And The First One Now Will Later Be Last!                                                22 April 2022

For the past week, ending 22 April 2022, Dubai Land Department recorded a total of 2,145 real estate and properties transactions, with a gross value of US$ 1.72 billion. A total of 225 plots were sold for US$ 305 million, with 1,436 apartments and villas selling for US$ 872 million. The two top transaction sales were for two plots of land – one in Hadaeq Sheikh Mohammed Bin Rashid for US$ 26 million, and another sold for US$ 14 million in Palm Jumeirah. The three leading locations for sales transactions were Al Hebiah Fifth with 114 sales worth US$ 69 million, followed by Jabal Ali First, with 33 sales transactions worth US$ 39 million, and Wadi Al Safa 5, with 11 sales transactions worth US$ 13 million. The top three apartment sales were an apartment sold for US$ 126 million in Marsa Dubai, another for US$ 96 million in Burj Khalifa, and third at US$ 77 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 474 billion, with the highest being for a plot of land in Nad Al Shiba Third, mortgaged for US$ 47 million.

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Latest figures from March’s ValuStrat Price Index reported property prices surging 18.8%, year-on-year, and 1.2% month-on-month. When split between villas/townhouses and apartments, the profits were up 34.1% and 2.1% and 8.4% and 0.4% for apartments respectively.  In the villa sector, the four leading locations, with the highest price rises, were Jumeirah Islands (40.3%), Arabian Ranches (40.3%), The Lakes (37.1%) and Jumeirah Village (35.5%). Some areas such as Mudon and Green Community West, performed better and recorded above average price growth of 0.5% and 0.8%, respectively. The index, which measures Dubai’s residential capital value performance, also reported that the leading locations for apartment price rises were Palm Jumeirah (21.9%), Jumeirah Beach Residence (16.0%), Burj Khalifa (15.3%), The Views (10.9 per cent), and The Greens (9.7%). The study also noted that “the villa capital values index reached 94.1 points last month, just 5.9 points below the price index base of January 2014.’ as the weighted average capital value for villas grew 6.3% quarterly and 34.1% annually. Meanwhile apartment capital values index reached 69.5 points in March, 30.5 lower than the price index base of January 2014. As Dubai’s global popularity grows, there is no doubt that Dubai’s property sector will benefit from the fact that its property prices are very cheap, when compared to those of their international rivals. The outlook for both segments remains positive, with villa prices moving faster and are expected to cross 2014 peak levels by the end of 2022.

CBRE noted that Dubai’s total Q1 transaction volumes reached 19k, the highest ever recorded in any first quarter of the year. Total transactions volumes recorded 75.1%, year-on-year growth, with off-plan and ready transactions increasing by 114.9% and 52.9% respectively. Secondary market transactions accounted for 56.1% of total transactions, with off-plan transactions accounting for the 43.9% balance, but that 68.6% of total Q1 sales were initial sales from the developer, and 31.4% of sales were for subsequent sales of properties. Over the remainder of 2022, an additional 42k units are expected to be completed to meet rising demand for residential units.

According to Luxhabitat Sotheby – utilising data from the Dubai Land Department – Dubai luxury property prices dipped 6.0% in Q1, with an average price of prime property at US$ 1.23 million. In this sector, it estimated that 5.3k apartments and 742 villas were sold, with the three leading locations, in terms of sales volume, being Mohammed Bin Rashid City at US$ 869 million, Palm Jumeirah at US$ 845 million and Downtown Dubai at US$ 708 million. In the prime residential market, the Jumeirah Islands area sales more than doubled to US$ 55 million, followed by Mohammed Bin Rashid City and Al Barari. During Q1, there was a 32.3%, quarter on quarter, jump in the prime villa market, with total sales of US$ 1.12 billion at an average villa price of US$ 2.89 million. The most popular areas for villa transactions in Q1 were Mohammed bin Rashid City, followed by Palm Jumeirah and Emirates Living. Sales volume of apartments decreased by 10% to US$ 2.97 billion with the average prime apartment selling at US$ 654k, equating to an average price of US$ 390 per sq ft. The three most popular ‘apartment areas’ were Downtown Dubai, Business Bay and Palm Jumeirah. The top six villa transactions in Q1 were Palm Jumeirah – Frond N (US$ 76 million), Jumeirah Bay Island (US$ 24 million), Palm Jumeirah Frond J (US$ 24 million), Emirates Hills – Sector L (US$ 20 million), Burj Khalifa apartment (US$ 20 million) and Business Bay Dorchester Collection (US$ 19 million).

Having invested US$ 272 million in a plot of land in Dubai South, and signing an exclusive agreement with the local authority, Discovery Land is planning to build an ultra-luxury golf community. The US-based developer indicated that the project will consist of a two sq mt golf community with mansions, villas, an 18-hole golf course and other premier amenities. This will become the fifth golf community in the emirate, following Emirates Hills, Arabian ranches Jumeirah Golf Estates and Dubai Hills.

Launched in 2006, Dubai South was planned to be an emerging 145 sq km, master-planned city which also includes Al Maktoum International Airport and the Expo 2020 site, which is currently being transformed into District 2020. This will become the country’s first fifteen-minute city, a cycle-friendly, traffic-free suburb of the growing metropolis, and will include an autonomous-vehicle route, a 10 km cycling track, interconnected, wide pedestrian pathways and a 5 km jogging track. The former Expo village will house fifteen mid-rise residential buildings, in four clusters, which will open “in different phases between now and October”.

HH Sheikh bin Mohammed announced further changes in the government’s residency visa law, making it easier, for skilled professionals, earning more than US$ 100k a year, as well as those purchasing a property worth more than US$ 545k, to apply for a ten-year ‘Golden Visa’. Undoubtedly, Dubai property sector will be a beneficiary of the ten changes made this week, as the initial introduction of the scheme in 2020, (which saw 44k visas issued in Dubai), was one of the main drivers in the sector’s post-Covid bounce back.Most analysts agree that the new changes are a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in property buyers in both the residential and commercial sectors. Another change was that off-plan investors can also apply for residency, with buyers no longer restricted having to have a title deed of a ready property in hand.

The latest Knight Frank report indicates that, in Q1, Dubai office rents, in five out of the twenty-seven locations, have returned to pre-pandemic levels. The best performing location was Business Bay where rents were 33.0% higher, on the year, at US$ 28 per sq ft, with the major sector being technology business, many of which are set-ups, which seem to be filling in the space left by the likes of global international entities – professional services, banks and blue-chip companies – that have been shrinking their occupancy footprint in a move to hybrid working models. Average Grade A rents in the CBD were up 9.0%, year-on-year, to US$ 500 per sq mt per annum in Q1 2022; financial and technology firms remain the main drivers of demand for Grade A office space. There is no doubt that the local booming economy is helping growth in this sector – it is estimated that Q4 GDP growth came in at 7.8%. The Federal Competitiveness and Statistics Centre confirmed that the country’s non-oil sector contribution to the 2021 GDP equated to 72.3% – 1.0% higher than in 2020, and 3.8% at constant prices. The hotels & restaurants, wholesale & retail and health & social services sectors contributed 21.3%, 14.1% and 13.8% respectively. JLL’s Q1 2002 market review confirmed that the UAE’s hotel market performed strongly, driven by Expo 2020 Dubai and returning international visitors, with both upper-upscale and midscale hotels witnessing higher average daily rates.

This month saw Dubai’s population top the 3.5 million mark, according to Dubai Statistics Centre’s latest data and that despite the pandemic, it has increased by over 100k since 2020, driven, of late, by an influx of foreigners, especially the high net worth individuals. 69.2% of the population, 2.4 million, is male. The quicker than expected economic recovery has resulted in the labour-intensive industries, such as retail, hospitality, aviation, tourism and real estate increasing their payroll numbers. Despite the population continuing to grow, the DSC estimates the unemployment rate in Dubai stood at just 0.5%, resulting in the emirate having one of the world’s lowest unemployment rates.

With the NFT market booming, (with some exceptions as noted later), Emirates is hoping to cash in by planning to launch collectible and utility-based non-fungible tokens, with a launch expected in the coming months; it will also build brand experiences in the metaverse. Five years ago, Emirates Introduced Virtual Reality technology on its website and app, and last year, it became the first airline to launch its own VR app on the Oculus store, offering users cabin interior experiences on board the carrier’s A380 and Boeing 777-300ER aircraft. The airline’s chairman, Sheikh Ahmed bin Saeed, noted that “Dubai and the UAE are blazing the way in the digital economy, having a clear vision supported by practical policies and regulatory frameworks in areas such as virtual assets, artificial intelligence and data protection.”

With global trade picking up, the resultant higher volumes in the Asia Pacific – 1.2% up at 8.5k TEUs (twenty-foot equivalent units), Middle East, Europe and Africa (1.4% higher to 8.0k TEUs), and Americas regions, (up 4.0% to 2.8k TEUs) – pushed DP World’s gross container shipping volumes 1.7% higher in Q1 to 19.3 million TEUs. In Q1, the company signed two important deals in Africa – one acquiring South Africa’s Imperial Logistics, an integrated logistics and market access company, for US$ 890 million, and a preliminary agreement with the Angolan government to develop the country’s trade and logistics sector. DP World is “looking ahead, the near-term outlook is mixed given the geopolitical environment, but we remain positive on the medium to long-term fundamentals of the industry,”

This week, the Ministry of Finance, the Issuer, in collaboration with the Central Bank of the UAE, as the issuing and paying agent, launched conventional AED denominated Treasury Bonds of the Government of the UAE (T-Bonds), with a benchmark auction size of US$ 409 million; the first auction date is scheduled next month, followed by a raft of periodical auctions. Initially the securities will be in 2/3/5-year tenures; followed later by a ten-year bond. The main purpose for the issuance of T-Bonds is to assist in the building of a local currency bond market, diversifying financing resources, and boosting the local financial and banking sector. Apart from the issuance providing a pricing reference for other UAE markets (bond and equity), it enhances the ability to cover future funding needs in UAE dirham and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds (in local currency). It will also help in the development of a Dirham local market for securities issued by the public sector in the country.

Following the success of the initial fifty-dirham polymer note, enhanced by advanced technical characteristics and security features. the Central Bank of the UAE has launched two new banknotes, The ten-dirham banknote entered circulation yesterday 21 April and the five dirham note is out next Tuesday 26 April. Current banknotes of both denominations will remain in circulation, along with the new polymer notes which are more durable and sustainable which will last two or more times longer in circulation.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum issued Decrees No. (15) forming the Supreme Committee to Supervise the Expo 2020 Dubai District, and No. (16) of 2022 extending the terms of the Expo 2020 Dubai Preparatory Committee, and the Expo 2020 Dubai Bureau and its Director General by six months. The new Committee will be chaired by Sheikh Ahmed bin Saeed Al Maktoum, with members of the Supreme Committee to Supervise the Expo 2020 Dubai District being Mohammed Ibrahim Al Shaibani, Reem bint Ebrahim Al Hashimy, Abdul Rahman Saleh Al Saleh and Helal Saeed Al Marri. Their main roles and functions include general policy for the Expo 2020 Dubai District’s development and supervising the implementation, governance and development of all projects, initiatives, programmes and activities within the District. It will supervise the rehabilitation of the Expo 2020 Dubai District’s infrastructure and the provision of investment opportunities in the area in partnership with the private sector.

Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, chaired the second meeting of the year of the Board of Directors of the Federal Tax Authority (FTA) which adopted the FTA’s financial statements for 2021. It noted the number of VAT registrants grew 2.4%, on the quarter, to 367.2k by the end of Q1, with the number of Excise Tax registrants 3.0% higher at 1.4k, and the number of Tax Agents increasing 3.0% to 446.  It also discussed new applications from UAE citizens to recover VAT (that came in 56.1% higher in Q1 to over US$ 50 million), incurred on building their new residences. The FTA board also examined the progress made on developing the draft corporate tax law, due to be implemented in 2023. Sheikh Maktoum also commented that “the Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

In December 2021, there were increases in M1 M2 and M3 Money Supply by 2.3% to US$ 186.9 billion, 3.0% to US$ 425.9 billion and 1.5% to US$ 505.9 billion respectively. The rise in M1 was due to an AED 16.6 billion increase in Monetary Deposits, with the increase in M2 down to the rise in M1, and an US$ 8.2 billion uptick in Quasi-Monetary Deposits. Although Government Deposits shed US$ 5.3 billion, M3 headed north because of the increases seen in M1 and M2. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, to US$ 905.0 billion at the end of December 2021. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, US$ 905.0 billion. Gross credit increased by 0.3% to US$ 488.8 billion due to 0.1% and 2.6% increases in Domestic Credit and Foreign Credit, respectively. Total Bank Deposits increased by 1.5% to US$ 544.0 billion because of 1.6% and 0.6% rises in both Resident Deposits and Non-Resident Deposits.

Saeed Al Tayer, MD of Empower and Chief Executive of Dewa, confirmed that Dubai’s leading district cooling provider – a nineteen-year old JV between Dewa and Tecom Investments – will probably go public by the end of the year; it seems likely that Salik and Tecom Investments may be at the front of the queue.  The company, which has a 79.5% share of Dubai’s district cooling market, serving 1.4k residential, commercial, healthcare, hospitality, education, retail and entertainment buildings. Empower posted a 4.0% increase in its 2021 profit to US$ 255 million, driven by a 9.0% revenue growth to US$ 682 million, resulting in a US$ 136 million dividend.

According to its MD, Saeed Al Tayer, Dewa is set to announce its Q1 results next month and has recorded a “strong performance”, and that “Dewa has strong cash flows and will not need to take on debt … We have no issues for the next five years and we will not seek loans”. It expects 2022 profits to be in the region of US$ 2.0 billion. Based on today’s close of trading figures, the utility has a market value of US$ 39 billion. It has projects valued at US$ 23.4 billion over the next five years, that will help it meet the increase in demand for electricity and water as the emirate’s population continues to boom; last year alone, energy demand rose 11%, nearly triple the company’s estimates.

At this week’s AGM, Emaar shareholders approved the dividend distribution proposal from the board of directors representing 15% of the share capital, along with the board of directors’ 2021 report on the company’s activities and financial position and the auditor’s report. Last year, it recorded total revenue of US$ 7.7 billion, with an EBITDA of US$ 2.5 billion. In 2021, the company posted real estate sales of US$ 9.2 billion – its highest on record – and an impressive sales backlog totalling more than US$ 12.5 billion.

Emirates NBD posted an 18.0% hike in Q1 net profit to US$ 735 million, as revenue came in 3.0% higher at US$ 1.74 billion, driven by stronger non-interest income, 4.0% higher to US$ 1.17 billion and declining impairment allowances, by 20%, to US$ 381 million. Expenses rose 5.0%, year on year, to US$ 545 million, driven by staff costs, Dubai’s biggest lender by assets also recorded its customer loan balance was 1.0% higher at US$ 115.8 billion and deposits 2.0% higher at US$ 127.8 billion; total assets remained flat at US$ 189.1 billion. The bank raised its interest rate by 15bp because of a similar decision by the Central Bank of the UAE, following the Fed’s move last month; it is expected that rates could be raised five more times this year. Despite rates moving higher, it is felt that local lending growth is likely to accelerate, underpinned by the UAE’s economic growth.

Emirates Islamic recorded a 62% increase in net profit to US$ 93 million, driven by a 14% growth in income and a 72% improvement in provisions; operating expenses surged by 10% on the year. There were increases across the board, with operating profit 17% higher, total assets up 8% to US$ 19.1 billion, customer financing rising 66% to US$ 12.3 billion and customer deposits 9% to the good at US$ 14.0 billion.

The DFM opened on Monday, 18 April, 252 points (7.5%) up on the previous five weeks, moved 81 points (2.2%) higher to close on Friday 22 April, at 3,683. Emaar Properties, US$ 0.31 higher the previous seven weeks, nudged US$ 0.06 higher to US$ 1.72. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.03, US$ 1.71 and US$ 0.71 and closed on US$ 0.78, 4.14, US$ 1.71 and US$ 0.73. On 22 April, trading was at 115 million shares, with a value of US$ 83 million, compared to 170 million shares, with a value of US$ 142 million, on 15 April 2022.

By Friday 22 April 2022, Brent, US$ 12.28 (3.4%) higher the previous fortnight, had shed US$ 9.95 (8.9%), to close on US$ 111.70. Gold, US$ 48 (2.5%) higher the previous fortnight, lost most of that gain, losing US$ 42 (2.1%), to close Friday 22 April on US$ 1,933.

Yesterday, Elon Musk confirmed that he has secured a funding commitment of US$ 46.5 billion to finance his bid to buy Twitter, of which US$ 33.5 billion has been personally committed by means of US$ 21 billion of equity and another US$ 12.5 billion coming from margin loans Furthermore, banks, including Morgan Stanley and “certain other financial institutions”, have committed to offer a further US$ 13 billion in debt secured against Twitter. Last week the Tesla founder offered to buy Twitter for US$ 43 billion.

Tesla shares jumped 5.2%, to US$ 1,028, when the electric vehicle maker posted a record US$ 3.3 billion Q1 profit, driven by an increased delivery of cars, despite Covid-induced supply disruptions and a global shortage of semiconductors; the profit figure dwarfed the 2021 comparative figure of US$ 500 million. This is the eleventh straight profitable quarter and the fourth consecutive three-month period with more than US$ 1 billion profit. Revenue was 81% higher at US$ 18.7 billion and a record 310k vehicles were delivered – 68% up on an annual basis; of that total, 295k were either Model 3 or Model Y, with the 15k balance being its more expensive Model S and Model Y. Tesla commented that  its cash and cash equivalents “increased sequentially by US$ 300 million to US$ 18 billion”, driven mainly by free cash flow of US$ 2.2 billion, partly offset by debt repayments of US$ 2.1 billion, with its total debt of less than US$ 100 million, excluding vehicle and energy product financing. It has ambitious expectations and is looking at a 50% average annual growth in vehicle deliveries, although they could be scuppered by external factors such as continuing supply chain problems, chip shortages and further lockdowns.

With French prosecutors investigating claims that fugitive former head of Nissan, Carlos Ghosn, had syphoned millions of euros from Renault through Suhail Bahwan Automobiles., there was no surprise to hear that French authorities have eventually issued an international warrant for his arrest. Ghosn fled Japan in 2019, when facing charges for financial misconduct and is now holed up in Lebanon from where he is unable to leave, as he is the subject of an Interpol Red Notice issued by Japan. It is thought that he would prefer a trial in Lebanon, on any charges brought against him by the French and Japanese courts – and was “totally confident” he could prove his innocence.

Having reported a Q1 loss of 200k subscribers, (against its forecast of a 2.5 million growth in numbers), and quarterly profit down 6.4% to US$ 1.5 billion, Netflix share value plunged 35%, and lost more than US$ 50 billion off its market value, in after-hours trading on Tuesday, making it the worst performer in the S&P 500 this year; YTD, the stock is down 62%. This was the first time in over a decade that the global streaming giant reported losing subscribers, whilst it predicted more contraction in Q2. The Ukraine crisis has seen it suspend service in Russia, resulting in a loss of 700k members. Netflix attributed some of the declineto “relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds;” it also noted that other drivers included various macro-economic factors such as sluggish economic growth, increasing inflation, geopolitical events and some continued disruption from the Covid-19 pandemic have affected its growth. Its global paid subscribers stood at 221.64 million at the end of Q1, with the company forecasting a Q2 1% fall in numbers to 219.6 million. It also announced the purchase of Helsinki-based gaming company Next Games. It does indeed face a major struggle to get back on track.

Bill Ackman’s Pershing Square Capital Management, one of the company’s twenty largest shareholders, has ditched his stake in troubled Netflix. The US billionaire investor and hedge fund manager disclosed that, in January, his firm had acquired a US$ 1.1 billion stake in Netflix, just after it had fallen 30% following a disappointing Q1 outlook. At the time, he praised Netflix’s “best-in-class management team” and said he long admired Netflix CEO Reed Hastings and the “remarkable company he and his team have built.” It is estimated that this investment, comprising 3.1 million shares, has lost him US$ 430 million in less than three months.

It is reported that Next has acquired a 46% stake in baby goods retailer JoJo Maman Bebe, with the majority 56% taken by companies managed or advised by hedge fund Davidson Kempner.  Its founder, Laura Tenison, will leave the business that she founded nearly thirty years ago. No financial details were made available but there will be no immediate job losses at the retailer, with 950 employees, which has eighty-seven brick-and-mortar shops across the UK. Next will also spend US$ 21 million in the brand, using its own cash, and plans to keep the JoJo brand distinct and grow the business globally using its online shopping infrastructure.

Workers at Apple’s Grand Central Station store in New York could become the first union at one of the tech giant’s US stores – and if successful it will follow the “union trend” started by Starbucks and Amazon. To qualify for a union election, the so-called Fruit Stand Workers United need to obtain signatures of support from 30% of colleagues at the store to qualify for a union election. The group is looking at a US$ 30 minimum hourly wage for all workers, additional holiday time and information on more robust safety protocols at the Grand Central location. Employees working in at least three other Apple stores are also attempting to organise a union.

Last year, Sina Estavi, invested US$ 2.9 million when purchasing a non-fungible token of the first tweet posted on Twitter by co-founder Jack Dorsey. Last month, the Malaysian entrepreneur decided he would sell the NFT, (and was expecting to receive at least US$ 25 million for the sale), with half of the proceeds earmarked for the charity GiveDirectly. By the beginning of the week the highest bid was at 10.1 Ether, equal to about US$ 29k.

In Australia, global hotel booking giant Trivago has been fined US$ 33 million (AUD $45 million), plus legal costs, for misleading customers with advertising that claimed it made it easy to find “the best price” for rooms. The case was brought against the company by the Australian Competition and Consumer Commission, which was pushing for a penalty twice that amount. It was estimated that consumers, who have yet to receive any compensation to date, lost around US$ 22 million. The Federal Court found the company had breached Australian Consumer Law over a “lengthy period of time”, and noted that “the television advertising conducted by Trivago during the early part of the relevant period was highly misleading,” It was noted that the firm did not make clear that it was being paid by the online booking sites and that more often or not the hotels listed at the top of the search results were not the best or cheapest deal., with Trivago promoting hotels that paid it the biggest fees.

Laying the blame at the doors of Covid lockdowns in China, shortages of materials and sky-high shipping costs, Appliances Direct warned that even though the prices of fridges, freezers and dishwashers are up by a third since last year, they are set to climb higher, as wholesale prices have jumped a further 9% in Q1.The company also noted that the cost of shipping  a fridge used to cost US$ 16, with a six-month lead time; now the cost has skyrocketed to US$ 104, with a led time of up to fourteen months. The sector does not see any improvement over the rest of the year and that factors such as shipping costs, material input prices and consumer price will continue to push prices higher, with consumer spending set to decline. Indeed, the price comparison site, Price Runner, found that prices of white goods and gadgets had soared by nearly 50% in just two years.

Not helped by yet another lockdown – this time in Shanghai – China’s March consumer spending fell, (with retail sales down 3.5% on the year), and unemployment rose, to 5.8%, (the highest level since May 2020), as Covid lockdowns confined millions of people to their homes. Meanwhile, the Q1 country’s economy grew at a faster pace than expected, with GDP up by 4.8%, compared to a year earlier. The impact of the latest lockdown measures, which started in mid-March, was initially limited but will result in a significant drag on economic growth for at least the next three months, not helped by the war in Ukraine. Analysts estimate that technology, industrial and automobile supply chains “will come to a complete halt” if Shanghai does not resume production by early May.  It is safe to report that some of the city’s residents are not happy with the situation.

Since the start of the Ukraine war, the EU has paid US$ 37.8 billion for Russian energy but any embargo on oil and gas seems a long way off, at a time when European ministers have been discussing a potential sixth round of sanctions against Russia; last year, the EU imported roughly 40% of its gas and 25% of its oil from Russia. The countries that would suffer most from a full embargo would be Germany, Italy, Austria and Hungary in particular, with their dependence on Russian gas – one thing is certain is that the EU will not throw Germany under the bus. Ukraine’s President Zelenskyy has urged the EU to impose sanctions on Russian oil and to set a deadline for ending gas imports from the country, but in reality, this is some time off. What seems likely is that coal may be banned by the end of Q3.

With pressure mounting at home, Prime Minister Boris Johnson may have found some relief in his two-day visit to India where he met with Narendra Modi to discuss a free trade deal. In recent weeks, the Indian government has signed such deals with both the UAE and Australia. However, there is every chance that this will take time and much discussion between the two parties but if it comes to fruition, it could double total trade between the UK and India to US$ 73 billion by 2035. Strangely, it seems that the UK currently sells less to India, with a population of 1.4 billion, than it does to Belgium and its 11.5 million people. Bargaining chips will include the likes of the UK wanting increased access to India’s manufacturing and services sector, areas in which India has traditionally resisted foreign involvement, as well as doing away with the protection that trade barriers have provided for Indian industries and workers. On the other side, there may be more Indian visas being allowed for Indian workers and pressure to allow Indian products, such as medicines into its market. If a free deal went through, two UK industries would benefit – Scotch whiskey, which currently attracts a 150% tariff – and the motor vehicle makers, as foreign cars attract tariffs of up to 100%. A trade deal with India would add just 0.2% to the UK’s GDP – and that’s over the course of a decade, and only if there is a substantial reduction in trade barriers. Is it worth all the bother?

As the rise in the cost of living begins to hit home in the UK, March retail sales dropped 1.4%, with online sales falling sharply, as consumers cut back on non-essentials because of lower levels of discretionary spending, and fuel sales were reduced, as people cut travel amid record petrol prices. Food sales dipped for the fifth consecutive month, as rises across the board have seen inflation rising above 7.0% and at its highest level in over thirty years. It is to be noted that although the current Ukraine crisis is a major inflationary driver, energy and fuel prices had been rising even before the onset of the war. The situation is likely to worsen, as the data was collected before April’s 54% hike in gas and electricity bills and the fact that consumer confidence continues to tank – now at its lowest level in fourteen years and the GFC.

Known for constantly changing its economic forecasts, the IMF has lowered its 2022 forecast from its January’s estimated 4.4% to its much amended 3.6%, driven by the triple whammy of surging inflation, war in Ukraine and a lingering pandemic. (The World Bank also said it was lowering its growth forecast from 4.1% to 3.2%). Global inflation pressures continue unabated and most central banks have been behind the eight ball for too long and future drastic action could weigh down on output and economic activity. Inflation is higher in most countries and is expected to persist longer; there is the possibility of social unrest as energy and food prices head inexorably higher. Meanwhile the Ukraine crisis, (which will see  the embattled nation hit with a massive 35% contraction this year), has led to increasing energy and commodity prices around the world and is resulting in less output and more inflation. On top of this comes yet another slowdown of the Chinese economy with more frequent lockdowns due to Omicron, with the latest being Shanghai in lock down further exacerbating the ongoing supply chain problems.

The IMF has not only cut global forecasts but has also cut that for the UK by 1.0% to 3.7% this year, noting that the war in Ukraine will “severely set back” the global economic recovery, with the UK hit harder than most.; a direct consequence of the conflict is that prices for energy and food have moved markedly higher. In 2021, the IMF placed the UK as the fastest growing G7 economy – a year later it is marked as the second fastest growing economy, whilst in 2023, it is slated to be the slowest growing member of the G7, at 1.2%, (down from the initial 2.3%), driven by price pressures forcing households to cut spending, while rising interest rates are expected to “cool investment”. Although part of the reason was that the UK rebounded quicker from the pandemic than its G7 peers, a bigger problem seems to be the fact that inflation could top 9% later this year – don’t forget that the BoE still had a 2.0% target as late as last month. UK inflation is expected to be 5.3% next year – the highest in the G7, and higher than all EU members, and only exceeded in the G20 by crisis-ridden Argentina, Turkey and Russia. Another dampener for consumer confidence is the inevitable rise of interest rates that will slow economic progress in the UK. Sixty-one years later, Bob Dylan’s words come to mind – And The First One Now Will Later Be Last!