16 Tons – Another Day Older and Deeper In Debt! 25 February 2022
For the past week, ending 25 February 2022, Dubai Land Department recorded a total of 2,064 real estate and properties transactions, with a gross value of US$ 1.93 billion. A total of 300 plots were sold for US$ 703 million, with 1,382 apartments and villas selling for US$ 784 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 141 million in Marsa Dubai, a second sold for US$ 68 million in Al Khairan First, and the third sold for US$ 66 million in Burj Khalifa. The top two land transactions were both for plots of land in Marsa Dubai, worth US$ 146 million and US$ 130 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 131 transactions, totalling US$ 79 million, followed by Jabal Ali First, with 67 sales transactions, worth US$ 62 million, and Al Merkadh, with 21 sales transactions, worth US$ 30 million. Mortgaged properties for the week totalled US$ 387 million, with the highest being for land in Business Bay at US$ 47 million. 56 properties were granted between first-degree relatives worth US$ 15 million.
According to latest January figures from CBRE, the emirate’s average residential market property market rose 10.2% – a sure sign that the strong uptick in the market continues, as it surged at its fastest rate in seven years. The consultancy noted that the average price increases for villas and apartments were 21.8%, to US$ 341 per sq ft, and 8.5% to US$ 296k respectively. However, these figures are still way down on their peak seen in 2014, by 13.5% and 27.1% (for apartments). The real estate consultancy indicated that, for villas, Palm Jumeirah witnessed the highest average sales rate, at US$ 735 per sq ft, and Downtown Dubai recorded the highest average sales rate, at US$ 534 per sq ft, for apartments.CBRE report further said average rents in the 12 months to January 2022 have increased by 10.1%, with average villa and apartment rents increasing by 22.8% and 8.3% respectively. In January, average annual apartment and villa rents stood at US$ 20.8k and US$ 62.7k respectively. Downtown Dubai remained the most popular area for apartments, (as average annual rents rose to US$ 41.1k) and Al Barari for villas – with average annual rates of US$ 217.5k.
Meanwhile, Zoom Property, like many other property consultants, forecast that the Dubai real estate market will sustain an upward growth momentum this year, noting“with a 33.4% increase in property prices in January, the Dubai real estate has started the year on a high note” – a portent that 2022 will carry on the momentum that started in the previous year. It concluded that the villa segment will continue its dominance, while the apartment market will become more stable, assisted by key factors such as expatriate-friendly policies, visa reforms, and the transition of Expo 2020 into District 2020.
In a bid to raise Dubai’s standing as a year-round global gastronomy hub, in line with the visionary leadership’s goal to make it the world’s best city to live in, work and visit, the Department of Economy and Tourism hosted the inaugural industry gastronomy briefing, with restaurateurs and key stakeholders from the emirate’s F&B sector. The gathering, which will meet on a quarterly basis, shared an overview of strategic plans which will further raise Dubai’s profile on the world stage, as a leading gourmet destination, with the DET providing a summary of its ‘Gastronomy Always on Campaign’. It was also announced that the ninth Dubai Food Festival will take place between 02 – 15 May.
Dubai boasts over 12k diverse eateries, drawn from the two hundred different nationalities found in the emirate, and ranging from homegrown kitchens to international fine dining, and everything in between. Last year, and despite the negative impact of Covid, Dubai attracted almost 7.3 million international overnight visitors, compared to 5.51 million in 2020 and 16.73 million in pre-Covid 2019; it is expected that this year’s number will more than double that of 2021. There is no doubt that Dubai is the gastronomy capital of the region and this is borne out by the fact that at the recent inaugural edition of MENA’s 50 Best Restaurants, independently owned casual dining restaurant 3Fils, located in Dubai Fishing Harbour, topped the list, as Dubai scooped six out of the top ten restaurants, and sixteen in the fifty list. In TripAdvisor’s Travellers’ Choice Awards 2022, Dubai won the top spot as the No.1 global destination and the fourth leading destination for ‘Food Lovers’ – an indicator of Dubai’s ‘culinary standing’ in the gastronomic world.
Having welcomed 29.1 million passengers last year, up 12.7% compared to 2021, Dubai International is still the world’s busiest airport, by international passenger numbers, for the eighth consecutive year. During the year, DXB successfully hosted the Dubai Air show 2021, the world’s first major air show since the start of the pandemic, and it opened one of the world’s largest in-house airport laboratories for fast-track processing Covid-19 PCR test samples for Dubai’s visitors. In November, it returned to 100% capacity for the first time since the onset of the pandemic. The current forecast is that this year, numbers will almost double to 55.1 million. The top six destination countries were India, Pakistan, Saudi Arabia, UK, US and Egypt with 4.2 million passengers, 1.8 million, 1.5 million, 1.2 million, 1.1 million and 1.0 million respectively. The top four city destinations were Istanbul (916k), Cairo (905k), London (814 k) and New Delhi (791k). The number of flights in 2021 totalled 233.4k, with the average number of passengers per flight at 154, down 18.9% year-on-year. Cargo did not disappoint, with annual freight volume 20.0% higher, at 2.319 million tonnes.
As part of ongoing efforts to boost Dubai’s economy and enhance the efficiency of the logistics sector, Dubai Maritime City is to invest US$ 38 million to further develop its infrastructure. The result will also consolidate the emirate’s position as a global maritime centre. This latest project will integrate DMC with the Mina Rashid area that includes the QE2 Hotel, P&O Marinas and Marina Cubes. The infrastructure project includes developing networks for deep sewage, stormwater, fire, irrigation, potable water, telecommunication, and roads. The sewage and stormwater networks are each serviced by a lift station. The fire and irrigation networks are served by a combined pump station, consisting of an underground tank of 460m3 for firefighting and 1240m3 for irrigation. The other networks consist of 6km of potable water, 10km telecom and 7km of road.
In a move that will strengthen its expanding position in Africa, DP World has finalised its acquisition of Imperial Logistics; last July, it had commented that it would purchase the South African company for US$ 890 million. It will now be delisted from the main board of the Johannesburg Stock Exchange on 15 March. Imperial Logistics is an integrated logistics and market access company, with operations in Africa and Europe and tis can only enhance DP World’s position as one of the world’s biggest operators of marine ports and inland cargo terminals. It will also build on the Dubai company’s growing presence in Africa where it already has projects in Egypt, Algeria, Djibouti, Rwanda, Somaliland, Mozambique and Senegal, where only last January it announced a US$ 1 billion investment to begin construction of that country’s Ndayane deep-water port.
DXB will close one of its runways, the northern one, for refurbishment, for forty-five days starting 04 May, at which time the emirate’s second international airport, Al Maktoum International, will reopen to scheduled, commercial passenger flights for the first time since the March 2020 onset of Covid-19 pandemic. The airport will still service airlines that operated from there before the pandemic.
The UAE Minister of State for Foreign Affairs indicated this week that an introduction of an employee income tax “is not at the table at all now,” in a Bloomberg TV interview. This comes two weeks after a 9% federal corporate tax on profits, from the financial year starting on or after 01 June 1, 2023, was announced. At the time, it was stated that there would be no tax on personal income “from employment, real estate and other investments or on any other income earned by individuals that does not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE”. The Minister also noted that “we have to comply with international directions. The OECD announced last year that most of the world is going to apply it [corporate tax].” Last October, the world body stated that 136 countries had agreed to a global deal to ensure big companies, (i.e. companies with revenue of more than US$ 868 million), pay a minimum tax rate of 15% from 2023. This would result in over US$ 150 billion being raised by new taxes, with US$ 125 billion in multinationals’ profits being reallocated to the countries in which they operate.
The UAE’s third nuclear reactor’s operating license will be issued this year, as the country seeks to produce clean energy in line with its 2050 zero emissions target. Notwithstanding any unexpected events, it appears that the Federal Authority for Nuclear Regulation (FANR) will issue the operating license for Unit-3 of the Barakah Nuclear Power Plant later in the year. If all goes to plan, then the licence for Unit-4 of the nuclear reactor, located in Abu Dhabi’s Al Dhafra region, will be issued. The four units will generate 5.6GW of power, while preventing more than 21 million tonnes of carbon emissions a year, as well as contributing to UAE’s Net Zero by 2050 Strategic Initiative. To date, Unit-1 is fully operational, and delivering electricity to the grid, with Unit-2 currently undergoing tests, in preparation for commercial operation.
A day after it was announced, at the fifth Dubai Diamond Conference, that the UAE had become the world’s largest rough diamond hub, with 2021 trade valued at US$ 22.8 billion, DMCC’s Almas Tower saw the opening of the Israel Diamond Exchange representative office at its Dubai Diamond Exchange on Tuesday. It is anticipated that the new IDE office will facilitate doing business for Israeli diamond companies operating in or looking to set up in Dubai. The entire global diamond industry is in Dubai this week for Dubai Diamond Week, which also includes the inaugural JGT (jewellery, gem and technology) Dubai and the President’s meeting for the World Federation of Diamond Bourses.
As part of the events being held at Dubai’s Museum of the Future, Thursday saw the debut of ‘Future Talks’ series by part-time Dubai resident Changpeng Zhao. Also known as CZ, the CEO of Binance, was the first of nine subjects to share their success story. (Over the next month, to 29 March, ‘Future Talks’ will host eight other prominent futurists, industry experts and scientists offering unique insights into the greatest challenges humanity will face in the future). Also known as CZ, the Canadian-Chinese businessman, with a personal fortune of US$ 96 billion, is reportedly the richest businessman in Canada and the 14th on the list of the world’s richest people, issued by Bloomberg. In his Talk, he spoke about life before and after the setup of Binance, which has a current trading value of US$ 2 trillion. He also shared his vision for the future of finance, the potential future applications of cryptocurrencies and blockchain technology, and the pivotal role of Dubai in globalising the future of the sector. Binance has also chosen to organise its largest digital blockchain conference, attracting senior industry experts from the region and the world, from 28 – 30 March in Dubai.
UK’s International Finance magazine has ranked Ahmed Al Naqbi, the “Best CEO for Banking Transformation in the UAE for 2021”. The chief executive of Emirates Development Bank has been the face of the bank’s new US$ 8.17 billion, (AED 30 billion) strategy to finance 13.5k SMEs and corporates in priority sectors over the next decade. To date, it has lent more than US$ 190 million to such entities over the past twelve months. The CEO has been involved in several funding exercises including a total value of US$ 2.72 billion, (AED 10 billion) as part of the UAE’s Projects of the 50 campaign which allocated 50% to support Emirati entrepreneurship and innovation, and the balance to accelerate industrial development and the adoption of advanced technology in the UAE. He was also involved in the launch of the EDB Business Banking app, which offers SMEs access to “secure, on-the-go digital banking services”.
Wolfi’s, a long-standing player in the cycling community, is the first company within the tourism sector that Adio has added to the programme, in line with Abu Dhabi’s goal to attract investment to sustainable tourism. Wolfi’s was one of the first cycling shops in the UAE and now it will be provided with financial and non-financial incentives to boost cycling access and participation at events, which will lead to environment-friendly ways for tourists to discover Abu Dhabi’s attractions. Wolfi’s is developing showrooms across Abu Dhabi, in four destinations, offering a range of bicycles, e-bikes and equipment to buy or rent, near Abu Dhabi’s cycling destinations. It will also develop “Made in Abu Dhabi” electronic bicycles. In the past two years, since its formation, the government body responsible for attracting and promoting investment in Abu Dhabi, has been opening up tourism investment opportunities in the emirate through its Innovation Programme, which has so far invested US$ 545 million to 37 high-growth firms; the programme is part of Abu Dhabi’s US$ 13.62 billion, (AED 50 billion), Ghadan 21 initiative assisting tech-focused industries.
After Dubai-based Udrive had raised US$ 5 million in a funding round last year, its valuation topped US$ 20 million. According to its co-founder, Nicholas Watson, “the recent funding secured will help us invest in new technologies as well as grow our offerings into the region this year;” this will include expansion in the MENA and Turkey, as well as focusing on streamlining customer experiences. It was reported that Cultiv8, Dubai government’s SME and start-up investment arm, and Oman Holding International, participated in the latest round of funding for the pay-per-minute car rental platform. Earlier finding came from a seed+ round in 2020, (US$ 2.5 million) and Eureeca, the Dubai-based equity crowdfunding platform, (US$ 1.3 million). In the five years since its foundation, Udrive – that allows customers to rent a vehicle by the hour, or even the minute – has recorded over two million trips.
E&, the telecom formerly known as Etisalat, posted a 3.2% hike in 2021 consolidated revenue to US$ 14.52 billion, the same percentage increase that saw net profit at US$ 2.53 billion. Consolidated EBITDA nudged 1.0% higher to US$ 7.27 billion. By the end December, its UAE database stood at 12.7 million subscribers, as the number of aggregate subscribers rose 3.0% to top 159 million. The telecom will maintain its previous Etisalat branding identity.
It is mooted that DEWA may be the first of ten Dubai state-owned companies off the blocks to float on the DFM and that this could happen early next month, with an IPO, followed by an April bourse debut. There will be strong investor interest in this historic IPO, especially if the valuation is at the lower end of the suggested US$ 27 billion to US$ 37 billion range. Annual dividends could top US$ 1.7 million which would make it an attractive investment, dependent on its initial market price.
The DFM opened on Monday, 21 February, 155 points (4.9%) higher on the previous fortnight, shed 15 points (0.5%) to close on Friday 25 February, at 3,327. Emaar Properties, US$ 0.15 higher the previous week, shed US$ 0.04 to close on US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.76, US$ 1.61 and US$ 0.65 and closed on US$ 3.62, US$ 1.64 and US$ 0.63. On 25 February, trading was at 168 million shares, with a value of US$ 73 million, compared to 91 million shares, with a value of US$ 57 million, on 18 February 2022.
By Friday 25 February 2022, Brent, US$ 1.22 (1.3%) lower the previous week, gained US$ 4.16 (4.4%), to close on US$ 97.93, after hitting highs of US$ 105.79 when news that Russia had actually invaded Ukraine earlier in the week. Gold, US$ 111 (6.2%) higher the previous three weeks, dipped a US$ 11 (0.6%), to close Friday 25 February on US$ 1,890; it had topped US$ 1,942 two days earlier.
As the global economy continues to recover at a faster rate than initially expected, HSBC more than doubled its 2021 profit from US$ 8.8 billion to US$ 18.9 billion. The profit figure was boosted by releasing US$ 900 million on previous bad loan provisions, compared with an $8.8bn charge it booked against expected losses in 2020. All regions posted profits including Asia, recording a US$ 12.2 billion profit, and Europe with a bottom line of US$ 4.8 billion. As mortgage balances grew, mainly in the UK and Hong Kong markets, 2021 customer lending was US$ 8 billion higher, on the previous year, on a reported basis and US$ 23 billion on a constant currency basis. Having paid a US$ 0.07 interim dividend earlier, the board approved a second interim dividend of US$ 0.18 per share, as well as announcing a US$ 1 billion share buyback.
After leaving Barclays last November, Jes Staley was reportedly expected to receive a long-term bonus and share payments, valued at almost US$ 30 million, but now these payments have been suspended, as regulators investigated his links with the dead sex trafficker, Jeffrey Epstein. Regulators are investigating whether the bank’s supremo’s relationship with Epstein was closer than he described to the board, having already admitted he maintained contact with Epstein for about seven years after his 2008 conviction for solicitation of prostitution involving a minor; he even visited his Little St James Island in 2015. In 2019, it is reported that his former employer, JP Morgan, handed the US regulators some 1.2k emails between the banker and the paedophile.
The two regulators – the Prudential Regulatory Authority and the Financial Conduct Authority – were concerned that these emails displayed that there was a closer relationship between the two; earlier Barclays has indicated that the link had been professional. Once the regulators had forwarded their report to the Barclays, Jes Staley resigned late last year, saying he was “shell-shocked, angry and upset” at the findings and that he would contest them. Mr Staley’s relationship with Epstein can be traced back to US investment bank JP Morgan where the sex offender was a customer.
Although Credit Suisse “strongly rejects the allegations and insinuations about the bank’s purported business practices”, German daily Sueddeutsche Zeitung and other media have released details of a data leak of some 30k of the bank’s client base. It is claimed that there have been possible failures of due diligence in checks on many customers. The newspaper, along with the Organised Crime and Corruption Reporting Project and dozens of media partners including The New York Times and The Guardian, evaluated data from the 1940s and it seems that the bank has, in the past, accepted “corrupt autocrats, suspected war criminals and human traffickers, drug dealers and other criminals” as customers. Noting that it had reviewed a large number of accounts potentially associated with the allegations, and about 90% of them “are today closed, Credit Suisse commented that the allegations are “predominantly historical” and that “the accounts of these matters are based on partial, inaccurate or selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct”.
Another financial institution not immune from past financial scandals is Lebanon’s central bank. It is reported that for more than a decade it has been charging local commercial banks commissions when they bought government securities. Nothing wrong with that except that, according to documents seen by Reuters, it failed to notify them that some of those commissions went to Forry Associates, a company controlled by Raja Salameh, the brother of Riad Salameh, governor of the central bank. Swiss authorities suspect the brothers may have illegally taken more than US$ 300 million in this way from BDL between 2002 and 2015 and it is reported that the Swiss attorney general’s office told Reuters it is conducting a criminal investigation into suspicions of “aggravated money laundering related to alleged embezzlement offences to the detriment of BDL”.
The bank Invest reports that UK household energy bills could top US$ 4.3k a year, in part due to the Ukraine crisis, as well as surging global demand, having made gas and electricity prices soar. It expects that this figure will be reached when the energy price cap, which limits what suppliers can charge, is next adjusted in October. The cap is already due to rise by US$ 0.9k to US$ 2.6kin April when it is estimated to impact about twenty-two million households. The current Ukraine crisis does not help matters, as Russia is the world’s largest natural gas exporter, and there are concerns western sanctions could push President Vladimir Putin to “weaponise” his resources and constrict supplies to Europe. The energy crisis has arisen in tandem with soaring inflation that has seen marked increases in the prices of food and manufactured goods. By Wednesday, average UK petrol prices had already hit a record high of over US$ 2.00.
There is no doubt that the crisis, in addition to the economic fall-out, could have a major impact on the well-being of people around the world, and that an escalation and an elongation will only exacerbate the problem. Russians are fighting with boots on the ground whilst the western countries are fidgeting around with various sanctions designed to cripple the Russian economy and military effort. The invasion started on Thursday 24 February and the economic effect was felt immediately as the oil price jumped to over US$ 100 a barrel, (its highest level in more than seven years), and future gas prices skyrocketed by 60% in just one day. One hopes that the European allies, along with US President Joe Biden, realised that Russia is the second-biggest global exporter of crude oil, and the world’s largest natural gas exporter. The UK is fairly lucky in that it only sources 6% of its crude oil and 5% of its gas from Russia, whilst the EU, obtains nearly 50% of its gas from there.
The two countries also provide about 25% of the world’s wheat and 50% of its sunflower products, like seeds and oil, with Ukraine also a major player, exporting corn to many countries, whilst Russia is also one of the world’s biggest exporters of fertilisers. Even though the UK produces 90% of its wheat, the price may rise because of the shortage, and the increased shipping and producing cost of fertiliser, will surely push wheat, and other grain crops, higher
Putin’s invasion not only angered the western alliance but would have irked the Russian oligarchs who, in one day, lost US$ 39 billion – more than they had lost since 01 January. Two of the bigger losers on the day were Lukoil chairman Vagit Alekperov, who suffered the sharpest decline, with his net worth slashed from US$ 19.2 billion to US$ 13.0 billion, and Alexey Mordashov, chairman of steel maker Severstal, losing US$ 4.2 billion to US$ 23 billion. In the House of Commons, Liberal Democrat MP Layla Moran, using parliamentary privilege, read out a list of thirty-five people who Russian opposition leader Alexei Navalny suggested should be sanctioned. The Johnson government has announced more individuals and companies that it is sanctioning following the Russian invasion of Ukraine, but worryingly there are still several Russian individuals who have been sanctioned by the US or the EU but not by the UK. The cynical observers will just shrug their shoulders. Shares of the Moscow-based oil producer, Lukoil, slumped by about a third yesterday, 24 February, whilst the MOEX Russia Index closed 33% lower, as some stocks tanked 45%, with banks and oil companies among the worst-affected. Meanwhile, the UBS Group, who reportedly services 50% of the world’s billionaires, has triggered margin calls on some wealth management clients that use Russian bonds as collateral for their portfolios after cutting the lending value of some debt from the country to zero.
Volatility was the name of the game elsewhere, but global stock markets capped their losses this side of 5%, including the Dax, at 5%, and the FTSE 100 at 3.0%. Every time the stock markets dip, it normally reduces the value of pension funds and other investment funds which in turn will dent consumer confidence and reduce their spend – both of which will have a negative impact on economic growth.
If anyone thought they had seen it all when it comes to inflation, the message is that they ain’t seen anything yet. Households in the US and the UK are already being squeezed by the rising cost of living, while wages struggle to keep up. For a variety of reasons, including soaring petrol/gas prices, higher commodity prices, reduced supply of energy, food etc, inflation levels will inevitably reach double digit levels. Even before that level is reached, interest rates will move higher and that, for instance, impacts the 2.2 million UK homeowners with mortgages, at a time when household budgets are already stretched.
With Russia one of the biggest global suppliers of metals, such as nickel or palladium, used in car manufacturing, the industry, already battered by a chip shortage and supply chain problems during the pandemic, will have further problems, if Russia decided to cut off supplies of these metals in retaliation to sanctions. This comes at a time when nearly 20% of UK’s nearly new cars are now selling at more than their brand-new equivalents. On top of that, Russian car factories, manufacturing the likes of brands like Stellantis, Volkswagen and Toyota, could struggle to operate under sanctions, potentially hampering production and the availability of new cars.
With investor concerns apparently easing today, global markets soared as it digested the severity, (or lack of it), of the extent of sanctions on Russia which seemed to focus on its banks but left its energy sector largely untouched. Rather surprisingly, the expected disconnecting of Russia from the Swift international banking system or targeting its oil and gas exports has not taken place, so the market responded by share price gains, after weeks of decline, with oil and gold returning to pre-invasion levels. The FTSE 100 index climbed 3.9% on the day, with both German and French bourses 3.5% higher; in the US the Dow Jones Industrial Average, S&P 500 and the Nasdaq rose by 2.5%, 2.2% and 1.6% respectively, as markets in Asia also closed higher.
According to Rightmove, the asking price for an average UK house rose by US$ 10.6k in one month, from January to February, driven by a shortage of homes being put up for sale – the largest month-on-month rise for twenty years. The increase in demand, driven by those looking for more space, and who were ready to move on from their first homes, has pushed the average asking price to a record US$ 475k. 65% of potential buyers pointed to the fact that the lack of available homes was having a severe effect on their ability to buy, whilst 94% of buyers, with a US$ 1.36 million (GBP 1 million) budget, thought there was a lack of choice available. It is inevitable that soaring inflation, a reduction in consumer spending and higher mortgage rates will have an impact and that “realistic pricing” could return to the market by the end of the year – most probably starting after spring which is seen as the industry’s busiest season.
With the threat from the Omicron variant apparently diminishing, the UK economy has bounced back, reaching its highest level since June 2021, with February’s IHS Markit/CIPS composite PMI 6.0 higher on the month to 60.2. The improvement was mainly attributable to a surge in consumer spending on travel, leisure and entertainment but a caveat that costs were surging, at the second fastest pace on record, which would indicate an almost inevitable rate rise next month; the only question is whether it will be 25bp or 50bp. The BoE has been surprisingly reticent to take any positive action considering that inflation could top 10.0% by April – quintruple the bank’s 2.0% target. Although February’s manufacturing PMI remained flat at 57.3, the flash services PMI rose 6.7 to 60.8, as private sector companies reported another steep increase in incoming new work, with UK economic confidence fast improving, with the easing of restrictions.
Again, because of the lifting of lockdown restrictions boosting its service industry, the eurozone economic recovery also rebounded sharply this month, with prices surging at record levels. IHS Markit’s Flash Composite Purchasing Managers’ Index and the PMI for the service industry were both at five-month highs – up 3.5 on the month to 55.8 in February, and 4.7 higher to 55.8, respectively. Just like the UK economy, the main drivers behind the increase were the further easing of restrictions, which led to increased demand for many consumer services such as recreation, hospitality, travel and tourism, allied with an improvement in supply bottlenecks; despite, a minor reduction in the pace of growth, there was also a better-than-expected return in the manufacturing sector. Despite the positive trends going forward, more so in Q2 and Q3, inflationary pressures will continue to impact on the economy, especially consumer spending.
Another casualty of soaring inflation is the UK government, with monthly interest payments topping US$ 83 million, over a third higher than in January 2021, and the highest amount for a January since 1997. The payments are pegged to the Retail Prices Index measure of inflation – which touched 7.8% last month. Despite government debt levels being at their highest level in sixty years, overall interest payments by the government are still at remarkably low levels.
With lockdowns easing, the economy improving and tax receipts heading north, the Office for National Statistics indicated that government finances recorded a surplus of US$ 3 .9 billion last month – a major improvement on the US$ 3.4 billion deficit recorded a year earlier, but well down on January 2020’s return of US$ 13.4 billion. In the first ten months of the fiscal year, (to January), borrowing was at US$ 188.2 billion – the second highest for the period since records began in 1993 – whilst revenue from self-assessed tax was US$ 2.7 billion higher, on the year, at US$ 25.0 billion. The ONS figures showed that total public sector debt stood at US$ 3.15 trillion at the end of last month, equivalent. to 94.9% of GDP but even with that mega figure, the public deficit is steadily decreasing, but still staggering. 16 Tons – Another Day Older and Deeper In Debt!