Bite The Hand That Feeds You.                                                 11 October 2024

September’s ValuStrat Price Index posted that Dubai apartment and villa prices have risen at an annual rate of 24.8% and 33.1%. Its September index improved by 2.1% on the month, (compared to 2.2% in August), reaching 190.1 points.  Over the past twelve months, the valuation-based index – benchmarked at 100 points in January 2021 – was up by 28.9%; villas reached 243.2 points, while apartments recorded 155.4 points. Overall, positive gains were noted in monthly capital values of Dubai homes, albeit at a slower pace than posted in August.  Ready sales saw double digit growth, while off-plan registrations reached a record triple digit annual increase.

In the villa sector, monthly and annual capital gains were at 2.3% and 33.1%, with the best performing locations being Palm Jumeirah, Jumeirah Islands, Dubai Hills Estate and Emirates Hills – all higher on the year by 42.8%, 42.3%, 35.3% and 33.8% respectively. At the other end of the scale, but still making tidy gains, were Jumeirah Village Triangle and Mudon, with increases of 20.0% and 20.4%. Meanwhile, apartment prices came in 1.9% and 24.8% higher on a monthly and an annual basis, led by marked price jumps of 33.5%, 33.0%, 30.9% and 30.0% noted in Discovery Gardens, The Greens, Palm Jumeirah and Al Quoz. Least capital value gains were found in Jumeirah Beach Residence (17.6%) and Dubai Sports City (17.8%).

Almost 75% of Oqood (contract) registrations for off-plan homes grew 9.1% on the month and a record 254.2% on the year. The volume of ready secondary-home transactions also grew by 10.9% monthly and 19.0% annually. Last month, there were sixteen transactions for ready properties over US$ 8.17 million, (AED 30 million), situated in Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, Dubai Hills Estate, and District One. Five developers accounted for 48.8% of total sales – Emaar – 18.8%, Damac – 14.7%, Sobha – 7.4%, Azizi – 5.0%, and Binghatti – 2.9%. Top off-plan locations transacted included projects in Jumeirah Village Circle (8.5%), Damac Hills 2 (8.0%), Bu Kadra (6.9%), and Dubai Hills Estate (6.2%), whilst most ready homes sold were located in Jumeirah Village Circle (12.2%), Business Bay (5.2%), Dubai Marina (5.2%), and International City (3.4%). This month, Jumeirah Village Circle also broke its individual record with the highest number of ready homes traded in one month.

An Emirates NBD Research report indicates that Dubai is expected to see 110k residential units coming onto the market in the next fifteen months to December 2025; in the nine months to September 2024, 21.3k units have hit the market, with 25k under construction, and that 76k will be delivered next year. If these figures come to fruition, then that would certainly help to ease pressure in prices/rentals and greatly help to find some sort of equilibrium between supply and demand. This blog uses an apartment to villa ratio of 82:18; recent official figures show 2020 to 2023 figures at 581k:131k (712k), 618k:139k (757k), 639k:145k (784k) and 661k:152k (813k); these figures indicate that residential units have risen by 37k:8k (45k), 21k:6k (27k) and 22k:7k (29k) over the three years to 2023. That being the case, 2025 handover of 75k will begin to balance the supply/demand equilibrium, and start to stabilise prices, which many would hope to be the case!

Another assumption is that the average number of occupants in an apartment and a villa is 4.85 and 4.25 persons; this estimate also takes into account the fact that there will be up to 9% vacant properties for a variety of reasons, including Airbnb, second homes, semi-retirement renovations or just left empty. Today’s Dubai population stands at 3.788 million and taking the estimates above that would indicate that 3.205 million live in apartments, (661k * 4.85), and 646k live in villas (152k * 4.25) which equates to 3.851 million. YTD, the population has grown by 3.68% so it could likely expand 4.85% to 3.832 million by year-end.  In 2023, the number of apartments rose by 3.44% to 661k and villas by 4.82% to 152k; this figure could see residential units 5.66% higher at 859k, with apartments and villas up by 5.70% to 698.7k and 5.46% to 160.3k.                                         

MAG Lifestyle Development has announced the launch of MAG 777, a US$ 95 million, twenty-two storey residential tower located in Dubai Sports City. The project, which is already 60% complete, will comprise two hundred and sixty-one fully fitted studio, 1 B/R and 2 B/R apartments; handover is slated for Q4 2025. The entire twentieth floor will be a comprehensive health club featuring a large gym, yoga room, Pilates room, steam room, sauna, and a cold plunge room, whilst the rooftop will have an infinity pool, with lake views, a BBQ deck, and serene relaxation zones.

It is no secret that Dubai is a magnet for high-net worth individuals for a myriad of reasons including its tax advantages, strategic location, and political neutrality; this year, it is expected to welcome 6.7k millionaires. Furthermore, other benefits include its premium real estate, investor-friendly frameworks, large industrial goals, and a highly sought-after residence by investment initiative. With a projected net inflow of over 6.7k millionaires in 2024 – more than any other country in the world – the UAE will maintain its position as the number one destination, well ahead of second place USA’s 3.8k. The number of HNWIs in the UAE has surged by 55% over the past decade, reaching approximately 68k HNWIs last year.

A 50:50 JV between Abu Dhabi’s Aldar and Expo City Dubai will result in a six-building mixed-use residential, office, and retail project development, with a gross development value of more than US$ 477 million. It will encompass a combined gross floor area of 103k sq mt and Aldar will be responsible for the asset management of the development, once completed. The buildings are located beside Dubai Exhibition Centre, which is set for a US$ 2.72 billion expansion that will more than triple the exhibition space to 180k sq mt by 2031, making it the largest indoor exhibition and events destination in the region. There is no doubt that Aldar sees Dubai as a viable market, having already established a JV, with Dubai Holding, to develop prime residential communities, a partnership, with DP World, to build a landmark logistics park, and a planned development of a Grade A office building adjacent to the Dubai International Finance Centre.

To take advantage of Dubai’s current status, JP Morgan becomes the latest entrée to set up a Dubai base to serve a diverse clientele, including individuals, family offices, charities, and family foundations. In June, UBS said it was strengthening its wealth management team in the Middle East with ten new hires joining expansion efforts by other Western banks and Asian wealth managers including Deutsche Bank and Lombard Odier.

The largest ever budget in the history of the UAE was approved by the federal cabinet, chaired by HH Sheikh Mohammed bin Rashid; the balanced budget saw both revenue and expenses pegged at US$ 19.48 billion. Its approval is part of the multi-year financial plan (2022-2026). As in past years, the 2025 budget is allocated across key sectors, including Social Development and Pensions, Government Affairs, Infrastructure and Economic Affairs, and Financial Investments, alongside other federal expenses, representing 39.0%, 35.7%, 3.6%, 4.0% and 17.7% of the total 100% budget amount, and in monetary terms US$ 7.59 billion, US$ 6.97 billion, US$ 0.701 billion, US$ 0.780 billion and US$ 3.44 billion.

In advance of its much-awaited Airbus A350s joining the fleet, Emirates Airline has invested US$ 48 million in full suites of the latest equipment and systems to support both pilot and cabin crew training. The suites include three full flight simulators, integrated with innovative pilot support systems (PSS), a fixed base training device, a cabin emergency evacuation trainer and a door trainer. The airline’s first A350 full flight simulator received a level D qualification, the highest for this type of simulators, from the European Union Aviation Safety Agency. Currently, the airline has trained nearly thirty pilots, (with a further fifty by the end of next month), and eight hundred and twenty cabin crew. Emirates has sixty-five A350s in its order book.

Jebel Ali Free Zone was awarded five major accolades at the fDi Global Free Zones of the Year 2024 awards, including the top position in the overall ranking of free zones, as well as  the Industrial Zone of the Year and the Top Sustainable Zone in both global and ME categories.

Dubai’s Roads and Transport Authority has posted that its 2023 digital revenues were up by an annual 16.8% to US$ 1.00 billion, as the total number of digital transactions, conducted through RTA’s channels, nudged 1.0% higher to eight hundred and twenty-one million. There was a 29.0% expansion in transactions, via smart apps, to 15.299 million, and 20% growth in the number of registered users to 1.404 million; 3.056 million RTA apps were also installed during the year.

With the potential to boost economic growth by almost US$ 2.2 billion, Digital Dubai launched the “Dubai Cashless Strategy,” with a target to account for 90% of all transactions by 2026. Director-General of Digital Dubai, Hamad Obaid Al Mansoori, said, “cashless payments are integral to daily life. We aim to establish Dubai as a global digital capital and an attractive investment destination.” By the end of last year, 97% of Dubai government transactions were digital. The strategy seeks to provide a seamless payment experience for customers and merchants, facilitating diverse payment methods and gradually reducing acceptance fees.

Earlier in the week, Dubai World Trade Centre hosted the two-day, seventh edition of the Forex Expo Dubai 2024 which saw over two hundred global exhibitors, highlighted the latest trends, technologies, and opportunities in trading. This year’s event, focusing on innovation, education, and connectivity, also offered a platform for industry leaders and investors to network, learn, and explore the latest trends in online trading.

Next week sees the four-day Future Blockchain Summit 2024 taking place from 13 – 16 October at Dubai Harbour. An expected 1.2k investors from fifty countries will be in attendance at the summit expected to host several discussions, surrounding the integration of blockchain with AI, the Internet of Things, and the growing role of non-fungible tokens. Global industry leaders will also be discussing how the direction of these industries is changing. One of the more popular presentations will see the COO of The Sandbox, Sebastien Bourget and the Executive Chairman of Animoca Brands Group, Yat Siu, deliberating about the future of gaming, decentralised game development and the rise of eSports.

A Comprehensive Economic Partnership Agreement has been signed with Serbia, which is the first the UAE has signed with a country that is not a member of the World Trade Organisation. As with the other CEPAs, already signed, the agreement features a tariff reduction and elimination of up to 96% across customs tariff lines. The UAE Minister of State for Foreign Affairs, Dr Thani Al Zeyoudi, noted that the initiative comes in light of the significant potential to increase non-oil trade between the two nations, and that the agreement will contribute to launching a new era of bilateral cooperation and stimulating sustainable growth of the economies of both countries. He also expected that the agreement will add US$ 351 million to the UAE’s GDP by 2032, to top US$ 500 million in non-oil foreign trade. President His Highness Sheikh Mohamed bin Zayed was present and witnessed the signing the Comprehensive Economic Partnership Agreement.

Two days later, on Sunday, President His Highness also attended the signing of a CEPA with Jordan – a deal that is expected to boost bilateral trade to exceed US$ 8 billion by 2032, as well as to reduce trade restrictions and non-tariff measures on commodities and services. The UAE minister noted that “the agreement will come into effect later this year after its ratification, and will mark the culmination of a long-standing, deep-rooted relationship between the two brotherly countries and their peoples.” It is hoped that the agreement will enhance opportunities across multiple sectors including renewable energy, industrial projects, manufacturing, transport, pharmaceuticals, and food processing. Last year, bilateral non-oil trade reached over US$ 4.2 billion and in H1 a credible US$ 2.7 billion – 36.8% higher on the year. The UAE is Jordan’s top foreign investor, whilst Jordan is currently the UAE’s third-largest Arab trade partner outside of the GCC; mutual investment between the two nations is estimated to be around US$ 22.5 billion.

The third agreement of the week saw the Minister of State for Foreign Trade confirming the conclusion of negotiations towards a CEPA with Malaysia. As with other similar agreements, it will result eliminating or lowering tariffs, reducing trade obstacles and setting up new investment opportunities. Last year, bilateral trade hit US$ 4.9 billion and, in H1, rose 7.0% to US$ 2.5 billion, and Malaysia is the UAE’s twelfth-largest Asian trading partner, and fifth among ASEAN countries, while the UAE accounts for 32% of that country’s trade with Arab nations. The CEPA programme’s principal target is to increase the country’s non-oil foreign trade to US$ 1.09 trillion, (AED4 trillion), by 2030.

The DFM opened the week, on Monday 07 October, one hundred and fifteen points (2.5%) lower the previous week but gained thirty-three points (0.7%), to close the trading week on 4,439 points by Friday 11 October 2024. Emaar Properties, US$ 0.15 lower the previous fortnight, gained US$ 0.07, closing on US$ 2.30 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 5.44, US$ 1.66 and US$ 0.35 and closed on US$ 0.68, US$ 5.40, US$ 1.66 and US$ 0.34. On 11 October, trading was at eighty-nine million shares, with a value of US$ 60 million, compared to one hundred and fifty-seven million shares, with a value of US$ 100 million, on 04 October.  

By Friday, 11 October 2024, Brent, US$ 6.07 higher (8.4%) the previous week, gained US$ 1.16 (1.5%) to close on US$ 79.21. Gold, US$ 13 (0.5%) lower the previous week, gained US$ 7 (0.2%) to end the week’s trading at US$ 2,668 on 11 October 2024.

Austrian consumers, affected by the ‘dieselgate’ scandal, have finally settled with Volkswagen for a sum of US$ 25 million. The German carmaker admitted, that in 2015, it had installed software to rig emissions levels in millions of diesel vehicles worldwide. VKI, the country’s consumer protection watchdog, filed sixteen complaints for 10k Volkswagen customers in “the largest wave of complaints ever filed” in Austria, pointing to the fact that “the people affected paid too much for their vehicles”. Volkswagen said it “welcomed the solution found with the VKI”. The original claim was higher at US$ 66 million, based on the value of the vehicles had fallen by 20%. To date, the scandal has already cost VW around US$ 33.0 billion in fines, legal costs and compensation to car owners, mainly in the US.

Because it allowed drug cartels and other criminals to transfer hundreds of millions of dollars in illicit funds, TD Bank has agreed to pay more than US$ 3.1 billion, (including US$1.8 billion to the Justice Department and US$ 1.3 billion to the Treasury’s Financial Crimes Enforcement Network),  after pleading guilty to charges in the US. Prosecutors claimed that one of Canada’s biggest lenders operated with inadequate guards against money laundering for nearly a decade, failing to act even when staff flagged obvious cases of abuse, such as a customer making daily deposits of US$ 1 million in cash. Its chief executive, Bharat Masrani, said that the bank was taking “full responsibility” for its failures, but that it had the financial strength to weather the situation and would be making “the investments, changes and enhancements required to deliver on our commitments”. TD Bank is the largest lender in US history to plead guilty to failures under the Bank Secrecy Act and the first to plead guilty to conspiracy to commit money laundering. It was claimed that by 2018, it failed to monitor more than 90% of the transactions on its network, activity worth more than US$ 18 trillion. Worryingly, TD is the sixth largest bank in North America by assets and serves over 27.5 million customers around the world.

There are reports that HSBC, the largest lender in Europe, is planning to save up to US$ 300 million by reducing top management layers, as it mulls over the possibility of merging its commercial and investment banking units; it currently has a global payroll of some 214k. In H1, the total group expenses came in 5.0% higher, on the year, at US$ 16.3 billion. In recent years, the bank appears to have focussed more on Asia, where it has scale, and has been slashing businesses in the western hemisphere, including US, France and Canada.

GSK announced that it has settled 93% of all cases, by paying US$ 2.2 billion, relating to the discontinued version of its heartburn drug Zantac causing cancer. Despite not admitting wrongdoing, the UK pharma has managed to reach agreements with ten legal firms who represented around 80k claimants. GSK also stated that while there is “no consistent or reliable evidence” the drug increases the risk of cancer, the settlements “remove significant financial uncertainty.” It will also pay US$ 70 million to resolve a whistleblower complaint by a laboratory that alleged the drugmaker defrauded the US government by concealing Zantac’s cancer risks. The drug was first introduced in 1983 and, within five years, was posting annual sales of over US$ 1.0 billion. In 2019, UK doctors were told to stop prescribing Zantac as a “precautionary measure”, and a year later US regulators followed suit. As well as being sold by GSK, the drug has also been marketed by other major pharmaceutical firms including Pfizer, Sanofi and Boehringer Ingelheim, the first two of which have already agreed to settle cases.

A rescue attempt by Breal Capital and Calveton, has bailed out TGI from going out of business and saved some 2.4k jobs, (equating to about 70% of the payroll), and fifty-one of its eighty-seven outlets. The deal only involves the UK operations of TGI Fridays and would result in the buyers, which also jointly own the upmarket restaurants business D&D London, (as well as Byron Burgers and Vinotica), and acquiring a majority shareholding. Hostmore, the parent company, and the trading subsidiary which owns the TGI Fridays UK franchise, has also filed a notice of intention to appoint administrators, blaming “a very challenging set of circumstances” for its collapse.

Earlier in the year, Manchester City launched legal actions against the English Premier League claiming that their associated party transaction rules on the grounds they were anti-competitive. (This is a separate issue to the one hundred and fifteen charges faced by the football club, alleging that it had failed to provide accurate financial information over a nine-year period). Both parties claimed victory with the City saying the tribunal had declared the APT rules “unlawful” and that the league had abused a dominant position under competition law; the EPL claimed that the majority of the club’s challenges in the case were “rejected” but added: “The tribunal did, however, identify a small number of discrete elements of the rules which do not, in their current form, comply with competition and public law requirements”.   

In the first eight months of 2024, China Development Bank issued about US$ 31 billion in loans for road projects across the country, as it continued to increase medium- and long-term financial support for the transport sector. Loans issued this year have focused on renovation and expansion of busy sections of the national expressway network, as well as the construction of inter-provincial road sections that were yet to be connected. The Xi Ping administration is keen to accelerate the establishment of a modern road infrastructure system. At the end of last year, the country had the world’s longest expressway network, at 184k km, whilst the total road mileage topped 5.44 million km. As at the end of 2023, the mileage of the nation’s expressways had totalled 184k km, and in the decade to 2023, there had been an annual 8.1% growth in investment in the transport sector – and road investment by an annual average of 10.1%.

In a bid to reverse the worrying slowdown in its economy, late last month China’s central bank announced a new stimulus programme to grow its struggling economy; three of the main measures were a cut in interest rates on loans to commercial banks, rate cuts on new and existing mortgages, to 15%, and a reduction in the amount of money banks are required to reserve. Growth had been slowing in the world’s second largest economy, as it continued to face a property market slump, falling prices and other challenges. The Chinese government has been trying to boost confidence in the world’s second largest economy, as concerns increase that it may miss its own 5% annual growth target. Initial market reaction was positive but the rally fizzled out, as a highly-anticipated announcement on plans to boost the country’s ailing economy disappointed investors., Shares had jumped by more than 10%, as trading restarted after the Golden Week holiday, (which had begun on 01 October), but fell back after a news conference by the country’s economic planners. Investors, who had been hoping for more information about how the government plans to support economic growth, were disappointed with the lack of detail and questioned whether the policies will be enough to fix China’s economic problems. Maybe only a more comprehensive strategy – and major reform changes – are needed to push the economy forward.

Probably the most famous of Indian tycoons, Ratan Tata, has died aged 86; he had overseen the running of the Tata Group, with annual revenues exceeding US$ 100 billion. During his tenure, as chairman of the Tata Group, the conglomerate made several high-profile acquisitions, including the takeover of Anglo-Dutch steelmaker Corus, UK-based car brands Jaguar and Land Rover, and Tetley, the world’s second-largest tea company. In 2011, The Economist called him a “titan” responsible for transforming the family group into “a global powerhouse”, and “most powerful businessman in India and one of the most influential in the world.”

A year ago, Mohammed Muizzu, the President of The Maldives was blasting India on his election campaign which centred on an ‘India Out’ policy, demanding that Delhi withdraw its troops from the island nation. Currently, with his country in dire need of finances – with its foreign exchange reserves having dropped to US$ 440 million, just enough for seven weeks of imports – his country needs a bailout of hundreds of millions of dollars. Moody’s has said that “(foreign) reserves remain significantly below the government’s external debt service of around US$ 600 million in 2025 and over US$ 1 billion in 2026”. Last month, the ratings agency downgraded the Maldives’ credit rating, saying that “default risks have risen materially”. After two years in power, during which time, bilateral relations were strained, Perhaps Muizzu has finally realised how his country is so dependent on India’s support.

India has become the fourth global economy, after China, Japan and Switzerland, to surpass US$ 700 billion in foreign reserves, after adding US$ 12.6 billion in the week ended 27 September. The Bank of America commented that the third largest Asian economy’s reserves were strong compared to other emerging markets and forecast that the reserves could increase to US$ 745 billion over the next eighteen months. Its build-up in reserves is supported by a balance-of-payments surplus, aided by a narrower current-account deficit, with the Reserve Bank of India realising the importance of maintaining a forex buffer to protect the economy during periods of market volatility. Prime Minister Narendra Modi added that India is not only preparing to reach the top spot, but also to sustain it for a long time. The International Monetary Fund has indicated that India’s GDP is on track to hit US$ 4 trillion in 2024. It is estimated that it took India seventy-five years to reach a per capita income of US$ 2.73k but it will only take five years to add another US$ 2k.

Last year, the EU imported US$ 524 billion worth of high-tech products – slightly lower on the year, whilst exports were 3.0% higher at US$ 506 billion. 55% of the bloc’s imports emanated from China (32% at US$ 170 billion) and the US (23% at US$ 118 billion). Other imports were from Switzerland (7% – US$ 34 billion), Taiwan (6% – US$ 31 billion), UK (4% – US$ 22 billion) and Vietnam (US$ 21 billion). Electronics-telecommunications accounted for the largest share of high-tech imports from non-EU countries (39%), followed by both computers/office machines and pharmacy accounting for 15% of high-tech imports, most of which came from China and the US respectively.  For Switzerland, pharmaceuticals were the largest category accounting for 70%, (US$ 24 billion), of high-tech whilst aerospace from the US and the UK accounted for 65% of aerospace imports – 35%, (US$ 41 billion), and 30%, (US$ 7 billion). The US was the top trading partner (28% – US$ 140 billion) for high-tech exports to non-EU countries, followed by China, (11% – US$ 54 billion), the UK (10% – US$ 48 billion), Switzerland (6% – US$ 31 billion), Japan (3% – US$ 16 billion) and Türkiye (US$ 15 billion).

Australia is a big country and there are thousands of small stores scattered over the vast continent. Although there is currently no specific legal requirement for smaller stores to display prices, for goods on the shelf, consumer law dictates that only larger stores – i.e. those with a physical size of more than 1k sq mt – are required to display price per unit costs for all goods sold. The federal government is considering whether to make visible pricing mandatory as it develops a remote community food strategy. Consumer groups complain that the lack of pricing in smaller outlets is leaving shoppers “flying blind” and struggling to budget, with authorities wanting all stores to display prices, but there doesn’t appear to be legislation specific enough to enforce this requirement.

A landmark High Court ruling could radically reshape how Australian corporations are held responsible for wrongdoing and that anyone in senior management, that has visibility over systems of conduct and patterns of behaviour, could be held liable. The ruling potentially makes it easier to pin blame on individuals who have had oversight of failures by corporate or government bodies or had knowledge of wrongdoing even if they have not been doing it themselves. Previously corporate fraud was difficult to prove, in as much as guilty individuals needed to be explicit and deliberate in their wrongdoing, or found to have taken money. 

The case was centred on a dodgy training college, with the High Court dismissing an appeal against a finding of “systemic unconscionable conduct”, i.e. that it had engaged in a course of conduct or a pattern of behaviour, which is, “in all the circumstances, contrary to commercial norms”. The court found corporations think and behave through their systems, policies and practices, so if a company had a “predatory business model”, it can be assumed this was a knowing and deliberate strategy — and that can be penalised through the courts. What the ruling indicates is that an executive who knows all of the facts, sufficient for a finding of unconscionability against the company, could themselves be subject to a finding of unconscionability.

The EU seasonally adjusted Q2 current account of its balance of payments recorded a surplus of US$ 143.21 billion, equating to 2.9% of GDP, compared with a surplus of US$ 145.40 billion (or 3.0% of GDP) in Q1, and a surplus of US$ 85.77 billion (1.8% of GDP) on the year. Estimates recorded current account surpluses with the UK (US$ 74.24 billion), offshore financial centres (US$ 42.06 billion), Switzerland (US$ 30.20 billion), Hong Kong (US$ 12.08 billion), Canada (US$ 11.09 billion), Brazil (US$ 9.55 billion), USA (US$ 9.33 billion), Japan (US$ 2.97 billion) and Russia (US$ 1.54 billion). Deficits were registered with China (US$ 30.42 billion) and India (US$ 3.62 billion). Direct investment assets of the EU decreased by US$ 93.34 billion and direct investment liabilities decreased by US$ 179.77 billion. Consequently, the EU was a net direct investor to the rest of the world, with net outflows of US$ 86.43 billion, with a portfolio investment recording a net inflow of US$ 100.59 billion, while other investment recorded a net outflow of US$ 150.45 billion. Fifteen Member States recorded surpluses, eleven recorded deficits and one Member State had its current account in balance in Q2. The highest surpluses were observed in Germany (US$ 68.42 billion), Ireland (US$ 38.99 billion), the Netherlands (US$ 26.69 billion), Denmark (US$ 25.0 billion), Sweden (US$ 15.04 billion), Spain (US$ 14.28 billion) and Italy (US$ 9.34 billion). The largest deficits were recorded for Romania (US$ 8.46 billion), France (US$ 6.70 billion) and Greece (US$ 4.94 billion).

In the US, the Department of Justice seem to be pushing for remedies that would see a downsizing of Google’s hold on the market in which it processes 90% of US internet searches and creating an illegal monopoly at the same time. It is possible that action could be taken to divest parts of its business, such as its Chrome browser and Android operating system, which will give its competitors more room to grow. If nothing is done, then Google would grow even bigger and expand their market share nearer to 100% – and then what would happen? In 2021, Google made annual payments of US$ 26.3 billion to companies including Apple, and other device manufacturers, to ensure that its search engine remained the default on smartphones and browsers; this may become a thing of the past if the DoJ has its way.

Following weeks of mortgage rates edging lower in the UK, it seems that some lenders, including Coventry and Co-operative Bank, are becoming nervous and have started withdrawing their lowest rates or announcing hikes. Rising tension in the ME is probably the main driver, as it could impact on oil prices moving higher and the subsequent inflationary contagion. Other signs of the possibility of rates moving higher are recent rises in swap rates, mixed messages emanating from the BoE and fears of a slowdown in the global economy.

In the UK, a study by Hampton found that Gen Z are paying almost twice as much as older generations did in mortgage payments, mainly attributable to a combination of record-high house prices and relatively high interest rates. The inflation-adjusted research showed that those born in the late 1990s will be paying US$ 2274, compared to just US$ 1,129 that the Millennial generation before them paid; baby boomers, those born between 1946 and 1964, would have forked out  US$ 1,013 a month. Halifax’s latest House Price Index shows the average cost of a new home in the UK is now nearly US$ 384k.

The eighteenth Post Office Travel Money Report lists the global destinations, with the best value for UK holidaymakers. This year, the report indicates that 90% of the PO’s best-selling currencies are currently weaker against sterling than a year ago, which in turn means price falls in many of the world’s more popular destinations – with food/drinks and other items cheaper in twenty-five of the forty resorts and cities surveyed; local prices are up year-on-year in 80% of destinations. Best value destinations in 2024 were Hoi An – Vietnam, Cape Town, Mombasa, Tokyo, Algarve, Sharm-El Shek, Sunny Beach – Bulgaria, Marmaris -Turkey, Paphos, Penang, Phuket, Delhi, Costa del Sol and Montego Bay. Tamarindo, (Costa Rica) is the most expensive destination, with annual prices up 13.2%, whilst also on the flip side, Sydney’s prices for the likes of coffee, local beer and a three-course meal, with a bottle of wine, are more than triple those found in Cape Town.

The fear that the upcoming autumn budget, later in the month, may see changes that will impact the rich has spooked the London multi-million-pound property market, with demand and deals having declined in recent months. Although July UK house prices posted a 2.2% hike in the year, there has been a 22% decrease in multi-million-pound house sales in the year. It seems that those in the very top income brackets are staying put, as they wait to see what Chancellor Rachel Reeves has in store. Sales in London were 36.0% lower, on the year, at US$ 3.62 billion, compared to the twelve months to July 2023; there were ten transactions above US$ 39.21 million (GBP 30.0 million), compared to thirty-eight, a year earlier.

According to the Institute for Fiscal Studies, the Starmer administration will have to find a further US$ 20.90 billion, in addition to the US$ 11.76 billion tax rises already set out in the Labour manifesto, to meet its pre-election promises of no return to “austerity” for public services and a boost to government investment, designed to kickstart growth. Chancellor Rachel Reeves will have to explain, in her budget speech later in the month, how she plans to meet a raft of manifesto promises against a tangle of self-imposed restrictions on borrowing, spending and debt.  Following the government’s strange decision to slash to all but the poorest pensioners the winter fuel payments, it is expected that she will go to the other end of the scale and start to squeeze the high earners. For what it is worth, at the election, Labour promised not to increase taxes on “working people” and said it would not raise VAT income tax or National Insurance. So it was no surprise to anyone to hear Prime Minister, Sir Keir Starmer, on Wednesday, not ruling out a possible increase in National Insurance contributions paid by employers. The influential think tank noted that she had inherited an “unenviable” situation, with the public finances, and faces battles on all fronts – higher debt following the pandemic, higher interest payments to finance that debt and continuing sticky inflation. She has to make do with falling revenues from fuel and tobacco duties and try to pump more money into the likes of the NHS, other public services, local government, higher education etc. The new government has also pledged to boost investment, which will be financed from further borrowing – and as a separate exercise to the day-to-day spending

The UK government is investigating a reported thirty-seven unnamed UK-linked businesses for potentially breaking Russian oil sanctions; a further fifteen cases had been concluded, but no fines had been handed out. The facts that no fines have yet to be handed out and that Russia has one of the world’s fastest growing economies, must be of concern to the Treasury. Financial sanctions on Russia were introduced by the UK and other Western countries following the invasion of Ukraine in 2022. It included a US$ 60 a barrel cap on the price of Russian oil, designed to ensure that oil can keep flowing without Russia making large profits.

After two months of stagnation, the UK economy popped its head above the parapet and posted a modest 0.2% GDP increase, with all major sectors – except wholesaling and oil extraction – heading north, with accountancy/professional services (4.3% higher), retail and many manufacturers having strong months. The UK’s total underlying trade deficit widened by US$ 3.92 billion to US$ 13.06 billion in the quarter to August, driven by an increase in imports of goods. On Monday, the PM and the Chancellor will host a two-day, hard-sell Investment Summit in London will bring together CEOs from private companies, investment houses and sovereign wealth funds. It is noteworthy that that Rachel Reeves did not talk down the UK economy after discussing the August figures, finally realising that foreign capital investment is so important to pull the economy forward – and negative remarks may well deter potential investors.

Kier Starmer seems to be jumping from one crisis to another in his early days as PM , including  the apparent mismanagement of the winter fuel allowance, Lord Ali’s generosity dressing him and his wife with a US$ 28k ‘allowance’, ‘giftgate’ etc. Now with the Summit two days away, DP World has ‘paused’ a scheduled announcement of a US$ 1.3 billion investment in its London Gateway container port, following criticism by members of Sir Keir Starmer’s cabinet; this was supposedly to be the centrepiece of Monday’s event. This follows criticism, by Transport Secretary Louise Haigh and Deputy Prime Minister Angela Rayner, of its subsidiary P&O Ferries, which two years ago made a business decision that did not go down well with the then Tory Minister of Trade, Grant Shapps. In a sign of a divided cabinet, it seems that both Deputy Prime Minister Angela Rayner and Transport Secretary had not read the script and decided to lay into the Dubai conglomerate. Announcing new legislation to protect seafarers on Wednesday, she described P&O, owned by DP World, as a “rogue operator” and said consumers should boycott the company, and in a press release issued with Ms Rayner, said P&O’s actions were “a national scandal” and Ms Rayner described it as “an outrageous example of manipulation by an employer”. It would appear that the two women will have to eat a little humble pie or face redundancy and should know that one ‘does not Bite The Hand That Feeds You.