the stock markets are in seventh heaven, thanks to incompetent management by governments and central banks on a global scale that has continued to feed the rich whilst the rest continue to suffer. The stock market boom has to end and the longer it goes on the bigger will be the fall-out when the crash happens. What needs to happen is to stop pumping unlimited amounts of money, on the pretext of fighting the pandemic; it is time to turn off the “money tap” and return the world away from zero interest rates and back to the real world.

It seems that China is holding about US$ 500 million worth of Australian coal because of “environmental quality” problems, as bi-lateral trade between the two countries begins to suffer. It is thought that coal is but one of seven Australian imported products targeted with restrictions and bans by Chinese authorities, as diplomatic tensions begin to worsen. It appears that Australian exporters were informally warned at the beginning of the month that their Chinese buyers had been told to stop buying specified Australian exports, including barley, beef, coal, cotton, lobster, timber, and wine. Australia has had tiffs all year with the communist government on a number of issues; they included the calling of an independent inquiry into the origins of Covid-19, condemning Beijing’s treatment of Muslim Uyghurs in Xinjiang, criticising Hong Kong national security law and the curtailing of freedoms in the special administrative region.

A former head of America’s central bank, 74-year-old Janet Yellen, is the bookie’s favourite to lead the treasury department; that being the case, she will become the first woman to hold this position. She previously served as a top economic adviser to the then President, Bill Clinton, and is widely credited with helping steer the economic recovery after the 2007 financial crisis and ensuing recession. Since leaving the Fed in 2018, she has spoken out about climate change and the need for Washington to do more to shield the US economy from the impact of the coronavirus pandemic.

Tuesday saw the Dow Jones rocket past the 30,000 level for first time in history, and the S&P touching record highs to close on 3,635, with investors banking on a double whammy of a peaceful handover of power and raised hopes of a speedier recovery, with Covid vaccines almost ready for distribution. Global bourses rose in tandem, with London’s FTSE 100 trading 1.5% higher, Japan’s Nikkei 2.0% to the good and Hong Kong’s Hang Seng Index up 1.4%; other indices in South Korea, Australia, New Zealand and Singapore all nudged higher. Wall Street witnessed shares in some of their bigger clients rising – Chevron, JP Morgan Chase, Goldman Sachs and Boeing climbing 5.0%, 4.6%, 3.8% and 3.3% respectively. It does not take a genius to see that the higher these bourses go, the quicker they will fall – this could happen on either a Monday or Friday this year.

South Africa has seen its credit rating cut even further into junk territory, to Ba2, by Moody’s Investors Service, expecting the continent’s second largest economy to weaken again because of the continuation of Covid-19; the agency maintained its negative outlook, as the battered economy slips two levels below investment grade. The agency noted that the pandemic would impact “both directly on the debt burden and indirectly by intensifying the country’s economic challenges and the social obstacles to reforms” and that the GDP would be 8% lower by year end. More worryingly, is that government debt to GDP would come in at 110%, by the end of 2024, equivalent to a burdensome 40% increase from its 2019 financial year.

The latest blow to hit the Lebanese economy was the withdrawal of auditing firm Alvarez & Marsal from an agreement with the Aoun government to conduct a forensic review of the nation’s central bank. The auditor pulled out of the assignment because they were unable to obtain the necessary information to carry out their work and “are not hopeful that they will be able to get additional information in the coming three months to carry on with their work.” The IMF has insisted that it will only release a US$ 10 billion bailout package, (and other donors US$ 11 billion), only if the financial assessment is carried out. It is difficult to imagine a bleaker picture for any other global economy – defaulting US$ 31 billion of eurobonds in March, September inflation at 131%, currency down 80% against the greenback on the black market since March, the economy expected to slump 25% this year and public debt topping US$ 94 billion.

October UK retail sales moved forwards, 1.2% higher on the month, driven by early Christmas shopping and discounting by stores. As has been the case since the onset of Covid-19, online stores did well, but clothing sales weakened after five consecutive months of increased sales, mainly because of local coronavirus restrictions leading to reduced footfall for the bricks and mortar outlets. Fuel sales remained flat, and still below their pre-March lockdown level, due to reduced traffic on the roads. However, retail sales in November will inevitably head south because of the fresh lockdown.

In what turned out to be a new October record – as well as US$ 14.5 billion higher than the same month last year – government borrowing came in at almost US$ 30.0 billion, with continuous heavy public spending to support the economy; monthly tax receipts were 6.4% lower at US$ 53.0 billion. YTD government borrowing at US$ 287 billion is 469% higher, year on year, and expected to near US$ 500 billion by the end of 31 March, the government’s fiscal year end. Rishi Sunak, the UK Chancellor, has frozen the pay of millions of public sector workers, as he tries to get to grips with the massive fall in private sector earnings this year, and the need for the Exchequer to try and bolster public finances wherever possible. Only the NHS, and the lowest paid, escaped the pay freeze, that will impact 1.3 million public workers; the health service will receive an extra US$ 3.9 billion. The population has been warned that they will soon see an “economic shock laid bare” and that Covid’s impact on the economy must be paid for – and high levels of borrowing could not go on indefinitely.

Other measures, to save costs, include the controversial temporary ditching the UK policy of spending 0.7% of national income on overseas aid – now cut to 0.5% and saving almost US$ 5.4 billion. Millions of pensioners will see the future value of their pensions lower owing to a planned change in the way payments are calculated from 2030. It would seem that the Chancellor will need to find a net US$ 40 billion every year (by increasing revenue and/or cutting costs) to stabilise the UK’s growing debt pile. To add to his problems, he will have to deal with the possibility of a no Brexit deal -or a patched up one – and either will cost money at least in the short-term.

With current unemployment levels 22.7% higher on the year to 1.6 million, the Chancellor has announced that this will rise 62.5% to 2.6 million by mid-2021, reiterating that the “economic emergency” caused by Covid-19 had “only just begun”. He indicated that the government would have to spend US$ 375 billion this year “to get our country through coronavirus” and is expected that its annual borrowing will top US$ 530 billion. Furthermore, there is talk that failure to secure a deal would reduce the size of the UK economy by a further 2% in 2021, with permanent damage to growth and living standards in future years.

The government also announced that it will make a major reform to the way it assesses the value for money of big spending projects which, in the past, has biased the South at the expense of the North.  The Chancellor confirmed that this was part of the government’s “levelling up” agenda and that it would allow those “in all corners of the UK to get their fair share of our future prosperity”. The Chancellor also noted that the Treasury would move some staff to a new base in the north of England next year, as part of a shift of 22k civil servant roles out of London and the South East. Interestingly, US$ 2.1 billion of the proposed US$ 800 billion planned public investment will be spent on tackling potholes on the country’s roads. I read the news today, oh boy, 4,000 holes in Blackburn, Lancashire.