Hang Your Head In Shame!                                                        25 October 2024

Figures from the Land Department confirm that, in the week ending 18 October, the Dubai realty sector posted 4,475 transactions, valued at US$ 4.78 billion, with sales totalling US$ 3.85 billion. The top three sales transaction were all for apartments – the first at Six Senses Residences DXB Marina, selling for US$ 27.6 million, and the other two at Bulgari Lighthouse for US$ 21.2 million and US$ 18.8 million. Over the week, mortgage deals were worth US$ 806 million) and gift transactions were valued at US$ 117 million.

Following its recent integration of Nakheel and Meydan, Dubai Holding Asset Management announced a rebranding of Dubai Asset Management, to Dubai Residential. This unifying move will see the “new” Dubai Residential, with a 40k property portfolio, serving 150k Dubai residents, whilst reaffirming the group’s commitment to supporting the emirate’s continued development. Unified under the Dubai Residential brand, the portfolio spans 40k homes, serving over 150k residents. Dubai Residential’s comprehensive portfolio now includes City Walk Residences, Bluewaters Residences, Remraam, Shorooq, Ghoroob, Badrah, Manazel Al Khor, Ghoroob Square, Meydan Residence 1, Layan, Bayti Villas, Nad Al Sheba Villas, Dubai Wharf, Meydan Heights, The Gardens, Garden View Villas, Garden View Apartments, Al Khail Gate, and International City.

Launched in collaboration with Marriott International, Arada has unveiled W Residences at Dubai Harbour, comprising four hundred branded apartments in a US$ 1.36 billion, forty-storey complex. The three-tower luxury seafront development, with a world-class array of amenities, is slated for completion in 2027. W Residences at Dubai Harbour is master developer Arada’s third project in Dubai – following Armani Beach Residences at Palm Jumeirah and Jouri Hills at Jumeirah Golf Estates – and fifth branded residences project in the UAE.

H&H Development announced the expansion of its Eden House brand with a new waterfront community – Eden House The Park – on Dubai Water Canal. The development will feature low-rise buildings, (ranging from studios to luxurious four-bedroom suites, spacious garden duplex units and three exclusive penthouses), and lifestyle services. One of the most striking features of these homes will be the floor-to-ceiling windows.

The Endowments and Minors’ Trust Foundation in Dubai (AWQAF Dubai) has announced the distribution of US$ 8.3 million in profits from investments made on behalf of minors and those under guardianship for the year 2024; nearly 2.3k minors were beneficiaries of this profit – 12.1% higher on the year. Funds have been invested in real estate assets, commercial ventures, and financial stock portfolios, while adhering to Sharia principles, ensuring that the capital is not exposed to unnecessary risks. It strategically invests in a range of public joint-stock companies, including Parkin, Salik, DEWA, and other low-risk government entities. The total value of assets, managed by AWQAF Dubai on behalf of minors and those under guardianship, reached US$ 277 million by the end of 2023.

Sheikh Hamdan bin Mohammed has announced the master plan for the 100 km Saih Al Salam Scenic Route, for vehicles and bicycles, with a US$ 106 million investment in rural tourism activities and facilities including, luxury camping, new cycle routes, kayaking and hot air balloons. Saih Al Salam Scenic Route (Route 1) Project includes several projects and initiatives, such as providing facilities and services to visitors along the route, offering trips to the ancient sites of Saruq Al-Hadid and Al Marmoom Heritage Village, and other experiences including horse/camel riding and desert walks. Furthermore, camps and lodges in the form of glass domes, with panoramic windows, will be built along the route, with open lounges that will allow people to enjoy their stay beside the existing lakes in the area. Furthermore, the project will also include an outdoor cinema experience, in addition to events and art exhibitions and a Caravan Park. It is uniquely built, based on the Scenic Route concept, and it includes facilities to provide a holistic tourism experience. It aims to increase the number of activities, events and services, that promote desert tourism, whilst also offering investment opportunities for inhabitants and supporting local projects.

Dubai Customs is planning to roll out what it termed ‘Airbnb of warehouses’, the Warehouse Platform – a new digital platform allowing warehouse owners in the UAE to list their properties for leasing across the UAE. Owners of warehouses can list their properties on this platform which aims to simplify the process of registering and leasing various types of warehouses through a centralised system. It aims to provide users, looking for warehouse space, with multiple options, which they can sort based on size, location, type, and lease duration. Owners of both bonded and non-bonded warehouses, within and outside free zones, can list their properties for leasing on the platform against a fee which will be announced in due course. The new platform also offers the option of leasing a customs warehouse dedicated to storing goods under suspended customs duties. In H1, there was strong growth recorded because of the increased demand; the highest rental growth was registered in Jebel Ali Industrial, with average Grade B rates surging 38.5% on the year.

A study compiled by Oxford Economic indicated that aviation-led activity accounted for 631k jobs across Dubai – equivalent to 20% of all jobs in the emirate – with a further 29.3% to be added in the six years to 2030; in addition there are some 185k aviation-linked jobs.  It is estimated that Emirates Group and Dubai Airport contributed US$ 25.61 billion and US$ 11.72 billion, tied to aviation-facilitated tourism. These figures are projected to increase steadily, with aviation activities facilitated by Emirates and Dubai Airports contributing US$ 53.40 billion, or 32% of Dubai’s forecasted GDP by 2030 (in 2023 prices). According to the report, international visitors flying to Dubai spent an estimated US$ 18.0 billion last year. Although the expansion of the US$ 35.0 billion Dubai World Central is not included in the study’s main impact results, its construction is expected to contribute an estimated US$ 1.66 billion to Dubai’s GDP in 2030, as well as to support 132k jobs. It will be five times the size of Dubai International Airport and when completed will consist of over four hundred aircraft stands, with capacity to serve 260 million passengers annually.

With five more jets ordered this week, Emirates is expecting a total of fourteen Boeing 777Fs, pending delivery from Boeing from now until end 2026. Furthermore, the airline has signed a multi-year lease extension with Dubai Aerospace Enterprise for four Boeing 777Fs in its existing fleet. When all are added, together with its current fleet of ten, Emirates Cargo will be operating a fleet of twenty-one production-built cargo planes, by December 2026. The carrier also remains invested in converting ten passenger Boeing 777-300ERs into freighters for further capacity and fleet growth. Emirates Chairman, Sheikh Ahmed bin Saeed Al Maktoum commented that “demand for Emirates’ air cargo services has been booming. This reflects Dubai’s growing prominence as a preferred and trusted global logistics hub, and also the success of Emirates SkyCargo’s bespoke solutions that address the needs of shippers in different industry sectors.” It will continue to utilise its wide-body passenger fleet to facilitate the fast, reliable and efficient movement of goods worldwide, offering customers more flexibility with a fleet mix comprised of 777s, 777-Fs, 747Fs, A350s, and A380s. Emirates plans to make a decision, this quarter, on its future freighter fleet for 2028/29 and beyond, with the Boeing 777-8F and Airbus A350-1000F as contenders. There are plans to make Al Maktoum International airport its base, to be the world’s largest hub in capacity – at twelve million tonnes. Logistics District will be located adjacent which is planned as an international base for global cargo and shipping companies.

As H1 bilateral trade between the UAE and Türkiye climbed 15% higher, it has now become the fastest-growing partner among the country’s top ten global trading partners; this follows a 107% 2023 surge, attributable to by the landmark Comprehensive Economic Partnership Agreement signed in March 2023. At the latest DMCC’s “Made For Trade Live” roadshow in Istanbul,Turkish companies were introduced to the trade and investment opportunities available through Dubai and DMCC, highlighting the infrastructure and trade facilitation arrangements made possible under the CEPA. DMCC posted an 11.0% rise, in Turkish companies.

Under the patronage of Sheikh Hamdan bin Mohammed, next week will see the three-day Healthcare Future Summit 2024, under the theme ‘Vaccination, Research & Development, Policy, and Delivery: Towards a Healthier Future’. Located at the Dubai World Trade Centre, the event will bring together over 3.5k participants and one hundred brands from more than twenty countries. The Summit will focus on cutting-edge innovations in vaccination and healthcare, including advancements in disease management and the application of advanced technologies like AI to enhance vaccine distribution and develop new strategies for future pandemics. Additionally, the Summit will feature several prominent international events, including the Dubai Otology, Neurotology & Skull Base Surgery Conference & Exhibition, the Annual Radiology Meeting Conference and Exhibition, and the International Family Medicine (IFM) Exhibition, all of which will have various scientific sessions and specialised workshops.

The three-day, eighteenth edition of Dubai International Food Safety Conference opened on Monday, featuring over 3k global experts and specialists in food safety. Under the theme of “Future Foresight in Food Safety”, the convention addressed proactive approaches to emerging challenges, in the global food sector, and the urgent need for sustainable and innovative solutions to ensure the safety of food systems for the future. Dawoud Al Hajri, Director-General of Dubai Municipality, noted that “the success of the conference reflects Dubai’s leading role in envisioning the future of food, both regionally and globally,” and highlighted “the need to continue developing modern technologies and harnessing them to enhance regulatory bodies’ capacity to predict potential risks and mitigate their impacts on communities, in addition to providing sustainable solutions based on scientific principles using AI and big data analytics”.

Based on the increase in the number of new cases, The Dubai International Arbitration Centre has had another progressive year, with a 4.4% hike, to three hundred and fifty-five; its 2023 Annual Report noted that total claims exceeded almost US$ 1.50 billion, with the highest individual case coming in at US$ 298 million. Key sectors that benefited from DIAC’s expertise included construction, real estate, banking/finance, logistics/transport, tourism, media, and technology/telecommunication. DIAC joined the Global Arbitration Review’s whitelist and is the only arbitration centre in the UAE, and one of only three in the MEA regions, to achieve this distinction. Sheikh Maktoum bin Rashid commented that “the emirate is solidifying its position as a top five global hub for arbitration and dispute resolution. This strengthens business confidence and attracts investment, directly supporting the Dubai Economic Agenda (D33) objective of doubling Dubai’s economy and establishing it among the world’s top three urban economies.”

A report from Statista shows the UAE leads the GCC, with over 5.6k, as a top hub for startups, as well as in the fintech sector, with more than five hundred and fifty fintech companies currently operating in the country. A report by Startup Genome notes that Dubai continues to lead regionally, with a start-up ecosystem valued at over US$ 23.0 billion by the end of last year. Dubai’s In5 initiative, a TECOM Group subsidiary, has supported over 1k start-ups and raised US$ 2.13 billion in funding since 2013.

The Central Bank of the UAE posted that the cumulative H1 balance of facilities and loans, extended by banks operating in the UAE, to SMEs reached US$ 22.13 billion. It also estimated that  

loans to SMEs accounted for 9.5% of the total cumulative balance of financial facilities, (at US$ 233.16 billion), provided to the commercial and industrial sectors in the UAE. SMEs account for more than 95% of the total number of companies operating in the country and provide jobs to around 86% of the private sector’s workforce.

The latest listing on Nasdaq Dubai was for a US$ 500 million Sukuk issued by Dubai Islamic Bank and was substantially over-subscribed; the additional Tier 1 (AT1) Sukuk was issued at an annual profit rate of 5.25% – the lowest for an AT1 instrument globally since the 2009 GFC.  DIB now has an outstanding value of over US$ 9 billion through eleven Sukuk listings on Nasdaq Dubai. This addition brings the bourse’s total outstanding Sukuk to US$ 93 billion, across one hundred and two listings, with a combined US$ 133 billion in capital market listings. The Sukuk is dual listed on Nasdaq Dubai and Euronext Dublin.

Majid Al Futtaim Properties have signed a five-year contract with Parkin Company for Dubai’s primary public parking operator to operate a new paid parking system at three of its operations – Mall of the Emirates, City Centre Deira and City Centre Mirdif. It is expected that current fees will remain unchanged. Under the new ‘barrierless parking’ system, the need to stop at barriers will be eliminated, as advanced cameras will capture license plates automatically, tracking each vehicle’s entry and duration of stay. This system, which will be implemented as from 01 January 2025, is expected to improve access for over twenty million vehicles annually, across a total of 21k parking spaces.

The Commercial Bank of Dubai (CBD) posted a 26.5% annual hike in nine-month net profit after tax result of US$ 608 million, with pre-tax profit 15.2% higher. Strong growth in loans during the first nine months of 2024 resulted in a solid net interest outcome, which was supported by non-funded income and lower cost of risk that more than offset higher expenses and the corporate tax charge. Operating income was 12.1% higher at US$ 1.13 billion, driven by a 7.3% rise in net interest income, on strong loan growth, and high market interest rates with other operating Income up 23.8%.  Various factors – inflation, increased costs for governance and regulatory compliance, as well as investments in digitisation/technology – saw operating expenses at US$ 277 million. There were increases in total assets, net loans/advances and customers’ deposits of 8.7%, 10.1% and 11.8% to US$ 35.15 billion, US$ 24.99 billion and US$ 26.89 billion.

The DFM opened the week, on Monday 21 October, sixty-three points (1.4%) higher the previous fortnight, gained a further ten points (0.4%), to close the trading week on 4,479 points by Friday 25 October 2024. Emaar Properties, US$ 0.01 lower the previous week, gained US$ 0.03, closing on US$ 2.32 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 5.45, US$ 1.69 and US$ 0.34 and closed on US$ 0.67, US$ 5.20, US$ 1.66 and US$ 0.34. On 25 October, trading was at ninety-six million shares, with a value of US$ 59 million, compared to eighty-five million shares, with a value of US$ 61 million, on 18 October.  

By Friday, 25 October 2024, Brent, US$ 5.66 lower (7.1%) the previous week, gained US$ 2.41 (3.3%) to close on US$ 75.96. Gold, US$ 70 (2.6%) higher the previous fortnight, gained US$ 22 (0.8%) to end the week’s trading at a record US$ 2,753 on 25 October 2024.  

After a period of hope that Rection Engines, the UK hypersonic aviation pioneer, could be saved by funding from the Abu Dhabi-based Strategic Development Fund, discussions have stalled, leaving doubts that its collapse can be averted. There are reports that the problem stems around the question of the investment arm of the UAE’s Tawazun Council anchoring a recapitalisation of the company. It also appears that a number of City investors have, in the last two months, slashed the value of their stakes in the business, amid doubts about its survival, even though it had reportedly grew its commercial revenues by more than 400% last year and is understood to have a strong pipeline of contract and R&D opportunities. However, time is running out to secure a financial package that would prevent the company falling into administration, with Reaction requiring millions of pounds of funding support within days, with strategic shareholders BAE Systems and Rolls-Royce Holdings also said to have been asked to agree more flexible terms with the company.

Boohoo, whose brands include Debenhams, (bought for US$ 72 million in 2021), Karen Millen, (acquired for US$ 24 million three years earlier), and PrettyLittleThing, is planning a major restructure that could see the break-up of the struggling online fashion firm. Boohoo had been an early beneficiary, from the impact of the pandemic, but has since struggled from the likes of China’s Shein and Temu. Some analysts consider that its best way forward is to divest Debenhams and Karen Millen, (both now considered purely online players), to allow it to concentrate on a younger target market. Whilst admitting that its youth brands were struggling, including boohoo.com, boohooMAN and PrettyLittleThing, it posted that its business remained “fundamentally undervalued”, and that it expected to improve in H2; H1 August results showed that sales had declined 15% to US$ 809 million. Frasers Group are seeking to depose former CEO John Lyttle as a company director, as well as trying to install their founder Mike Ashley instead, complaining of a “complete failure to meaningfully engage” with Frasers.

Over recent times, it seems that Boeing is always in some sort of crisis; this week, there has been a “total loss” of a communications satellite, designed and built by the aerospace giant. The US Space Forces posted that it is “currently tracking around twenty associated pieces” of the satellite. The failure of its of iS-33e, which has affected Intelsat customers in Europe, Africa and parts of the Asia-Pacific region, is but the latest episode of Boeing mishaps. Recent examples include a crippling labour strike by more than 30k of its workers belonging to the International Association of Machinists Aerospace Workers, that has been ongoing since 13 September, (and voting this week to reject the new offer and continue the industrial action), as well as issues with its ill-fated Starliner spacecraft; this returned empty to Earth last month, after a considerable delay in space due to problems with its thrusters. Two astronauts had been stranded at the International Space Station  after the Boeing Starliner capsule they arrived on in June, was considered unfit to return them to earth seven days later. To make matters even worse, Boeing’s boss Kelly Ortberg warned that the company is at a “crossroads” as losses at the firm surged to US$ 6.0 billion.

According to the Centers for Disease Control and Prevention, some forty-nine people have become ill after eating a McDonald’s Quarter Pounder sandwich, caused by E. coli, a type of bacteria that can cause serious stomach problems. Ten cases resulted in patients being admitted to hospital and one person has died. The CDC confirmed that “It is not yet known which specific food ingredient is contaminated,” but noted that McDonald’s has already “stopped using fresh slivered onions and quarter-pound beef patties in several states”. McDonald’s shares fell by about 9% on the New York Stock Exchange after the news broke on Tuesday but had regained some of those losses by the end of the day; its share value had lost 4.9%, equating to more than US$ 15.5 billion being wiped off its market cap.

With its revenue stream slowing, Brian Niccol, the new top man at Starbucks, has indicated that he will overhaul the global coffee chain’s menu, as he also announced the suspension of the firm’s 2025 financial forecasts due to the “current state of the business”. He noted that “we will simplify our overly complex menu, fix our pricing architecture, and ensure that every customer feels Starbucks is worth it every single time they visit.” The company expects Q3 US comparable sales to have fallen by 6.0% on the year, as customers cut back on spending, as the rising cost of living continues to squeeze household budgets. Probably more worrying is the 14.0% sales slump in China, where the economy is faltering. Starbucks shares fell by more than 4% after the announcement. There is a lot for the new chief executive, appointed last month, to mull over as he takes his daily 1.6k km commute from his New Beach Californian home to the coffee retailer’s Seattle headquarters.

Following four crash reports involving the use of Tesla’s “Full Self-Driving”, (FSD), software, the

National Highway Traffic Safety Administration initiated a preliminary investigation, indicating that the crashes involved reduced roadway visibility, with fog or glares from the sun. The enquiry will aim to determine if Tesla’s self-driving systems can detect and appropriately respond to reduced visibility conditions and will also examine if other self-driving crashes have happened under similar conditions. Unlike Waymo, the self-driving venture operated by Google-parent Alphabet, Tesla’s autonomous systems rely largely on cameras and AI and is a cheaper option when compared to Waymo’s high-tech sensors like Lidar and radar. The ultimate result could see the total recall of 2.4 million Tesla vehicles across multiple models manufactured between 2016 and 2024.

Yesterday, 24 October, Tesla shares soared 22%, lifting Elon Musk’s net worth by about US$ 26 billion to US$ 270 billion; this puts him US$ 58 billion ahead of his good friend and former Tesla board member Larry Ellison. Tesla had its second-best day ever on the stock market following earnings beat and an uplifting projection for 2025 growth.

There are reports that Barclays is in detailed discussions with Brookfield about it becoming a shareholder in its UK merchant acquiring arm; in February, the bank had indicated that it was exploring a sale or partnership of the division. The heavily structured deal would involve the Canadian asset manager bearing the costs associated with growing the business, rather than paying a significant up-front sum for the stake. Valuation estimates put the value of the unit at between US$ 1.0 billion to US$ 2.5 billion. Barclays shares have surged by 65% over the last year.

There are many who would agree with James Watt when he claims that entrepreneurs will abandon the UK, “for places like Dubai”, if capital gains tax is increased in next week’s budget. The founder of BrewDog also commented that a significant rise in the tax “will do far more damage to our economy” and deal a hammer blow to the prosperity of every family. Furthermore, he noted that any increase in the tax would lead to lower tax receipts, as “people who start businesses – they also pay national insurance, PAYE for their team, corporation tax”. The current CGT rate is set at 20% – by the end of the month, it could easily move to 25%.

In an opening gambit, HSBC’s new chief executive, Georges Elhedery, commented that he wants to “unleash our full potential and drive success into the future,” by splitting geographically into eastern and western markets amid increasing geopolitical tensions and an urgent requirement to cut costs, as well as simplifying operations by splitting into four key units. The bank will create separate business units in the UK and Hong Kong, with two other operations: “corporate and institutional banking” and “international wealth and premier banking”. Business in these operations will fall into either “eastern markets”, which includes the Asia-Pacific region and the Middle East, or “western markets”, covering the UK, continental Europe and the Americas. He also announced a reshuffle in its leadership ranks, including the appointment of Pam Kaur, who becomes the first female finance chief in the bank’s one hundred and fifty nine-year history.

Today, Kenya’s high court suspended a US$ 736 million public-private partnership between Kenya Electrical Transmission Company and India’s Adani Energy Solutions to build and operate power infrastructure including transmission lines; the deal, which was signed earlier in the month, would have seen a marked reduction in persistent national power blackouts and support economic growth. However, the Law Society of Kenya challenged the agreement saying it was “a constitutional sham” and “tainted with secrecy”.  The Indian Group is also facing opposition, by the Law Society, to its plans for a PPP to lease the country’s main airport for thirty years in exchange for expanding it.

It does seem to the casual observer that Peru has had more than its fair share of corrupt despots, the latest being former President Alejandro Toledo, (in office between 2001 – 2006), n being sentenced to twenty years and six months in jail for corruption and money-laundering; it was alleged that he took US$ 35 million in bribes from Odebrecht, a Brazilian construction company, which was awarded a contract to build a road in southern Peru. In 2019, another former leader, Alan Garcia, (1985 -1990) shot himself when police arrived at his home to arrest him over bribery allegations involving Odebrecht.Two other former Peruvian presidents, Pedro Pablo Kuczynski and Ollanta Humala, (2011 – 2016) are also being investigated in the Odebrecht case. Probably the most famous was Alberto Fujimori, (1990 – 2000), who was forced from office amid allegations of corruption. He fled Peru for Japan and later moved to Chile where he was imprisoned. He was extradited from Chile to Peru in 2007 where he was convicted of multiple crimes in a series of trials; he died last month in Lima, aged eighty-six.

In what would be seen as a logical move, Vladamir Putin has proposed the creation of a BRICS grain exchange, as he pointed out that “BRICS countries are among the world’s largest producers of grains, legumes, and oilseeds”; he added that the exchange “will contribute to the formation of fair and predictable price indicators for products and raw materials, considering its special role in ensuring food security”. He added that a separate platform could be set up to trade precious metals and diamonds which could later be expanded to trade other major commodities. In his opening remarks to a summit of leaders of the BRICS countries, he also referred to the creation of a BRICS investment platform, which will facilitate mutual investment between BRICS countries and could also be used for investment in other countries in the Global South.

Octopus Energy, which rescued rival Bulb after its collapse in 2021, has repaid the final tranche of the US$ 3.9 billion government support provided to secure the deal. It is also reported that, although the government had spent more than US$ 2.0 billion, dealing with the Bulb crisis, the fall in wholesale energy prices had generated an unexpected US$ 1.95 billion profit for the Exchequer,

owing to a hedging arrangement which had been established at the time of the transaction, as well about US$ 260 million in interest payments.

Government borrowing was the third highest ever September return, attributable, in part, as a result of public sector pay rises, (including teachers and junior doctors), and continuing high interest payments on existing debt. Although tax receipts came in higher, there was a bigger increase in spending which was US$ 2.1 billion higher than in the same month a year ago. But the gap between what the government took in and what it spent was GBP 1.17 billion – less than expected. Public sector borrowing was expected to reach US$ 22.68 billion but came in US$ 1.17 billion less at US$ 21.51 billion – the sum excludes borrowing by public sector banks.

With all the adverse – and often deserved – criticism of water firms, it beggars belief that bonuses to water company bosses nudged 1.3% higher to US$ 12 million, and this despite record sewage discharges and financial woes at some of the utilities in England and Wales. When base pay and pension contributions are factored in, total payments to executives were 1.0% lower at US$ 26 million, although pension contributions rose 8.4% to US$ 2.2 million. Environment Agency data shows that discharges of untreated sewage, by water companies, doubled to 3.6 million, with individual spills 54.2% higher at 464k. Current legislation dictates that water companies can discharge sewage from storm overflows, but only during periods of heavy rain and under strictly permitted conditions.

According to water regulator, Ofwat, water companies in England and Wales are asking for water bills to be raised even higher by 2029-2030, with Thames Water requesting a 53% annual hike to US$ 866; Southern Water has asked for the highest increase – 84%. Of all eleven English and Welsh water and wastewater firms only Wessex Water is not seeking even higher bills than they first requested from the regulator in July. On average, the companies want bills to rise 40% and cost US$ 800 a year by 2030, compared to the current average bill of US$ 570 a year. Ofwat will make its final decision for how much water bills can rise on 19 December.

Meanwhile, Thames Water, the UK’s biggest water provider is in big trouble. Industry experts indicate that the company is “uninvestable”, as shareholders pull their investments, with its holding firm having defaulted on some of its US$ 20.77 billion debt pile. What did the company do when it is in such an economic mess – it lifted bonus payments which almost doubled to US$ 1.6 million. Legislators are calling for a bill that would put an immediate ban on bonus payments at all water companies while sewage outflows continue and want to crack down on pollution and financial mismanagement in the water industry; it also includes proposals that include the ability to jail executives and increased compensation for customers.

In a country that has a growing housing shortage, it is estimated that there are almost 700k empty and unfurnished homes in England, of which some 37% are counted as “long-term empty,” indicating that no-one has lived there for six months or more. Some argue that if they were brought back into use, the country’s housing crisis would be solved at a stroke and that the government would not have to build 1.5 million new homes. There are various reasons why they remain empty.

Often homes become empty when the owners pass away, leading to a long administrative process, known as probate, when their assets are divided up; even when that process is completed families can still be reluctant to part with a property for a host of reasons. Local authorities can charge extra council tax on homes that have been unoccupied for more than a year, under the Empty Homes Premium, and if that does not work, they can take enforcement action. Abandoned homes can be treated as environmental health issues – mainly from the Double “V-Whammies” of vermin or vandalism – which can impact on neighbouring properties. In some cases, the council is able to carry out emergency repair work on abandoned homes, and then force a sale at auction to recover its costs, with any gains going to the property owners; another option is to repair run-down properties, that have been vacant for more than two years, and then rent them out for up to seven years to recover costs. However, since many English authorities do not have the funds to carry such repairs, there are some who believe this should be a national government problem which should fund the operation which would go a long way to solve this age-old problem and put empty homes back on the market. In reality, so many local councils are teetering on bankruptcy, and the Starmer government hell bent on building 1.5 million homes, it is a good bet that come 2029, England will still have seven hundred thousand empty houses – during which time, a lot of green belts will have disappeared.

If The Employment Rights Bill were to become law, it would overhaul workers’ rights but will come with a cost estimated, by the government, to be in the region of US$ 6.5 billion; its main aim would be to overhaul workers’ rights, including low pay and poor working conditions. Other amendments would see granting workers protection from unfair dismissal from the first day of their employment, the right to statutory sick pay from the first day of illness, day one rights to paid and unpaid paternity leave, and the right to flexible working, including a four-day week. Furthermore, unions will also be given the right to access workplaces and there will be a ban on “exploitative” zero hours contracts. A further cost would see the volume of cases reaching mediation service and employment tribunal increasing by around 15%. No wonder the unions have praised the bill as “life changing” for millions of workers and say it will also benefit employers in the form of a healthier and happy workforce and boosted productivity. Many employers think differently.

Rishi Sunak must still be scratching his head, asking himself whether he went too early to the polls because since then there has been a raft of positive economic data which would have the seen the Conservative vote come in a lot higher! In what is their largest upward revision for any advanced economy, the IMF has raised its projection for UK growth this year to 1.1%; the latest forecast is 0.6% and 0.4% higher than the two previous figures of 0.5%, in April, and 0.7% in July; its 2025 projection remains unchanged at 1.5%. The IMF’s global take on the economic situation predicts strengthening growth as “falling inflation and interest rates” stimulate demand. The global body’s view of the UK economy comes on the back of August figures showing a return to growth after two months of stagnation and a dip in inflation to below the BoE’s target of 2.0% for the first time since early 2021. The global central bank did caution that after years of elevated borrowing, in response to the pandemic and post-COVID economic adjustment, governments need to improve growth prospects, stabilise debt and “rebuild much-needed fiscal buffers”.

Whether Labour will fudge promises made in its pre-election manifesto, (including not increasing taxes on “working people”, including National Insurance, income tax and VAT), will be revealed next Tuesday. The Chancellor has commented that it was important for the government to “get a grip on day-to-day spending” by making sure it was paid for through tax receipts and by reforming public services to make them more productive. If she follows this track, she will commit to a tighter financial rule requiring all day-to-day spending to be funded via tax receipts. That being the case, the lady faces a conundrum that she has to cut back on public spending and has to raise taxes; both will upset a lot of the population. A compromise seems to be what she was seeking when commenting that “we need to invest more to grow our economy and seize the huge opportunities there are in digital, in tech, in life sciences, in clean energy, but we’ll only be able to do that if we change the way that we measure debt.”  One fact, that most will agree upon, is the urgent need for the UK to advance its current levels of public investment.

By making a technical change to the way public debt is measured, the Starmer government will change its self-imposed debt rules in order to free up billions for infrastructure spending. The chancellor admitted yesterday that she would rewrite the government’s fiscal rules in next week’s budget to allow her to increase borrowing for public investment in roads, railways or hospitals, by around US$ 65.0 billion. She added that the change was being done “so that we can grow our economy and bring jobs and growth to Britain”. She said the Treasury would “be putting in guard rails” on investment spending by having the National Audit Office and the Office for Budget Responsibility, the government’s financial watchdog, “validating the investments we’re making to ensure we deliver that value-for-money”. The extra room for manoeuvre for spending on investment projects will not be able to be used for extra day-to-day spending, because that will be funded from tax receipts.

In its manifesto, the Labour Party confirmed that it would “not increase taxes on the working people”. When asked for his definition of “working people”, and whether he would classify a working person as someone whose income derived from assets, such as shares or property, the prime minister said, “well, they wouldn’t come within my definition.” He did add that he believed a working person was somebody who “goes out and earns their living, usually paid in a sort of monthly cheque” but they did not have the ability to “write a cheque to get out of difficulties”. He separately told reporters a working person is someone who “works for a living and through that gets their income”. The Chancellor weighed in on the debate when she indicated that businesses face an increase in National Insurance, saying the “working people” pledge related to the employee element of the tax, as opposed to the sum paid by employers. The debate continues on who or what is considered a “working person”, exacerbated by several ministers refusing to rule out raising national insurance on employers. To say there has been lack of clarity over how the government defines “working people” is an understatement.

Two of the favourite tax increases relate to capital gains tax, that raises an annual US$ 19.45 billion, which could see a 5.0% rise to 25%, and inheritance tax. The latter, which has a current rate of 40%, that is charged on any amount above the US$ 423k (GBP 325k) threshold; it could see a marginal push up to 42.5%. It will be no surprise to see the Chancellor also tinkering with the likes of drinks and excise tax and tobacco in her quest to source a further US$ 51.87 billion of tax rises and spending cuts to fill the so-called ‘black hole’ in public finances. Then there is the possible scrapping of the tax break for wealthy foreigners that could raise about US$ 4.15 billion a year, but that could well see the super-rich either leaving the UK or finding ways to avoid the tax. One certainty is that she will lift the employer national insurance rates on pension contributions which would bring in a further US$ 15.56 billion.

Meanwhile, the  US economy is projected to have grown by 2.5% this year, an increase of 0.2% on the July projection, before falling back to 2.2% in 2025, whilst the Euro area’s growth forecasts for this year and 2025 have been trimmed – down 0.1% to 0.8% and by 0.3% to 1.1% The report concluded that the “global battle against inflation has largely been won”, with average global rates due to settle at 3.5% next year, lower than the average between 2000 and 2019. Additionally, there are warnings that all is not well on the global stage and that the IMF has to face head on numerous challenges . They include regional conflicts including, those in the ME and Ukraine, the need to loosen monetary restraint, while tightening fiscal policy; a potential slowdown in China, which has already started, and the associated risk of protectionism and trade wars.

The global news surrounding the Israeli bombardment of Gaza seems to focus on the political and humanitarian losses, with little details of the economic costs facing the embattled nation. The overall unemployment rate in the Occupied Palestinian Territory, comprising Gaza and the occupied West Bank, climbed to an average of 51.1%, with the real GDP plunging by an average of 32.2% over the past twelve months. Furthermore, with unemployment levels reaching 34.9% and over the twelve months, to 09 October 2023, more than 42k have been killed, along with thousands injured. In the West Bank, employment plummeted by more than 28%, as more than 150k Palestinian men had been working in Israel. The economic downturn has devastated living standards, with real GDP per capita in three locations – Occupied Palestinian Territories, Gaza Strip and the West Bank – all slumping by 33.4%, 84.9% and 23.4% respectively.

On top of that, nobody really knows how long it will take to repair the damage to property, with a UN Trade and Development report commenting that the scale of devastation has far surpassed the impact of conflicts in 2008, 2012, 2014 and 2021. An April joint report, by the World Bank and the UN, estimated there had been US$ 18.5 billion of infrastructure damage in the first six months of this crisis which had started in October 2023 – a lot has happened since then and with continuing dithering by global powers, seemingly oblivious to the Israeli onslaught and destruction in the name of defence, still more to occur. It is difficult to disagree with the comment of Ruba Jaradat, ILO regional director for Arab states, “the impact of the war in the Gaza Strip has taken a toll far beyond loss of life, desperate humanitarian conditions and physical destruction.” There are some world leaders who should be told to Hang Your Head In Shame!