Black Swan                                                                          23 August 2024

In July, the top three developers in the off-plan market were Emaar Properties, Danube Properties and Sobha Group, with 23.0%, (2.08k transactions), 6.9%, (0.27k transactions), and 6.5%. ValuStrat noted that Emaar (20.3%), Damac (7.2%), Danube (5.2%) and Nakheel (4.8%) led the sales charts overall last month. In H1, Dubai posted delivery of 12.90k apartments and 3.93k villas; it is estimated that a further 20k apartments and 5k villas in H2.

Properties with a value of over US$ 545k continue to see significant demand in 2024 from investors and end-users looking for the ten-year Golden Visa. Property investors looking for long-term residency in the UAE are required to buy assets worth US$ 545k or more and this is but one reason why such a property sector has seen a 30% hike in H1. According to Property Monitor, properties valued at below US$ 272k (AED 1 million) account for 29.6% of the market, between US$ 272k – US$ 817k, 48.5%, and over US$ 817k – 21.9%; July prices were down 1.0%, up 4.2% and down 3.2% respectively.

Cushman and Wakefield Core expects that the emirate’s office market will remain under-supplied until 2027-28, which is not good news for new tenants who will be facing higher rents. They have noted several new launches to cater for the increased demand, especially in the Grade-A office space category, including Immersive Tower in DIFC, offices in D3 Phase 2, and the mixed-use development by Aldar on SZR. Furthermore, multiple developments are under discussion in DIFC. However, these will only become available in 2027, at the earliest. There is no doubt that Dubai is the prime location in the region for many international firms, with the usual array of advantages such as security, lifestyle, safety, zero personal tax, location as a global hub, excellent infrastructure, progressive government and a positive environment.

Asteco reports that 0.37 million sq ft of office space was added in Q2, with a similar amount expected to be added in H2. Meanwhile, Cushman & Wakefield Core posted that, in Q2, around 260k sq ft of gross leasable area was released to the market in Dubai CommerCity. Over 1.63 million sq ft is expected to be handed over in H2, mainly from Expo City Dubai, Innovation Hub in Dubai Internet City, office component in Wasl Tower, and Millennium Plaza Downtown (renovated Crowne Plaza), both on SZR. Much of the development work is to be found in central areas – such as DIFC and SZR – followed by JLT, Expo City and the Tecom free zones. Of the new stock coming online, 78% will be located in the free zones, with the remaining 22% in on-shore areas. City-wide office occupancy topped a record 90%, with Grade A offices at 93% and expected to increase further. In terms of average rentals, Asteco revealed that Bur Dubai, Jumeirah Lake Tower, Barsha Heights (Tecom), Business Bay, SZR and DIFC were the most expensive areas. According to Cushman & Wakefield Core, the three areas showing the biggest rental growth, post pandemic, are Business Bay, JLT and SZR with increases of 160%, 153% and 121% primarily down to a significantly lower rental base and occupancy rate.

Dubai Land Department has signed an agreement, with seven of Dubai’s leading developers – Emaar Properties, Damac, Binghatti Properties, Aldar Properties, Sobha Realty, Azizi Developments and Danube Properties. Whilst empowering developers and substantially increasing the registration capacity, this deal will result in them utilising its registration system to manage all real estate transactions. Furthermore, the authority has given them complete authority to use the systems to register and audit all real estate transactions for both developers and investors. Majid Al Marri, CEO of the Real Estate Registration Sector at DLD said this agreement will provide “greater protection for investor rights and expedite and simplify procedures” as well as ensure transparency in the sector. The authority also noted that it will improve its supervision and regulation by tracking all transactions.

Following inspections carried out by its partners, Dubai Land Department has banned ten property owners from leasing their properties, due to overcrowding and safety standards. The pertinent property owners will be unable to let their property until their status is resolved and they comply with the regulations. DLD has urged property owners and tenants to comply with laws and regulations to avoid any violations.

In a strategic move, Dubai-based Meteora Developers has announced the multi-million dollar acquisition deal of Maisour, a DIFC-based property crowdfunding platform. Maisour had introduced a model of digital fractional ownership, so that an investment of US$ 136, (AED 500) could allow people from around the world to invest in Dubai properties. This acquisition aligns with both companies’ visions to democratise real estate investment and capitalise on Dubai’s booming property market. It will allow the developer to integrate its expertise in the real estate market with Maisour’s tech-driven platform, offering a broader and more diverse range of real estate investment opportunities. With Meteora’s support, Maisour will be able to rapidly scale and introduce new features such as a secondary market, AI-driven reinvestment strategies, and even explore expansion into other regional markets like Saudi Arabia, Egypt, India, and Pakistan.

In H1, Dubai World Trade Centre Authority Free Zone posted a 21.1% surge in the number of new tenants to 2.74k, whilst the number of registered companies in DWTCA also rose by 19.1% to 2.82k. Over the period, the number of direct jobs within the free zone also grew 4.9% to 8.22k, whilst it officially extended its Free Zone jurisdiction to include the Investment Corporation of Dubai’s One Za’abeel. The many advantages afforded entities in the freezone include 100% foreign ownership, exemption from customs duties, dual-licensing opportunities, zero Corporate Tax, and simplified procedures for visas and permits.

At this week’s meeting of the Emirati Talent Competitiveness Council, also known as Nafis, it was announced that the number of Emiratis working in the private sector has now reached 113k. When the organisation was set up almost three years ago, in September 2021, there were 32k Emiratis working in the private sector; one of its current main aims is to see that by 2026, “locals” account for 10% of skilled private sector jobs. Under the initial nationwide Emiratisation scheme, companies must increase their Emirati workforce by 1% every six months, and employers, with at least fifty members of staff, must have at least one citizen on the payroll; over the next three years, the requirement will be that in 2024, 2025 and 2026, the rate will be 6%, 8% and 10% of the total workforce.  Last year, the government directed that businesses employing between twenty and forty-nine staff must have at least one Emirati staff member by the end of 2024, and two by the end of 2025. Last March the federal government approved a US$ 1.74 billion budget to boost Emiratisation in the private sector.

H2 has witnessed a significant boost for local businesses, as the Mohammed Bin Rashid Establishment for Small and Medium Enterprises Development (Dubai SME), has greatly expanded its support for entrepreneurs in H1. Since its launch in 2002, Dubai SME has provided guidance and training services to 48.92k entrepreneurs and mentoring services to 51.50k Emirati entrepreneurs, as well as having supported the creation of 18.43k local enterprises. During H1, it  provided guidance and training to 2.71k entrepreneurs – a 164% increase on the year – whilst there has been an impressive 190% surge to 1.37k Emirati entrepreneurs benefitting from mentoring services; in the six-month period, it supported the establishment of almost 2k new enterprises in H1 – a 57% increase from last year. It has also doubled its financial support, to US$ 5 million, over the period, and has assisted members in securing contracts worth US$ 106 million, from both the public and private sectors, bringing the total contract value since its inception to US$ 3.08 billion. It also has sixteen partnerships with private sector entities, having added four more in H1. The Hamdan Innovation Incubator (Hi2) also continued to support technological innovation, assisting one hundred and nine Emirati tech startups, and expanding its network to twenty-three incubators.

Under the patronage of HH Sheikh Mohammed bin Rashid, Dubai is to host the tenth edition of the annual World Free Zones Organisation World Congress at Madinat Jumeirah from 23-25 September, under the theme ‘Zones and the Shifting Global Economic Structures – Unlocking New Investment Avenues’; the emirate hosted the event last year and this will be the fifth time since its inception. The event is expected to welcome over 2k global and regional business leaders, free zone officials, and a diverse group of experts, specialists, and decision-makers in the free zone, logistics services, and multilateral organisation sectors; the organisation’s main aim is to promote growth and prosperity for global economies through the free zone model. Economic zones are responsible for more than a third of global trade flows.

It is reported that part of TECOM’s strategy of investing US$ 470 million to acquire commercial and industrial assets has been carried out. The plan raises the Group’s portfolio of high-quality commercial assets to exceed ten million sq ft of gross leasable area and its land leasing portfolio to one hundred and seventy-nine million sq ft. It will also develop premium Grade-A office spaces, worth US$ 93 million, at Dubai Internet City, with the launch of Innovation Hub Phase 3, bringing the total value of the Group’s 2024 investments to more than US$ 618 million. It has also started developing six Grade-A office buildings within Phase 2 of Dubai Design District (d3), with a gross floor area of 629k sq ft, and a US$ 255 million investment. It has also spent US$ 114 million for two operational Grade-A office buildings at Dubai Internet City, which has added 334k sq ft of GLA to its commercial portfolio. It now has a land bank encompassing 179 million sq ft, having invested US$ 112 million for 13.9 million sq ft for industrial leasing at Dubai Industrial City

Data indicates that by the end of H1, the number of active Chinese companies, registered with the Dubai Chamber of Commerce, had risen about 16% to 5.4k, and that Dubai-based Emirati companies had invested a total of US$ 1.4 billion in the Chinese market in the nine years to 2023.  Its President, Mohammad Ali Rashed Lootah, commented that these entities are expanding their presence in China, driven by enhanced trade exchanges and the growing potential for mutual investments between the UAE and China. He noted that “both nations are working closely to boost cooperation across various sectors, particularly in the new economy, technology, entrepreneurship, tourism, small and medium enterprises, energy, renewable energy, agriculture, aviation, logistics, infrastructure, and industry”. He also added that the Dubai Business Forum held in China was the first international edition of this forum, which highlights Dubai’s role in offering attractive investment opportunities to Chinese companies and fostering stronger economic ties between the two sides.

‘Brands for Less’ has divested 35% of its shares to TJX Companies for US$ 360 million, valuing the local off-price retail business at over US$ 1.0 billion. The new US partner is a global value seller of clothing and home fashions and will enable BFL, which already services seven markets in the region, to leverage TJX’s extensive international experience and market presence across the US, Canada, Europe and Australia, with over 4.9k outlets in nine countries. The first store was opened in Lebanon by Toufic Kreidieh and Yasser Beydoun in 1996, before moving its headquarters to Dubai four years later – now it has more than one hundred stores selling designer brands, homeware and toys at up to 80% off the original retail price. These goods typically consist of surplus inventory, clearance items or production overruns sourced from many retailers and manufacturers. A report by Coherent Market Insights estimates that the off-price retail market is expected to top US$ 342 billion this year, with projections to jump to US$ 606 billion by 2031.The group has also acquired exclusive rights to the Tchibo franchise in the MENA ,selling the German brand’s homeware and clothing at competitive prices in the region.

With a US$ 35 million investment, The British International Investment has joined forces with DP World to develop the initial phase of the Democratic Republic of Congo’s first deepwater container port, (the Port of Banana), making it a minority investor. This project is in line with similar bi-lateral arrangements in other African countries – including Somaliland, Egypt and Senegal – where BII, the UK government’s development finance arm, joins as a minority shareholder. This particular project will result in 85k new jobs, enable an additional US$ 1.12 billion in additional trade and cut the cost of trade in DRC by 12%. It will involve a 600 mt quay, with an 18 mt draft, capable of handling the largest vessels in operation and 450k units and is located along the country’s 37 km Atlantic coastline. Interestingly, the African continent is home to over 16% of the world’s population, but accounts for just 4% of global containerised shipping volumes.

The Central Bank of the UAE revoked the licence of Muthoot Exchange and struck its name off the register. The decision came pursuant to Article 137 (1) of the Decretal Federal Law No. (14) of 2018 regarding the Central Bank and Organisation of Financial Institutions and Activities, and its amendments. Following investigations, it was found that the exchange house failed to maintain its paid-up capital and equity to the level required by the applicable standards and regulations.

In an agreement with the DFM, eToro’s thirty-eight million registered users are now allowed to invest in ten listed companies – Dubai Electricity & Water Authority, Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development, Gulf Navigation Holding, Ajman Bank, Commercial Bank of Dubai, Salik, and Air Arabia. They are from different sectors, but all are considered to have among the highest market caps on the index – totalling some US$ 124 billion. The addition of DFM stocks onto the eToro platform has been facilitated by Dubai-based emerging markets specialist Arqaam Capital.

The DFM opened the week on Monday 19 August 39 points (0.9%) higher the previous week and gained 59 points (1.4%), to close the trading week on 4,293 by Friday 23 August 2024. Emaar Properties, US$ 0.16 lower the previous four weeks, gained US$ 0.05, closing on US$ 2.27 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 5.40, US$ 1.61 and US$ 0.34 and closed on US$ 0.66, US$ 5.38, US$ 1.66 and US$ 0.34. On 23 August, trading was at one hundred and thirty-one million shares, with a value of US$ 72 million, compared to eighty-one million shares, with a value of US$ 49 million, on 16 August.  

By Friday, 23 August 2024, Brent, US$ 2.67 higher (3.4%) the previous fortnight, shed US$ 0.75 (1.0%) to close on US$ 79.02. Gold, US$ 77 (3.2%) higher the previous week, gained US$ 38 (1.5%) to end the week’s trading at US$ 2,546 on 23 August 2024.

In response to what it claims to be “pricing and margin compression”, Ford has announced that it was scrapping plans for a large, three-row, all-electric SUV and postponing the launch of its next electric pickup truck – a sure indicator that growth in EV demand has slowed, leading to price wars and other pressures; it will also reduce capex dedicated to “pure” electric vehicles from 40% to 30%, which it is expecting  to cost US$ 1.9 billion in write-downs and new spending. The car maker will use the new schedule to take advantage of technological advances in batteries and other areas that are expected to lower costs and expand how far the cars can go without charging. Figures show how Ford had fared; in the first seven months of 2024, Ford sold more than 50k EVs – up more than 60% – but its electric business also lost nearly US$ 2.5 billion. Just a few years ago, it was aiming to produce more than two million vehicles by 2026. Like its main rival, GM, the EV maker had already confirmed it would scale back its investments and ambitions because of signs of weaker than expected consumer demand and enhanced preference for hybrids; in a bid to lower costs, it also plans to move some battery production to the US from Poland, thus allowing the firm to access government incentives from the Inflation Reduction Act.

Waitrose plans to invest US$ 1.31 billion to open one hundred new convenience shops, over the next five years, as it responds to changing consumer habits and demand; it currently has about forty-five Little Waitrose stores, which are largely located in the south of England. Some of the main reasons, behind this move to smaller outlets, include less robust planning, easier permission constraints, less affordability, with smaller outlets being cheaper and quicker to develop. Smaller outlets have also been introduced by Asda, (who revealed plans to open three hundred convenience stores over the next two years), with both retailers aiming to slow “gains” made by the discounters such as Aldi and Lidl. GlobalData predicts that online shopping will see a 6% increase in sales in 2024, and smaller stores may be at an advantage for rapid-delivery capabilities to expand.

Another bad week for embattled Boeing – following an inspection indicating the failure of a structure that mounts the GE engines to the 777X aircraft’s wings; it is suspending further testing, after a cracked thrust link was found on a 777-9 aircraft during routine maintenance. This is the latest setback to the new plane’s long-delayed programme, which is now running five years behind schedule. Boeing noted that “our team is replacing the part and capturing any learnings from the component and will resume flight testing when ready,” and that it would be keeping the Federal Aviation Administration “fully informed” on the issue and had shared information with its customers. The plane maker began flight tests with US aviation regulators on board in July. Both Emirates and Qatar have more than a passing interest because the former was expecting the first of their 205 Boeing 777X aircraft to enter service by 2026, after attaining full certification at the end of 2025; Qatar has an order book of ninety-four 777X planes, with sixty 777-9s on order. To make matters worse for Boeing, on Monday, the FAA issued an airworthiness directive requiring operators of Boeing 787 Dreamliners to inspect the aircraft’s cockpit seats, following reports that their inadvertent movement had disrupted flights.

Boeing’s manufacturing and supply chain problems, have had the expected negative impact for many of the local carriers. Flydubai has announced that it has had to cancel the launch of routes planned for H2 and reduce capacity on some others. Apart from there being no further route launches this year, after the carrier cancelled routes to Riga in Latvia, Tallinn in Estonia and Vilnius in Lithuania that were scheduled to start in October, it also temporarily suspended its flight schedule to Pisa in Italy from October 2024 to March 2025 to mitigate the impact on busy travel periods.

Last month, the all-Boeing fleet operator  commented that its growth plans had been “stunted”, after it received an update from the US manufacturer that it would not receive any more planes this year, creating a capacity shortage during a period of strong demand. Patience must be wearing thin at flydubai – last December it was told that twelve new planes would be delivered in 2024, (which included four that were delayed from 2023); in March, it received advice that only eight of the twelve would be delivered this year, only to be told last month it will not receive any additional aircraft beyond the four already delivered earlier in the year.

In what could be the country’s record foreign takeover., Canada’s Circle K owner, Alimentation Couche-Tard, has made a US$ 38 billion bid for the Japanese-owned 7-Eleven; the offer price values 7-Eleven at 20% more than its pre-bid price on the Japanese stock market. If successful, ACT’s footprint in the US and Canada would more than double to more than 22k sites.  On a global scale, the Japanese company has 85k outlets and the potential buyer 17k. ACT commented that “the company is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders”. Meanwhile, Tokyo-based Seven & i Holdings, which owns 7-Eleven, said it had formed a special committee to consider the offer, having confirmed it had “received a confidential, non-binding and preliminary proposal by ACT to acquire all [of its] outstanding shares”. In 1974, 7-Eleven was introduced to the Japanese market from the US, by retail tycoon Masatoshi Ito. Quebec-based ACT is listed on the Toronto Stock Exchange and is valued at US$ 58.2 billion.

McDonald’s plans to open over two hundred “Drive-to” restaurants across the UK and Ireland over the next four years in a US$ 1.31 billion expansion drive that will enhance its footprint by 10% to 1.7k sites  in the UK and Ireland; they will not have a drive-in facility but will have a car park and a small seating area – with “other smaller formats” being tested as part of the new offer. The company has had several problems lately, that have eaten into margins, including boycotts arising in response to the Israel-Gaza conflict, (and its perceived support for Israel), pulling out of Russia after its invasion of Ukraine, and a recent BBC investigation over a culture of sexual abuse and harassment. It seems that expanding its UK base market because it is considered a “stable” market. McDonald’s pointed to a “renewed focus” on High Street restaurants and estimated that this expansion will create 24k new jobs. These moves come at a time when High Street rents have almost collapsed due to a swag of eateries closing, so that rents are comparatively low, allied with an apparent recovering economy and lower interest rates on the horizon. Furthermore, Meaningful Vision, which tracks the sector, indicated that fast food promotions have risen by 33% on the year.

There are reports that Hobbycraft may be sold to Modella Capital – a specialist investor whose executives have backed chains including Paperchase and Tie Rack; Modella is affiliated to the turnaround firm Rcapital, a former owner of Little Chef. One of Britain’s leading arts and crafts retailers, Hobbycraft, founded in 1995 and owned by Bridgepoint since 2010, has more than eighty-five stores. Financial arrangements have yet to be made public.

Modella also has interests in a number of other investments including No Ordinary Designer Label, the licensing partner of Ted Baker in the UK, which went into administration earlier this year. This week, the retailer’s remaining thirty-one stores have closed, with the possibility of five hundred retrenchments.

Shein has been in the news for a variety of reasons including the use of child labour. Since it is now readying itself for an IPO, and wants no negative publicity to negate the process, the fast fashion retailer has stepped up audits of manufacturers in China. It reports that it found only two cases and took immediate action, suspending orders from the guilty suppliers and only restating business with them after they had strengthened their processes, including checking workers’ identity documents. Shein also added that both cases had been “resolved swiftly”, with remediation steps, including ending underage employees’ contracts, arranging medical checkups, and facilitating repatriation to parents or guardians as necessary. Last October, the retailer also introduced an “Immediate Termination Violations” supplier policy meaning that any severe breaches would result in the business relationship being terminated immediately – previously thirty days’ notice to resolve the problem was given.

July saw Chinese youth unemployment, (those between sixteen and twenty-four), move 3.9% higher on the month, to 17.1% – the second highest monthly return in 2024. This is but one major obstacle that the economy is facing, along with a heavily indebted property sector and intensifying trade issues with the West. Premier Li Qiang, who is responsible for economic policy, called for struggling companies to be “heard” and “their difficulties truly addressed”. Earlier in May, he stated that countering youth unemployment must be regarded as a “top priority”. After this index, which only measures statistics in urban areas, had peaked at 21.3% in June 2023, the authorities suspended publication of the figures and later changed their methodology to exclude students – one year later, in June 2024, twelve million students graduated most of whom will be looking for jobs. In the next bracket, (twenty-five – twenty-nine), the unemployment rate was 0.1% higher on the month to 6.4% and for the total workforce – 5.2%. These figures come on the back of earlier disappointing returns – including industrial production at 5.1%, (down from June’s 5.3%), a further decline in real estate prices and demand for bank loans contracting for the first time in twenty years. To make matters even worse for the economy, there are increasing tariffs being applied by the US and the EU to protect their markets from low-cost Chinese products and perceived unfair competition.

The latest figures from the Labor Department indicated that the number of initial claims for state unemployment benefits rose 4k to a seasonally adjusted 232k for the week ended 17 August. The figures show that the economy is slowing, along with a levelling off of filing new applications for unemployment benefits and a gradual cooling of the US labour market that should set the stage for the Federal Reserve to kick off interest rate cuts next month. July also saw the unemployment rate rise to a post-pandemic high of 4.3%, after the number of people receiving benefits, (after an initial week of aid), rose 4k to a seasonally adjusted 1.863 million during the week ending 10 August.

It seems inevitable that the Fed will move rates lower next month – the question is whether it will be 0.25% or 0.50%. Reports show that interest rates on home loans have already started to dip, resulting in a larger-than-expected rebound in July existing home sales. The S&P Global Composite PMI Output Index, which tracks the manufacturing and services sectors, is still at a healthy 54.1, (with any reading above 50 indicating expansion in the private sector). A slight pick-up in the services sector was outpaced by an easing in the manufacturing industry. In Q2, the GDP increased at 2.8%, compared to 1.4% the previous quarter. New orders received by private businesses nudged up 0.1 to 52.3 in July, whilst the measure of prices paid by businesses for inputs was unchanged at 58.0, but the survey’s gauge of prices charged slipped 0.3 to 52.8.

After four consecutive months of declines, US existing home sales rose 1.3% in July, (to a seasonal adjusted annual rate of 3.95 million units), attributable to improving supply and declining mortgage rates. Meanwhile, resales, which account for a large portion of US housing sales, declined 2.5% on the year, as the median existing home price rose 4.2% on the year to US$ 422.6k. Inventory rose 0.8% to 1.33 million units last month, with supply moving 19.8% higher compared to July 2023.

August’s HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, remained in negative territory slipping 0.6 to 49.1 on the month – any reading under 50.0 signifies contraction. The composite index tracks the services, (which dipped 1.1 to 51.4), and manufacturing (deep in negative territory, having fallen 1.1 to 42.1), sectors together account for more than 67% of the euro zone’s largest economy. The contagion fear is that the continuing weakening in the manufacturing sector is beginning to impact the services sector, and that Q3 may follow Q2 by registering an 0.1% GDP decline.

The number of firms in England and Wales going bust last month rose by 16%, year-on-year, according to official figures. Many businesses still have yet to recover fully from the impact of the pandemic, with the situation further exacerbated by continuing high inflation and borrowing costs; the latest figure for July showed 2.2k businesses went to the wall – 16% higher than the figure in July 2023, but only 7% lower on the month. Although the economy is moving in the right direction, growth is still at almost snail’s pace, and if the pace is not stepped up, an increasing number of businesses will be heading into insolvency.

The August preliminary “flash” estimate of the UK S&P Global Composite Purchasing Managers’ Index saw a monthly rise of 1.6 to 53.4, as business activity quickened, and cost pressures were the weakest in over three and a half years; this was its highest monthly reading since April. (Another indicator that Rishi Sunak may have jumped the gun, by calling an early election, just when the economy started to improve). The figures, which could indicate that Q3 GDP may hit 0.3%, were better than similar data posted in France and Germany figures and was a major factor in sterling rising to its highest level, against the greenback, in twelve months. However, the likelihood of another rate cut next month has diminished somewhat, but with services inflation cooling, inflation dropping, a further 0.5% to 4.5%, by the end of 2024, is on the cards. The PMI for the services sector, which dominates Britain’s economy, rose 0.8 to 53.3, whilst the manufacturing PMI was up 0.4 to 52.5 – its highest level since June 2022, as the sector added jobs at the fastest pace in more than two years.

On a visit to the Principality, Prime Minister Starmer Sir Keir Starmer has been in discussions to save jobs at Tata Steel’s Port Talbot plant but reiterated that he cannot give “false hope” to the steel workers ahead of the planned closure of the town’s last blast furnace next month. In true fashion, the PM claimed that he had “turbocharged” the party’s action on steel since he has been in power.  Both opposition parties seemed to disagree with Plain Cymru noting that Labour was on the “backfoot” in responding to Tata, with the Welsh Conservatives claiming that Labour ministers had led Port Talbot “up the garden path”. Since the closure was announced, at the beginning of the year, only minor changes have been made to the overall plan to cut 2.8k jobs and shut the heavy end of Port Talbot’s operation by the beginning of Q4.

Weeks after coming to power, the Starmer government has advised almost ten million pensioners that they will no longer get winter fuel payments to help them with bills, at the coldest time of year; in 2023, more than 11.3 million received the winter payment. Even though energy prices are now at their lowest for more than two years, they are still US$ 520 higher than they were in 2021. Now Chancellor Rachel Reeves has announced that from winter 2024, they will only go to pensioners who get pension credit or other means-tested benefits; the policy applies in England and Wales. Cornwall Insight has issued a report that it expects average annual energy prices to rise 9.3% to US$ 2,234 from October, noting that wholesale costs, paid by suppliers, had risen by about 20% over the past few months, and that this shows up in consumer bills, accounting for about 50% of what customers pay.

The Office for National Statistics confirmed July borrowing – the difference between spending and tax receipts – reached US$ 4.1 billion, (US$ 2.38  billion on the year); this was more than the market expected, and the highest July level since 2021. These figures could impact on whether the Chancellor will increase tax, reduce public service expenditure or borrow money in her autumn October Budget – Rachel Reeves faces some “tough choices”. Previously, she is on record saying that some taxes will be increased but has reconfirmed she would not raise VAT, national insurance or income tax. However, it seems that she will have no other option but to raise taxes and increase borrowing in the medium term to cover spending more on public services, with the latter presenting further problems on how any extra money is distributed between sectors such as the NHS, education, transport and security.

Early Monday morning, a luxury yacht sank off coast of the Italian island of Sicily, after encountering a heavy overnight storm that caused waterspouts; the 56 mt super yacht, Bayesian, was carrying twenty-two people.  Fifteen were rescued and brought to port but among the seven deceased were
British tech tycoon Mike Lynch and his eighteen-year-old daughter, Hannah. Only two months earlier, the man, known as the “British Bill Gates”, had finally been acquitted in a US court, after a ten-year battle to clear his name and escape what would have been a long incarceration in a US prison cell. Lynch had co-founded a UK software company Autonomy which was sold to US tech giant Hewlett-Packard for some US$ 11.0 billion in 2011; within eighteen months, that investment was written off by HP who accused Lynch of fraud and took legal action against him in the UK in 2019. Last year he was extradited to the US to face criminal charges.

The sinking of the yacht came on the same day that Mr Lynch’s co-defendant in the fraud case, Stephen Chamberlain, was confirmed by his lawyer as having died, after being hit by a car in Cambridgeshire on Saturday.  Some may hypothesise – was this something else or a strange coincidence or just a Black Swan?