Out of Her Depth!                                                              24 January 2025

A new report by fäm Properties estimates that Dubai’s 2024 secondary property market generated capital gains of US$ 16.27 billion, equating to 32% of Dubai’s record high total re-sale value of US$ 51.25 billion. Over the past five years, total re-sale profits have surged 1,300% and 34% higher on the year. According to DXBinteract, of the one hundred and thirty-six areas, the highest amount of capital gain, US$ 1.77 billion, was achieved on Palm Jumeirah, followed by Dubai Marina, Dubai Hills Estate, Downtown Dubai and Business Bay. Jumeirah Village Circle was the top-performing area for ready property developer sales last year and placed second behind Dubai Marina in total re-sale transactions. The increase, value and volume in apartment and villa sales came in at 42.0%, US$ 71.00 billion and 141.2k plus 21.1%, US$ 44.71 billion and 21.1%. Commercial property transactions were up 10.1% in volume to 4.3k units at US$ 2.64 billion, while 4.4k plots sold for US$ 23.57 billion – 2.6% higher.

Good news this week for some property owners in SZR, (from the Trade Centre Roundabout to the Water Canal) and Al Jaddaf area, who can now convert their properties to freehold ownership. The announcement by the Dubai Land Department gave permission for a total of four hundred and fifty-seven, (with one hundred and twenty-eight along SZR), are eligible for conversion to freehold. There is no doubt that this will see property prices surge, in these two localities, as there will be robust demand from both investors and end-users. The DLD will charge each application a 30% conversion fee after which the property will become freehold. An indicator that profits will be high can be seen from what happened when property in Al Wasl became freehold, and prices doubled to US$ 1,226, (AED 4.5k). Furthermore, growing consumer confidence will lead to more robust rental yields, with higher returns coming, with redevelopment and modernising old buildings. Commercial properties also stand to attract international businesses.

Having announced a record 2024 set of results, Sobha is aiming to top that in 2025. Last year, the developer posted sales of US$ 6.27 billion and has forecast a 30.4% rise in Dubai revenue, to US$ 8.17 billion – two thirds of which emanate from its Dubai-based business and the balance from its iconic project, Sobha Siniya Island in Umm Al Quwain. On completion, the island will house 25k residents, in 8k housing units, with 2.14k units already sold since its launch last year. In 2024, Sobha accounted for 10% of Dubai’s real estate market share in 2024 with 11 masterplans across the UAE.

Earlier in the month, in the presence of Donald Trump, Hussain Sajwani pledged US$ 20 billion to be used for investing in the US. This week, Damac’s founder posted that “we are also planning the launch of our Miami-based luxury condominium project this year, which will be designed by the renowned Zaha Hadid Architects,” and “we will continue to evaluate premium real estate as well as data centres opportunities across key US markets.” Edgnex Data Centres by Damac has posted that it has plans to double its initial US$ 20.0 billion investment on the basis of future demand, market opportunity and scalability.

To enhance Dubai’s road infrastructure, to meet ongoing growth and accommodate projected urban and population expansion, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed Al Maktoum, and also the Roads and Transport Authority’s chairman, has announced the US$ 409 million contract for the Al Fay Street Development Project. The project extends from its intersection with Sheikh Mohammed bin Zayed Road, passes through Sheikh Zayed bin Hamdan Al Nahyan Street, and continues to Emirates Road. The project will feature 13.5k mt of bridges, 12.9k mt of roads and five key intersections; it will enhance Al Fay Street’s capacity to accommodate 64.4k vehicles per hour.

‘Dubai Universal Blueprint for Artificial Intelligence’ was launched last year, with the twin aims of promoting AI adoption across industries and consolidating the emirate’s “position as a global leader in emerging technologies”. Since then, the initiative has seen Chief AI Officers appointed in the public sector and schoolteachers trained in AI. This week, Sheikh Hamdan bin Mohammed made a significant announcement concerning Gulf Data Hub. The Dubai-based firm, founded in 2012, posted that it will join with KKR & Co, to invest US$ 5.0 billion towards consolidating its market leading position. The global private equity firm will be acquiring a stake in the Dubai firm which will be one of the largest international investments into a UAE-founded and managed business. The Crown Prince commented that “this landmark investment, the first of its kind in the region, will expand data centre capacity in the UAE and the ME,” adding that “we look forward to welcoming more partners, as we advance Dubai’s digital capabilities and drive AI innovation. Dubai is the future, and the future is Dubai.”

At the fifty-fifth World Economic Forum in Davos, the UAE’s Minister of Economy, Abdulla bin Touq Al Marri, participated in a session titled ‘Hard Power: A Wake-Up Call for Businesses Amid Global Economic Shifts’; he emphasised the private sector’s role as a key partner in driving national economic growth and boosting its competitiveness at both regional and international levels. He also spotlighted the country’s competitive advantages and vibrant business ecosystem. He also added that last year, the number of new economic licenses issued in UAE markets totalled 200k. The minister also spoke on the visionary approach to developing a dynamic and competitive economic legislative framework, based on global best practices. The end result was that it made the country a more attractive destination for global businesses and entrepreneurs whilst enhancing its position as a leading and global hub for business and investment. He also spoke how the country has welcomed the private sector by making it easier, in many ways, to make all necessary enablers and resources to increase its contribution to non-oil sectors.  He also spoke of the global economic risks, including protectionist policies, rising trade tensions, and supply chain disruptions, that act as obstacles for investors, and businesses alike; these need to be addressed by flexible economic strategies, focusing on emerging sectors, boosting economic openness, and supporting a multilateral global economic system. Finally, the Minister indicated that the country views technology as the key tool for overcoming future challenges, and is actively promoting investment in new economic sectors like AI,, fintech, and digital infrastructure.

The latest Global Power City Index report, from the Institute for Urban Strategies at the Mori Memorial Foundation in Japan, ranks Dubai the cleanest city in the world for the fifth consecutive year; forty-seven cities were included in the survey. The emirate achieved a perfect score of 100% in the cleanliness metric, one of the key indicators used to assess the global strength of cities.

Online data base, Numbeo has ranked Abu Dhabi the world’s safest city for the ninth consecutive year, with fourth to seventh places taken by Dubai, Sharjah, RAK and Ajman. Doha came in second place followed by Taipei. Numbeo’s website ranked three hundred and eighty-two cities and evaluation was based on comprehensive safety metrics that checked security systems, community-focused policing initiatives and emergency response capabilities.

According to its Chief Projects Officer, Mohammed Al Shehhi, Etihad Rail will contribute US$ 39.50 billion to the country’s GDP over the next five decades.  He emphasised that the high-speed rail network, connecting Abu Dhabi and Dubai, will not only facilitate rapid and convenient travel but also serve as a catalyst for enhanced economic and social integration. The high speed train, carrying  some four hundred passengers, with speeds of up to 350 kph, will cut the Dubai-Abu Dhabi travel time to under thirty minutes, stopping at six stations including Reem Island, Saadiyat Island, and Yas Island in Abu Dhabi, and stations in proximity to Al Maktoum International Airport and the Jaddaf area in Dubai. The high-speed rail system, operating entirely on electric power, will make a substantial contribution towards achieving the objectives outlined in the “UAE Net Zero 2050′ Strategic Initiative.

A warning to taxpayers in the country, failing to pay the due corporate tax on time, that they will be subject to a monthly payment of 14% per annum. This penalty is imposed on the unpaid tax amount and is calculated from the day following the payment deadline, accruing on the same date each subsequent month. The due date is no later than nine months after the end of the relevant tax period, in accordance with Federal Decree-Law No  47 of 2022 on Corporate Tax and its subsequent amendments.

Salik’s toll-gate operations reported a 2.4% hike in 30 September YTD net profit of US$ 224 million, attributable a 6.5% increase in revenue to US$ 447 million. Last November, with two new Salik gates opening, it is expected that 2025 revenue will show a marked increase of up to 25%, also aided by the increase in road traffic. Starting 31 January, Salik will introduce their new variable road toll gate fees for Dubai’s roads:

                                    Monday – Saturday                           Sunday

01.00 – 06.00 hrs       Free                                                     Free                                        

06.00 – 10.00 hrs       AED 6.00        (US$ 1.63)                  AED 4.00

10.00 – 16.00 hrs       AED 4.00        (US$ 1.09)                  AED 4.00       

16.00 – 20.00 hrs       AED 6.00        (US$ 1.63)                  AED 4.00                   

20.00 – 01.00 hrs       AED 4.00        (US$ 1.09)                  AED 4.00       

On Sundays, excluding public holidays, special occasions, or major events, the toll will remain US$ 1.09 all day and will be free from 1am to 6am. Hours during the holy month of Ramadan, expected to start on or around 28 February, will be as follows:

                                    Monday – Saturday                           Sunday

02.00 – 07.00 hrs       Free                                                     Free    

0700 – 09.00 hrs       AED 4.00        (US$ 1.09)                  AED 4.00                   

09.00 – 17.00 hrs       AED 6.00        (US$ 1.63)                  AED 4.00       

17.00 – 02.00 hrs       AED 4.00        (US$ 1.09)                  AED 4.00

These initiatives also included event-specific parking tariffs aimed at improving traffic flow in Dubai. There are also reports that event-specific parking tariffs, initially near major events around the Trade Centre, will cost US$ 6.81 per hour, (AED 25).

A recent 2024 report by the United Nations Conference on Trade and Development has ranked UAE among the top thirty-five countries globally with the largest shipping fleets by tonnage and capacity. Meanwhile, the Statistical Centre for the Cooperation Council for the Arab States of the Gulf posted that ten Gulf container ports were ranked among the seventy most efficient ports globally in 2024, out of a total of four hundred and five ports worldwide.

Dubai Investments, a listed DFM company, with the  emirate’s sovereign wealth fund holding a stake, announced that it would be IPOing four of its subsidiaries; its chief executive, Khalid bin Kalban, noted that “we think that there are at least four companies in the portfolio worth looking at for IPO,” and that “the discussion is going on now [around] what multiples we are going to get and what value we are going to get for our divestments.” The company has operations in various sectors including:

real estate                                         Properties Investment, Al Mal Capital Reit, Dubai Investment Real Estate, Al Taif Investment and Dubai Investments Park. Assets in Dubai and RAK worth more than US$ 4.08 billion

building materials/construction  Emirates Building Systems and Emirates Float Glass. and district cooling company Emicool. Total asset value – US$ 544 million, with a further 2025 capex budget of US$ 272 million

education                                          Africa Crest Education Fund

financial services and others         Dubai Investments International Limited, Dubai International Holding Company and Al Mal Capital. Its financial portfolio is valued at about US$ 1.36 billion with investments in bonds/equities and private/listed companies

healthcare                                         Kings College Hospital London in Dubai, Clemenceau Medicine International, Global Fertility Partners and Globalpharma                            

Dubai Investments’ total assets by the end of Q3 2024 stood at US$ 6.0 billion, with the chief executive commenting that “I like to reach a maximum AED 25 billion, (US$ 6.81 billion) and then start offloading some of the companies, or exiting from some of the companies”.

The DFM opened the week, on Monday 20 January fourteen points, (0.5%), lower the previous week, gained twenty-six points (0.3%), to close the trading week on 5,226 points by Friday 24 January 2025. Emaar Properties, US$ 0.05 lower the previous week, gained US$ 0.13, closing on US$ 3.62 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.72, US$ 6.06, US$ 1.99 and US$ 0.42 and closed on US$ 0.71, US$ 6.10, US$ 2.05 and US$ 0.43. On 24 January, trading was at two hundred and three million shares, with a value of US$ one hundred and thirty-five million dollars, compared to two hundred and fourteen million shares, with a value of US$ one hundred and twenty-one million dollars on 17 January.

By Friday, 24 January 2025, Brent, US$ 7.95 higher (10.9%) the previous five weeks, shed US$ 2.34 (2.9%) to close on US$ 78.55. Gold, US$ 102 (3.9%) higher the previous fortnight, gained US$ 94 (3.5%) to end the week’s trading at US$ 2,781 on 24 January 2025.

According to GCC-Stat, the Gulf commercial fleet accounted for 54.2% of the total Arab commercial fleet in 2023. Data further revealed that most GCC countries surpassed the Arab average in the Liner Shipping Connectivity Index, recording 100.5 in 2023. Additionally, the number of major Gulf seaports exceeded twenty-five last year. Regarding container productivity, two Gulf ports were listed among the high-production ports with output exceeding four million containers, while eight ports were classified as medium-production ports, with output ranging between 0.5 million and four million containers.

There are reports that the world’s second largest mining company, Rio Tinto, is holding merger talks with the global commodities trader Glencore. It seems that the mining giant is in the market to acquire more future-facing commodities such as lithium. Like other major rivals, Rio is flush with cash and will be looking to distribute that cash and expand their asset sizes.

In 2024, there was an annual 5.9% rise, to US$ 12.3 trillion, in assets of China’s centrally administered state-owned enterprises. As reported by the Assets Supervision and Administration Commission, the total profits of these enterprises reached US$ 355.0 billion, with spending on R&D topping US$ 150.2 billion. Fixed-asset investment by the SOEs, including real estate, grew 3.9%, on the year, to US$ 723.5 billion and strategic emerging industries, up 21.8%, to US$ 368.6 billion.

Driven by December industrial production surging 6.2% higher, on the year, (mainly down to external frontloading demand), China’s 2024 economy expanded 5.0%, (US$ 18.77 trillion). The country’s troubled property market continued to stabiliselast month, with the decline, in prices for new and second-hand homes and residential property sales, slowing down, but whether any improvement can be maintained going into 2025 is problematic. Data for the property sector, including sales and new construction starts measured by floor area, showed some improvement, boosting sentiment.

Most people, with mortgages here and the UK cannot wait for interest rates to be cut from the current 4% – 5% level, should count their blessings when news this week saw Türkiye’s central bank has lowered its key interest rate by 2.5% to 45%, as official figures showed inflation was easing.

The fact that in December, Australia’s unemployment rate nudged 0.1%, is another indicator that the chance of a rate cut at the next RBA meeting next month is slowly diminishing. Last month, 56k people found work – easily beating the 15k market expectation – but that this may not be enough to justify cutting rates. The monthly CPI indicator rose 0.2% on the month in November to 2.3%, with the annual movement for the monthly CPI indicator, excluding volatile items and holiday travel, was 2.8% in November, following a 2.4% rise in October. Another sign of the current strength in the labour market is the employment to population ratio being at a record high 64.5%, with the unemployment rising to 4.0%, attributable to more people looking for work. However, an increase in labour force participation led to the number of unemployed people also increasing by 10k. December witnessed 80k part-time jobs being created whilst full-time jobs fell by 23.7k. The Q1 fiscal figures, (ending 30 September), indicated that there was an annual 0.6% slowdown to 3.5%, on the quarter, in wage growth figures.  There is a school of thought that says that inflation tends to be higher when unemployment is low and the job market is strong, due to upward wage pressure. It seems that the RBA has somehow managed to have full employment, without the associated inflationary wage pressures. Over the coming months, the jobs market will become tighter but what happens if the economy slows?

Last week’s blog noted that the World Bank had predicted 2.7% global growth this year which would be its weakest performance since 2019, aside from the sharp contraction seen at the height of the Covid pandemic. This week, it is the IMF’s turn, noting that inflation is moderating back towards central bank targets and growth holding steady at 3.3% for this year and 2026. The IMF expects higher US growth, than previously predicted, to offset lower growth in other major economies. It highlights concerns with the arrival of Donald Trump and the risks involved if he were to introduce tariffs, (that could be 10% globally on imports, 25% on imports from Mexico and Canada, as well as 60% for Chinese goods), and warns an inflationary US boom could be followed by a possible bust that would potentially “weaken the role of US Treasuries as the global safe asset”. He has also said he would impose 100% tariffs on ther BRICS bloc of nine nations, (including the UAE), if they were to create a rival currency to the US dollar. Furthermore, with the likes of Elon Musk in his cabal, if red tape is cut too much, this could lead to a surging dollar that would see other currencies heading downwards which in turn could lead to a further economic slowdown. In addition, any move by the new Trump administration to deport illegal immigrants could “permanently reduce potential output” and also raise inflation.

The IMF noted that although global inflation is nudging lower to central bank targets, there are risks and uncertainty ahead. It noted that “key risks include a sharper slowdown in Europe, due to energy costs and public debt concerns, and in China, where insufficient policy support could trigger a stagnation trap. In the US, fiscal and trade policy shifts, as well as possible curbs on immigration or a confidence boom fuelled by expected deregulation, could act in opposite directions to affect output but overall can stoke inflationary pressures, requiring tighter monetary policy. These dynamics could strain emerging markets through tighter financial conditions and a stronger US dollar”.

A day after her husband launched the $Trump cryptocurrency, (with a market value of US$ 12.0 billion), his wife, Melania Trump has introduced a cryptocurrency, $MELANIA – a crypto asset created and tracked on the Solana blockchain – on the eve of her husband’s inauguration on 20 January. According to the CoinMarketCap website, $Melania’s stands at around US$ 1.7 billion. It seems that both coins were “not intended to be, or the subject of” an investment opportunity or a security. During his campaign, the new President commented that he would create a strategic bitcoin stockpile and appoint financial regulators that take a more positive stance towards digital assets.

Following the entry of sports programmes to the Netflix portfolio, along with an improved and enhanced content line-up, shares in Netflix soared over US$ 994.36 million on Wednesday; a blockbuster Q4, which saw a record number of new subscribers, adding 18.9 million or 44.3% on the year, also witnessed its market cap surging US$ 53.0 billion to US$ 425.0 billion. The stock’s twelve-month forward price-to-earnings ratio stands at 35.43 compared with Walt Disney’s 19.19. Last year, Netflix’s stock soared about 83%, compared to Disney’s 23%, whilst Warner Bros Discovery dipped 7%.

Last Saturday, TikTok went ‘dead’ but within twenty-four hours it had resumed normal service to its one hundred and seventy million users in US, after the new President said he  would issue an executive order to give the app a reprieve when he takes office. The Chinese-owned app stopped working for American users, after a law banning it on national security grounds came into effect, and after no US buyer had shown interest in buying the app by the appointed date of 19 January. The tech company thanked the incoming president for “providing the necessary clarity and assurance” and said it would work with Trump “on a long-term solution that keeps TikTok in the United States”.

The Stargate Project was announced by Donald Trump this week which brought together the combined forces of the leaders of OpenAI, Oracle and Softbank with another US tech giant, a Japanese investment firm and MGX, an Emirati sovereign wealth fund. Other technology partners include British chipmaker Arm, US chipmaker Nvidia and Microsoft, which already has a partnership with OpenAI. Its immediate aim is to construct US$ 500 billion of AI infrastructure in the US. Although the country is seen as the global leader for AI, the new President opined that he needed to intervene to help the industry. Some of the mega tech giants actively involved in AI investment are Microsoft, set to invest US$ 80 billion to build out AI-powered data centres this year, and Amazon, announcing two projects worth about US$ 10 billion each in just the last two months. It is estimated that global demand for data centre capacity would more than triple by 2030, growing between 19% and 27% annually by 2030.

As it is reported that China is still actively involved in “sending fentanyl to Mexico and Canada”, Donald Trump said he was considering a 10% tariff on imports of Chinese-made goods as soon as 01 February; this is a lot less than the 60% he was talking about late last year. Earlier he had threatened Mexico and Canada to levy 25% tariffs on imports, accusing both countries of allowing undocumented migrants and drugs to come into the US. The EU also continues to be in the presidential firing line, with his comments that the EU “treat us very, very badly”, and “so they’re going to be in for tariffs. It’s the only way you’re going to get back. It’s the only way you’re going to get fairness.”. Last Monday, the new president also instructed federal agencies to conduct a review of existing trade deals and identify unfair practices by US trading partners. These measures, if enacted, will lead to higher prices for US consumers – and if these nations retaliated with their own import levies could impact on US exports.

An agreement between the UK Ministry of Defence and Rolls Royce sees a US$ 11.24 billion contract for nuclear submarine reactors – the biggest ever between them. The eight-year contract, called Unity, is designed to make the design, manufacture and support services for reactors more efficient and environmentally friendly. It is hoped it will create more than 1k UK jobs and safeguard 4k other roles

It appears that Pepco Group, which has owned Poundland since 2016, has hired AlixPartners to address a sales slump which has raised questions over its future ownership; it has a market cap of some US$ 2.09 billion, and employs some 18k. No final decision has yet to be made but the advisers will be looking at the likes of a company voluntary arrangement, a formal restructuring process – that would almost inevitably result in many of the eight hundred and twenty-five stores closed –   and even a sale of the business. In the short-term, the emphasis will be on improving Poundland’s cash performance and reviving the chain’s customer proposition, having seen a like-for-like sales slump of 7.3% during the Christmas trading period. Pepco stated that Poundland had suffered “a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment”. Poundland’s crisis contrasts with the health of the rest of the group, with Pepco and Dealz both showing strong sales growth.

Sainsbury’s has revealed plans to cut more than 3k positions as it is to close all of its sixty-one remaining in-store cafes, in a move to save money in the face of a “challenging cost environment”. In addition, there will be retrenchments, seen both at head office and among senior management roles. Like many other businesses in the UK, it is going to suffer from  a massive jump in costs, brought on from measures taken in the October budget. It would do Rachel Reeves well to read what chief executive, Simon Roberts, had to say – “we are facing into a particularly challenging cost environment which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective”. He had earlier warned then that additional costs would be met with consequences, including higher prices for customers, as the chain did not have the “capacity to absorb” a “barrage of costs”, including an extra US$ 174 million from April to cover the cost of additional employer national insurance contributions alone. The company has a payroll in excess of 148k.

Lakeland, one of Britain’s most prominent privately held retailers, is yet another leading retailer struggling and now exploring a sale, after more than sixty years, amid growing cost pressures sweeping the industry. Lakeland, which employs roughly 1k people, in its fifty-nine 59 stores, at its head office in Windermere and its distribution centres, has appointed advisers to seek a possible sale.

Over the sixteen-week period to 04 January, Primark posted a 6.0% decline in UK and Ireland like for like sales – an indicator that even the discount retailers are facing a tough time. These two countries account for almost half of the company’s revenue, but these losses were partly offset by improved business in key emerging markets of the US, France, Spain, Italy and Portugal. Primark has downgraded its 2025 sales forecast from an earlier single-digit growth to “low single-digit” sales growth. To make matters worse, the British Retail Consortium’s latest Sentiment Monitor showed declines in expectations for both the economy and personal finances, with the outlook for UK consumer confidence diving to a new low.  Like Sainsbury’s, and most UK retailers of any size, Primark is just another victim of the October Budget that will see the retail sector facing US$ 8.71 billion in additional costs from the budget and new packaging levy. Little wonder that the economy will stagnate even more come April.

HM Revenue and Customs confirmed that it has no central record of how many investigations it is carrying out into Russian sanctions. No-one involved with the implementation and management of these sanctions can take credit and should be ashamed to admit that while it had issued only six fines, in relation to sanction-breaking since 2022, it would not name the firms sanctioned or provide any further detail on what they did wrong. Meanwhile, the Office of Financial Sanctions Implementation has so far only imposed a single US$ 18.4k fine for breach of financial sanctions.

Some major supermarkets have come out on the side of the farmers in their dispute against the Starmer administration over the introduction of inheritance tax on farms, worth over US$ 1.24 million. Tesco, Lidl and Aldi, which make up about 45% of the UK grocery market, have noted that  “the UK’s future food security is at stake” and the government should pause the introduction of inheritance tax on such farms. Asda and Morrisons have already been vocal about backing farmers in the dispute and Sainsbury’s has also called for the government to listen to concerns, while M&S also released a supportive statement on Wednesday. There is also concern and a warning from the Office for Budget Responsibility that some farmers may slash investment because of these tax changes and may even consider “potentially running down the value of estates”, to limit their tax liability The OBR has also estimated that the tax would only raise a highly uncertain US$ 621 million a year by 2029.

There are many analysts who think that the Office for Budget Responsibility’s estimate, that this abolition will reap US$ 3.65 billion for the Exchequer, is far too optimistic. Some think that it will cost the government, up to a potential of US$ 1.0 billion, whilst others consider that any increase will be well down on the government’s estimate. The Adam Smith Institute estimate that by 2035, these reforms will make the economy US$ 1.58 billion, (GBP 1.3 billion) smaller than it would otherwise have been, which could lead to over 23k job losses. The Growth Commission has warned that it could potentially see the GDP dip 0.5%, whilst cutting revenue by US$ 6.09 billion, (GBP 5 billion). Currently, inheritance tax for a non-dom is only charged on UK-based assets; after 01 April, it will be not only UK but all global assets.

The world body has upgraded its growth forecast for the UK economy this year, to 1.6% – 0.1% higher than its previous estimate – with the Trump caveat that the introduction of tariffs will take all bets off the table; if that were to happen, it sees trade tensions worsening, lower investment, and supply chains disrupted across the world. The IMF report could be seen as a mini boost for the embattled UK Chancellor of the Exchequer who can claim that the UK was the only G7 economy, apart from the US, to have its growth forecast upgraded.

Robust wage growth, of 3.4%, in the private sector, for the quarter ending 30 November, was the main reason that the UK pay after inflation has risen at its fastest rate for more than three years; growth in the public sector jobs lagged behind. Notwithstanding that the latest wage figures could be a portent for pushing  inflation, currently 0.1% lower at 2.4%, higher, the odds seem to be pointing to the BoE cutting interest rates by 0.25%, to 4.5%, next month. Now that the gap between inflation and pay is biased towards pay for the first time since late 2022 and growth has flatlined. The unemployment rate has nudged up to 4.4%, while the estimated number of vacancies dropped 2.9% to 812k in Q4, continuing the decline but still remaining above pre-Covid pandemic levels; it seems that the main driver for firms putting hiring on hold was a result of the tax rises announced on businesses in the Reeve October Budget, (ROB).

Yet another cause for concern about the state of the UK economy came with official figures noting that UK shop sales unexpectedly fell, by 0.3%, in the run up to Christmas due to a “very poor month” for food being sold in supermarkets; the market had expected an 0.4% rise, as food

sales sank to their lowest level for more than ten years last month, marginally offset by rising sales in clothing/shoe shops, (up 4.4%), and department stores. Not only did the retail sector see a disappointing drop in sales volumes in supermarkets, but also butchers and bakers, along with alcohol and tobacco/vaping shops also struggled. Strangely, Tesco and Sainsbury’s both posted strong trading figures over the festive season. Even Rachel Reeves had to admit that the government had to “do more to grow our economy”, in order to boost living standards, and she will have to lift her game this year to stay in the job.

Many companies and sole traders have been critical of some of the measures that the Chancellor in the first six months of her tenure, initiated – triple hits of the 1.2% rise to 15.0% in the rate of National Insurance paid by employers, a 50% reduction in the NI threshold and an increase in the minimum wage. This week, another leading figure in the retail sector, Next’s Lord Wolfson, came out saying the changes could make it “harder for peoplke to enter the workforce”. A PwC spokesperson noted that 2025 was likely to see the return of “higher price inflation, as retailers pass on the increasing cost of doing business”.

Henley & Partners has posted that the UAE has become the second most popular destination for high-net-worth individuals looking to leave the UK for many reasons as the country continues to roll from one crisis to another. The report indicates that in 2024, a record number, at a record annual increase of 157%, (10.8k), of millionaires left the country, with eight hundred of them moving to the country – with 6.7k heading to the EU. The main reason is as a result of the Starmer administration announcing changes to the tax system, including to the current non-doms status which will see them having to pay inheritance tax as from this April; previously, non-doms paid a US$ 36.5k GBP 30k) annual fee to HM Revenue & Customs to protect their offshore income and gains.

Despite all the economic headwinds facing the UK and the Chancellor of the Exchequer, including public at a higher than expected borrowing, Rachel Reeves says she is “optimistic” on the UK economy, even if after public borrowing rose more than expected in December – at US$ 21.90 billion, and 21.9% higher than market expectations; December interest repayment came in at US$ 10.21 billion. Although tax receipts were higher, they were offset by National Insurance cuts made by the previous government, along with expenditure on public services, benefits, and debt interest which were all up on the year. Add to the mix that recent figures show that the UK economy is flatlining and it is easily seen that the Chancellor is under pressure. The Starmer administration continues its mantra that ‘economic growth is its top priority’, whilst she has repeated her pledge to go “further and faster” to deliver growth. However, the country’s biggest lender, Lloyds Bank, noted that business confidence had “waned further”, with price rises to slow activity this year. There are many who think that the Chancellor’s time in the job is almost over, and it does seem that she may be Out of Her Depth!