Hold On To What You’ve Got!                                                 15 November 2024

There is no doubt that residential rents have been heading north at speed, with the emirate’s ultra-luxury real estate market leading the pack. This week, a US$ 2.3 million, two year rental agreement of a Umm Al Sheif villa was signed; the deal for the 24k sq ft villa on a 15k sq ft plot was a record for the exclusive residential community in the western part of Dubai. With a further 6.7k millionaires moving in to make Dubai their new home, and with a limited supply of ultra-luxury villas available, it is patently obvious that sales prices and rentals will have to rise. (DXB Interact reports that of the 61.6k villas set for completion over the next three years, only three hundred and seventy-nine are priced at US$ 16.3 million, (AED 60 million), or higher, eight hundred and thirty-three fall within the US$ 8.2 million to US$ 16.3 million, (AED 30-60 million), range, and two thousand, eight hundred and fifty-four are priced between US$ 4.1 million to US$ 8.2 million, (AED 15-30 million) range. Demand for resale properties is also high, with a 25.0% annual rise in total transactions, in the US$ 2.7 million to US$ 3.4 million, (AED 9.8 -12.4 million) range. According to DXB Interact data, there was a massive 1,245% surge in the ultra-luxury apartments and villas sector, between 2016 and 2023, with sales rising from US$ 1.74 billion to US$ 23.46 billion over the seven-year period.

This week, H&H Development launched its US$ 1 billion Eden Hills project, with prices for the uber-luxury villas starting from US$ 4.77 million and going up to US$ 26.43 million, which will cater to the high-net-worth individuals. The project, which comprises three hundred and twenty-seven five, five plus and six-bedroom villas, including twenty-nine customisable plots, will be completed in three phases. Up to one hundred and four villas went on sale in phase 1 in the gated community, which will be ready for handover by Q4 2027. Eden Hills provides access to premium dining, high-end retail, leisure destinations, top-tier educational institutions, and on-site healthcare facilities, ensuring convenience and connectivity. The project is located near Dubai Hills Estate on Al Khail Road.

This announcement comes at a time when Knight Frank indicated that the number of luxury property listings in Dubai dropped in Q3, as demand continued to outpace supply; the latest quarter saw four hundred deals being registered in the city’s prime locations, 18.2% lower when compared to Q3 2023. However, there were ninety-two deals in Q3, seven more than in Q2.

ValuStrat’s October data saw capital values of Dubai villas gaining 32.4% on the year and 2.2% on the month. Its report noted that villas in Jumeirah Islands were now three times more expensive than they were in 2021, followed by Palm Jumeirah (42.5%), Dubai Hills Estate (33.7%), and Emirates Hills (33.1%); the lowest gains were seen in Mudon (17.1%) and Jumeirah Village Triangle. Meanwhile, average monthly and annual price rises for apartments came in at 1.7% and 24.3% respectively. The locations, where annual apartment rises were at their highest, included The Greens (32.4%), Discovery Gardens (30.9%), Palm Jumeirah (29.9%), and The Views (28.4%), whilst the lowest capital gains were in International City (16.8%) and Dubai Sports City (17.5%). Last month, the ValuStrat Price Index rose by 28.3%, on an annual basis, and 2.1% monthly, to 193.8 points. The Index had a 100-point base mark from January 2021.

There was a monthly 13.1% hike in Oqood (contract) registrations for off-plan homes – and 99.7% annually, equating to almost 75% of all October home sales. The volume of ready secondary-home transactions was up 11.7% on the month and  30.1% annually. The month also witnessed twenty-one transactions for ready properties, priced over US$ 8.17 million, (AED 30 million), situated in Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, Al Barari, Dubai Hills Estate, and District One. The influx of high-net-worth individuals remains strong, driven to Dubai for a raft of reasons, including it being seen as a safe haven in a turbulent world, the introduction of long-term residencies for property investors and a surging non-oil economy. Long may it continue.

According to Issa Abdul Rahman, CEO of Kasco Developments – and also to this, and many other observers – there is no oversupply in the Dubai property market, as demand for new residential units continues to be persistently strong. One major factor supporting this, is that if there were an oversupply, then property prices would not be witnessing consistent double-digit growth. He also noted that “property prices are rising in Dubai and it looks like the boom will continue despite some tailwinds. Dubai has become a globally relevant city. When we compare Dubai to other major metropolitan cities, around the world, like Hong Kong, London, New York and Singapore, real estate is still cheaper here. There is no oversupply”.

Damac Air is set to become the first airline to be established by a private UAE developer. It has already announced six sought-after holiday destinations – Bali, Bora Bora, Fiji, Hawaii, Maldives and Seychelles. According to its website, “we offer unparalleled journeys capturing the essence of the world’s most coveted tropical paradises”. Damac Air’s entry into the market will position it against competitors like Beond, (which, in April, launched its maiden flight to the Maldives ex DWC), Rotana Jet, and others. Damac Air is a subsidiary of Damac Properties which last year saw its Moody’s ratings, on its corporate credit, and its US$ 600 million senior unsecured trust certificates due 2027, at Ba2, with its outlook nudging higher from stable to positive. In H1, Damac Properties awarded over US$ 1.9 billion in contracts for various projects within its portfolio.

At the ULTRAs 2024 Awards, Emirates won the “Best Airline in the World”. They are among the most respected awards in the industry, and they recognise travel leaders in multiple categories, with winners determined from the votes of a global network of active and affluent travellers. Emirates’ “fly better” travel experiences have also been recognised by more than twenty awards this year, including “World Best Airline” by Telegraph Travel, ranking first amongst ninety global carriers, and “Best Airline” by The Times and Sunday Times Travel Awards.

Over the past seven years, Emirates and flydubai have operated more than 1.5 million flights since the partnership started on 14 November 2017, carrying more than nineteen million passengers across the joint network; the carriers have a combined network of more than two hundred and twenty-five destinations in more than one hundred countries. The partnership sees Emirates customers exploring more than one hundred and eighteen flydubai destinations, while flydubai passengers can access more than one hundred and thirty-six Emirates destinations. Furthermore, customers can choose from two hundred and seventy-five codeshare flights each day.

In a post on X, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid, noted that Dubai’s Q2 and H1 GDPs rose 3.3% to US$ 31.61 billion and 3.2% to US$ 62.94 billion.  He also added, “we thank all teams and partners for their exceptional contributions to achieving the D33 Agenda’s goal of establishing Dubai as one of the world’s top three urban economies.”

This week, Dubai International Financial Centre fully repaid its US$ 700 million 2014 sukuk. The leading global financial centre in the MEASA region announced the full redemption and on-schedule repayment of the sukuk. Essa Kazim, Governor of DIFC, noted that “over the past ten years, we have invested in high-quality commercial infrastructure, and this has helped position DIFC as the region’s preferred centre for business and finance”.

Although available in countries such as in Hong Kong, Japan, the Philippines, Singapore, Thailand and Vietnam, Visa confirmed that it was rolling out a flexible payments feature in the UAE and US. This would then allow customers to use a single card to pay from different funding sources, as customers are increasingly prioritising convenience and flexibility in payments. An in-house study found that 51% of card users wanted to access multiple accounts and funding sources through a single credential. Visa has teamed up with Liv Bank for the UAE expansion and has plans to expand into Europe in H1 2025.

With a 15.0% market share of the global diamond international trade, the UAE ranks third behind India and the US. Juma Al Kait, Assistant Undersecretary for International Trade Affairs at the Ministry of Economy, commented that the value of the UAE’s diamond trade will exceed US$ 40 billion this year, and that diamonds account for 5.5% of the country’s non-oil trade, with the value of diamond trade reaching almost US$ 39 billion last year, after it had reached about US$ 20 billion in H1. He also highlighted the growing role that the diamond sector plays in the UAE’s economy and the sector’s continued ability to innovate and adapt. The growth of the diamond sector reflects the UAE’s position as a global destination for trade and investment and reinforces the government’s vision to diversify the economy.

In its attempt to acquire Silk Logistics Holdings Limited, DP World Australia has entered into a binding Scheme Implementation Deed for 100% of its issued share capital, at an offer of US$ 1.41 per share; this values the equity of the company at US$ 115 million. Silk Logistics is a comprehensive port-to-door logistics services provider which operates twenty-one logistics hubs and twenty-five warehousing sites across five Australian states; it operates two main business segments – Port Logistics, which offers seamless wharf cartage services between Australia’s major ports, and Contract Logistics, which provides warehousing and multimodal distribution solutions to support complex supply chain needs.

With enabling works and piling contracts now completed, Dubai World Trade Centre has initiated the first phase of the Dubai Exhibition Centre expansion at Expo City Dubai. The US$ 2.72 billion masterplan will transform Dubai Exhibition Centre into the region’s largest indoor events venue upon completion. When completed by 2033, it will see Dubai  double the number of large-scale events hosted annually to over six hundred. The DEC will enhance the establishment of Dubai’s new urban centre, comprising Expo City Dubai – the UAE’s first fifteen-minute city – the overall Dubai South community, and Al Maktoum International Airport (DWC). Phase 1 of the construction project is massive, beginning with foundation work, involving five hundred and fifteen piles to support the structure, 14k tonnes of structural steel – equivalent to the weight of two Eiffel Towers – and 48k cu mt of reinforced concrete. The expanded exhibition centre will be covered with 78k sq mt of roof sheeting – an area comparable to sixty-two Olympic-size swimming pools.

It seems that the next DFM IPO off the blocks could be the twenty-year old Talabat, the ME business of Germany’s Delivery Hero, which could see the largest food ordering business in the region sell stock worth more than US$ 1 billion. Over the past twenty years, it has extended its reach from its Kuwait base to the UAE, Oman, Qatar, Bahrain, Jordan, Iraq and Egypt, with over six million active customers as of the end of July; besides food, it provides deliveries of groceries and other goods including health and beauty products. The German parent company, which acquired a majority stake in Talabat in 2015, will retain a majority shareholding. However, Delivery Hero has seen its shares fall over 74% from their January 2021 highs. This comes on the back of a retail spending boom, with a surfeit of public listings, with the latest being only last week – with Lulu Retail raising US$ 1.72 billion on the Abu Dhabi bourse.

Emaar Properties posted impressive nine-month financials with revenue, net profit before tax and EBITDA all moving markedly higher – by 30% to US$ 6.49 billion, by 24% to US$ 3.38 billion and by 17% to US$ 3.43 billion respectively. Property sales came in 60% higher on the year at US$ 13.62 billion, for the nine-month period, which then boosted it revenue backlog figure to US$ 27.25 billion – up 45% from September 2023 and 12% from June 2024.

Emaar Development, specialising in build-to-sell assets, and majority-owned by Emaar Properties, maintained strong momentum during Q3. The company posted nine-month figures – to 30 September – with property sales up 66.1% to US$ 13.08 billion, revenue 69.0% higher at US$ 3.41 billion and EBITDA up 35.0% to US$ 1.60 billion. Emaar sales backlog, (to be recognised as future revenue), reached US$ 22.81 billion – 47.0% higher than in December 2023; by the end of Q3, it had registered fifty successful project launches in 2024.

In the first nine months of 2024, Emaar’s malls and commercial leasing operations posted revenue of US$ 1.14 billion and an EBITDA of US$ 954 million. Over the period, the retail sales performance of its tenants grew more than more than 6% on the year. Emaar Malls prime assets boasted occupancy of over 99% as of 30 September 2024. Over the same period, Emaar’s international real estate operations recorded property sales of US$ 517 million and revenues of US$ 436 million, mainly attributable to operations in Egypt and India. Revenues from international operations represented 7% of Emaar’s total revenue. Emaar’s hospitality, leisure, and entertainment divisions recorded a 7% annual rise in revenues to US$ 708 million, driven by the steady growth in the tourism industry and strong domestic spending. Emaar’s UAE hotels, including those under management, reported an average occupancy of 77%. All of Emaar’s recurring revenue-generating portfolio, listed above, generated US$ 1.85 billion, equating to 29% of Emaar’s total revenue.

In the first nine months of the year, DEWA posted cumulative revenue, up 6.20% at US$ 6.40 billion, EBITDA of US$3.22 billion – 4.71% higher, net profit after tax of US$ 1.50 billion and cash from operations, up 17.83% to US$ 3.16 billion; for Q3, the revenue was 4.75% higher at US$ 2.70 billion, EBITDA was flat at US$ 1.39 billion and cash from operations was 34.20% higher at US$1.61 billion. The utility’s Q3 power generation – at 19.6 TWh – was 3.98% higher on the year, with 9.18%, or 1.8 TWh, sourced from green energy source; the Hassyan power plant, Warsan Waste Management Company and its gas-fired portfolio accounted for 3.25 TWh, 0.32 TWh and 14.3 TWh respectively. There was a 3.41% increase in its quarterly peak demand, on the year, reaching 10.76 GW, with the Q3 gross heat rate of 7,923 BTU/kWh, being the best achieved so far in DEWA history.  There was a total desalinated water production of 40.5 billion Imperial Gallons, 4.64% higher on the year, with the daily demand, increasing by 4.92%, to reach a record 455 million Imperial Gallons. As Dubai’s population rose, (by 3.49% in the nine month period to 3.782 million) so did DEWA’s customer accounts by 4.16% to 1.250 million. In Q3, two 132 kV substations were commissioned, along with four hundred and twenty-six substations. By September 2024, the company’s installed generation capacity was 16.779 GW, with 2.86 GW (17.0%) of this capacity representing renewable energy; by 2030, this should have risen to 20.0 GW. Its installed desalinated water production capacity was unchanged at 495 MIGD and is expected to reach 735 MIGD by the end of the decade. DEWA distributed its US$ 845 million H1 dividend to its shareholders on 31 October 2024.

As expected, Salik Company produced fine Q3 financials with all indicators heading higher – revenue 6.2% higher, on the year, profit before tax 19.6% higher at US$ 83 million, and EBITDA, up 14.0% to US$ 100 million – the highest ever Q3 return.  In the nine-month period to 30 September, net profit was 12.5% higher at US$ 246 million, with the main revenue drivers being toll usage, fines, (on the quarter, and YTD, up by 7.9% to US$ 16 million, and 7.6% to US$ 48 million), and tag activation fees, (on the quarter, and YTD, up by 11.3% to US$ 3 million, and 23.3% to US$ 8 million). The number of revenue-generating trips rose in the nine-month period by 5.1% to 356 million, and in Q3 by 5.7% to US$ 128 million. Revenue from toll gates has also seen strong growth with Jebel Ali, Airport Tunnel and Al Safa up by 16%, 9% and 7%. Future revenue will be bolstered by the addition of two new toll gates – Business Bay gate and Al Safa South gate — which will be operational from 24 November , and bring the number of gates to ten – and the fact that Salik’s inaugural parking solution at Dubai Mall, (with a Q3 revenue stream of US$ 700k, whilst processing some 3.8 million transactions), is now fully operational. Revenue-generating trips are expected to increase in the range of 24% – 25% in 2025, including the contribution from the two new gates, and up to 8.0% this year.

For the first nine months of the year, Parkin posted that the total value of fines rose 26.1% to US$ 47 million, with net profit increasing by 4.9% to US$ 29 million. Perhaps Parkin will better that figure next year, as it plans to add a further twenty-four more smart cars, by year-end, to step up parking inspections. By the end of Q3 2024, the inspection cars had scanned 56.7% more vehicle registration plates, at 4.7 million. The company also upgraded the software on their handheld inspection devices in July 2024, resulting in a marked increase in the number of vehicle plates being scanned and the number of fines issued, compared to prior periods.

Spinneys posted positive nine-month, to 30 September, results, with an 11.4% hike in revenue to US$ 627 million, a 27.1% surge in profit before tax to US$ 55 million, and net profit 14.6% higher at US$ 50 million. Gross profit was up 12.0% on the year to US$ 258 million – equating to a stable gross profit margin of 41.2%, achieved through efficient sourcing and supply chain management. Sunil Kumar, CEO, commented, “All at Spinneys remain firmly committed to delivering on our ambitious growth plans as we widen our footprint in the UAE, accelerate our expansion in Saudi Arabia, roll-out new concepts and deepen our ecommerce offering.”

The DFM opened the week, on Monday 11 November, two hundred and thirty-three points (5.4%) higher the previous five weeks, gained a further 101 points (2.2%), to close the trading week on 4,740 points by Friday 15 November 2024. Emaar Properties, US$ 0.01 lower the previous week, gained US$ 0.12, closing on US$ 2.52 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 5.23, US$ 1.73 and US$ 0.34 and closed on US$ 0.68, US$ 5.26, US$ 1.79 and US$ 0.36. On 15 November, trading was at two hundred and thirty-one million shares, with a value of US$ 134 million, compared to three hundred and fifty-one million shares, with a value of US$ 151 million, on 08 November.  

By Friday, 15 November 2024, Brent, US$ 0.52 higher (0.7%) the previous week, shed US$ 1.29 (2.0%) to close on US$ 72.01. Gold, US$ 60 (2.3%) lower the previous fortnight, shed US$ 95 (4.6%) to end the week’s trading at US$ 2,568 on 15 November 2024. 

A 2021 climate court ruling, that Shell must sharply reduce its carbon emissions, by 45% to 2030, (compared to 2019 levels), has been overturned by the Court of Appeal in the Netherlands; the original ruling was put in place to protect Dutch citizens. The emissions curbs included those caused by the use of Shell’s products, but the judge, in the appeal, dismissed all the claims against Shell, with the petro giant arguing that the 2021 ruling was flawed on many grounds. It was noted that only nation states can set such sweeping demands and that such a cut to its business would only shift output towards its competitors, without any benefit to the planet. However, the court did agree with the climate control activists that Shell had an obligation to cut its greenhouse gas emissions to protect people from global warming; it also noted that Shell was on target to meet required targets for its own emissions.

Volkswagen Group and loss-making Rivian have launched a JV, with the German car giant increasing its investment in the partnership, from an initial US$ 5.0 billion to US$ 5.8 billion. This arrangement comes at a time when the EV sector is struggling, not helped by slowing global demand and increased competition from Chinese rivals. However, both companies will benefit from this JV – Rivian will have a new supply of funding, ahead of the launch next year of its sports utility vehicle R2 model, and VW will be able to use Rivian’s technology in its own range of vehicles. The first VW models, equipped with Rivian technology, are expected to be available to customers as early as 2027. There will be further saving as the two companies plan to reduce development costs and scale new technologies more quickly, with developers and software engineers from both firms initially working side by side in California. Like other major European car makers, VW, which includes the likes of Audi, Lamborghini and Porsche, is struggling with rising costs, slowing sales, increased competition from Chinese EV makers and a slower-than-expected move away from petrol and diesel vehicles.

The UK defence giant BAE Systems is a case to prove that every cloud has a silver lining, having picked up total orders, worth more than US$ 31.8 billion for this financial year alone. Six months ago, it was carrying an order book, valued at US$ 19.1 billion, but like other major defence companies, earnings have shot higher, fed by global conflicts in many locations such as the ME, Ukraine and the Red Sea. Indeed, shares in the firm have grown by more than 115% since the invasion of Ukraine in 2022. 

The EC  has fined Meta  US$ 839 million for breaking competition law by embedding Facebook Marketplace within its social network, which has led the EC noting that this meant alternative classified ads services had faced “unfair trading conditions”, making it harder for them to compete; in addition, it ordered the social network site, which said it would appeal, to stop imposing these conditions on other services, with Meta commenting  that the  Commission had provided “no evidence” of harm either to competitors or consumers. The case arose in 2021, after Meta’s rivals complained that Facebook Marketplace gave it an unfair advantage.

The UN Food and Agriculture Organisation posted that October global food prices hit their highest level in eighteen months, noting that vegetable oils, (with a 7.3% monthly hike), led the increases in most basic food commodities; international prices of a basket of food commodities, were 2.0 points higher on the month at 127.4, with only meat not posting a gain. Sugar prices were 2.6% higher, lower than expected because of production concerns in Brazil, whilst price of dairy products rose by about 2.0%, supported by increased demand for cheese and butter, amid tight supplies; cereal prices nudged up 0.8%, following wheat prices moving higher amid concerns about farming conditions in the northern hemisphere and after an unofficial minimum price for Russian exports, and maize prices, increased.

This week, DIY chain Homebase called in administrators, following a failed attempt at a sale that will result in 55.6% job redundancies, equating to 2.0k.  The remaining 44.4%, (1.6k), will remain after The Range, a general merchandise specialist, acquired seventy-five of the one hundred and thirty stores in a so-called pre-pack deal. Forty-nine other stores will continue to trade while alternative offers are explored.

In a bid to deliver a further US$ 65 million reduction in costs, Direct Line is planning a 5.5k retrenchment among its 10k staff. It is also planning to save further costs, via improvements in procurement, technology and a simplified operating model. This follows a 35.7% reduction in Q3 total gross written premium and associated fees, to US$ 1.08 billion, compared to Q3 2023; YTD the figure was 3.0% higher. There is no doubt that the insurer, whose brands also include Churchill and Privilege, has struggled in the motor insurance sector in what is seen as a tough market. It is estimated that a further 71k own-brand motor customers, (many of whom were online operators, with lower cost bases), were lost in Q3, as average premiums were 3% higher than in 2023. Earlier in the year, Belgian rival Ageas was interested in a US$ 4.09 billion takeover.

It seems that Sanjeev Gupta is to seek court approval for a restructuring plan for his Speciality Steel division in the UK (SSUK) – the bulk of the steel tycoon’s remaining UK operations; if successful, that would significantly reduce its debts. The process is being implemented under Part 26A of the 2006 Companies Act, and it will have no impact on the 1.5k payroll of SSUK but it would require approval of 75% of its creditors – and this could be a problem because the owner has ‘form’ and has been involved in a series of restructuring and cost-cutting measures, including a GBP 170 million request for government assistance which was subsequently rejected. Mr Gupta’s efforts to turn around the business are said by allies to have been hampered by its deep relationship with Greensill Capital, the controversial financial group which collapsed in 2021.

In Australia, a Gold Coast businessman David McWilliams was in court last week, accused of gambling US$ 26 million from funds invested into his NDIS property development company. He, and his wife, have seen the Federal Court ban them from leaving the country and freezing their assets, whilst appointing receivers to thirteen companies run by the NDIS property developer. The action was taken after a tipoff that McWilliams had placed US$ 26,015,695 worth of bets at Star casinos between October 2022 and February 2024, gambling between US$ 329k and US$ 3.29 million per month. His gambling losses, during the period, totalled US$ 2.50 million. The accused, who is also suspected of providing financial services, without a licence, is the sole director of ALAMMC Developments, a company offering investment opportunities for purpose-built, NDIS housing development schemes across Australia. It is reported that investors have deposited more than US$ 45 million on the promise that offered them fixed returns of 10% per year, plus a 15% bonus payment upon completion of the development. It also seems that his good lady, Laura Mary Fullarton, withdrew US$ 1.64 million from company accounts during the same period and it appeared she also used investors’ money to purchase a luxury vehicle and a unit on the Gold Coast. A judgement from Justice Patrick O’Sullivan confirmed that McWilliams could not explain where the money he had gambled came from, and that the scope of the couple’s “suspicious conduct” in the management of investor funds could be described at best as “incompetence or carelessness”, and at worst as “serious breaches of trust”.

Just when the Federal Reserve thought that they had inflation under control, and edging closer to its long-standing 2.0% target, the election of Donald Trump has thrown a spanner in the works. Amid signs of cooling prices and a weaker labour market, the Fed started cutting interest rates in September by 0.50%, and by 0.25% last month, with inflation over the two months being 2.4%, rising to 2.6% in October; in June 2022, the rate had topped 9.0% – a four-decade high. However, with the upcoming Trump administration, there could well be measures taken that could move the inflation temperature higher, including a mix of tax cuts, tariffs and migrant deportations that will maintain pressure on businesses and consumers. Although the overall trend is still moving lower, there are some outliers such as the heavily weighted (in the US price index), housing costs, including rents, rising 4.9%, car insurance at 14%, medical care and education.

In the quarter to September, the UK unemployment rate came in 0.3% higher on the month to 4.3%, whilst the average regular earnings growth fell to its lowest level, since Q2 June 2002, easing 0.1% to 4.8%. There was a 5k decline in the numbers in payrolled employment during the month of September. Furthermore, it appears that the earnings growth rate was propped up only by public sector pay rises, suggesting that private sector awards were continuing to ease. However, others point that there could have been an influence from the new government’s claims, since late July, of a dire economic inheritance including a US$ 28.0 billion black hole in the public finances. Since the late October budget, the private sector has expressed its concerns that some of the measures, mainly a 1.2% hike to 15.0% to national insurance contributions by employers, will hit investment, hiring and pay awards. What the Starmer government does not seem to realise is that job cuts are inevitable in an environment where employer NI contributions have risen and there are further rises in the national living wage. The Labour growth agenda will not be worth the paper it is written on, if these additional costs restrict hiring and cause jobs to be lost.

Despite noting that he had previously avoided commenting on the topic, because of the Bank’s independence from Westminster politics, the BoE governor seems to be following in the steps of his predecessor Mark Carney, by offering his thoughts the EU and Brexit. Many thought, at the time, that the Canadian banker should have been fired for warning about the economic dangers of leaving the EU prior to the vote. He even had to apologise for being proven wrong. Now Andrew Bailey has gone beyond his remit espousing that the UK must “rebuild relations” with the EU “while respecting the decision of the British people” who voted to leave in 2016, adding that one of its consequences has been weaker trade. He added “the impact on trade seems to be more in goods than services… But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting that very important decision of the British people.” He seems to be unaware that the Starmer government remains opposed to rejoining the EU.

Dismal news for the Chancellor, with the UK economy slowing and nudging 0.1% only higher in Q3, but actually shrinking in September, with uncertainty about the Budget being blamed for the weak growth. Even more galling for the new administration was that under the Tory administration Q2 growth was at 0.5%. It was no surprise to hear Rachel Reeves saying she was “not satisfied” with these latest figures which cover the first three months of the new government, especially with Labour making boosting economic growth its top priority. Since the Budget, the government has been widely criticised for tax rises which some reckon will lead to higher prices and fewer new jobs.; on top of that, many leading retailers may well have to increase prices because of the changes. The CBI noted that firms had widely reported “a slowdown in decision making” prior to the Budget, and that once it had been announced it had “set off warning lights for business”. It also added that the increase in National Insurance Contributions for firms, together with other measures such as the rise in the minimum wage, “is expected to trigger a more cautious approach to pay, hiring and investment”. The Office for National Statistics said Q3 growth in the UK was “subdued across most industries”, with the main contributor being the services sector, growing by only 0.1%. In October, Reeves presented what she called a “Budget for growth” which the government’s independent forecaster, the Office for Budget Responsibility, indicated that the Budget measures would only “temporarily boost” the UK and, more worryingly, that the size of the economy would be “largely unchanged in five years”, compared with its previous estimate.

During the UK week, several major banks – including HSBC, Santander, Nationwide, TSB and Virgin – decided to hike mortgage interest rates; this comes hot on the heels of the autumn budget, which many analysts considered inflationary, as many of the costs will have to be borne by employers. Last week, the BoE cut the base rate to 4.75% but struck a cautious note, saying further rate cuts would be “gradual” – and this after high street lenders have been gradually lowering their rates for months. But it is obvious that some banks have not read the message and have started tweaking rates marginally higher – mainly around the 0.3% level.

Using evidence from Canada and Australia, Chancellor Rachel Reeves seems convinced that reforms to the pensions market could “unlock GBP 80 billion” (US$ 101.3 billion) of investment, based on the theory that fewer, but larger funds, can get greater returns. Her idea is that pension schemes get increased returns when they reach around US$ 25.31 billion to US$ 63.29 billion, as they are “better placed to invest in a wider range of assets”. Part of the Starmer government’s plan to boost economic growth is to invest in infrastructure and almost ninety local government pension pots will be grouped together, with defined contribution schemes merged and assets pooled together. Evidence from Canada and Australia shows that the former’s schemes were investing four times more in infrastructure, and Australia three times more, than the UK’s defined contribution schemes. It is also argued that larger pension schemes are able to invest “in a more diverse range of assets, including private equity, which are higher risk, but over time give a higher return”. It also appears that the average Canadian/Australian investor is more likely to be investing in UK infrastructure, or a UK high growth company, than the average UK investor.  The Local Government Pension Scheme in England and Wales will manage assets worth around US$ 633 billion by 2030, currently split across eighty-six different administering authorities, with local government officials and councillors managing each fund. The plan is to move these management funds from councillors and local officials to “professional fund managers”.

By the start of the week, the price of Bitcoin had lifted its head above the parapet to, a new record, of over US$ 80k, mainly attributable to Donald Trump’s election victory; in the build up to it, Trump had pledged to make the US “the crypto capital of the planet”, and to create a strategic bitcoin stockpile. His party also won the trifecta – Presidency, Senate and Congress. Other cryptocurrencies, including dogecoin – which has been promoted by high-profile Trump supporter Elon Musk – are also making gains. One inevitability of his success is the end of the current SEC chair, Gary Gensler, a Biden 2021 appointee, who led the watchdog’s crackdown on the crypto industry to be replaced with digital asset-friendly financial regulators. YTD, Bitcoin has gone 123% higher from its 01 January opening US$ 40.0k to today’s US$89.3k and even topped US$ 90.0k earlier in the week. Over the past month it has surged 36.5% and since the 05 November presidential election, it has climbed 30.7% over the past ten days. The advice is Hold On To What You’ve Got!