Sorry Seems To Be The Hardest Word!                   13 June 2025

According to consultancy Cavendish Maxwell, with 73k new homes slated for delivery by 2025, and an ambitious target of 300k units by the end of 2028, Dubai is undergoing one of the most significant residential expansions in its history. Assuming a 6% population growth, there will be 4.878 million residing in the emirate by the end of 2028, and assuming that the number of units at the end of 2024 was at 860k, there would be 1.160 million units, (860k + 300k), in 2028, split between 948.6k apartments, (housing 3.889 million), and 211.4k villas, (housing 1.120 million); this shows that 5.009 million will be housed – a gap of only 131k. (This is based on the assumption that the average apartment will house 4.1 people and the average villa 5.3). However, add in empty properties, (that could be as high as 10%), Airbnb, second homes, units being upgraded etc, then there still will be an inventory shortage in 2028. However, it is all but inevitable that this almost five-year bull run will eventually come to a soft landing, as some major global economic event(s) hit(s) consumer/investor confidence.

There is no argument that the market is softening, as witnessed in Q1 which recorded a 10% decline on the quarter but was still 23% higher on the year. The average Q1 price increase of 2.8% was lower than the 4.0% a year earlier pointing to both a stabilising and a maturing market. During the period, the ninety-five launches will, at the earliest hit the market by H2 2027. About 9.3k of these units were completed, with villas/townhouses accounting for almost 20% of the total, and apartments the balance. As noted in previous blogs, Jumeirah Village Circle led the field with 4.33k units and 3.33k apartment sales.in both completions and transactions.

Increasing by 32% on the year, the 29k off-plan sales, accounting for 70% of the total, contributed US$ 21.12 billion In the secondary market, there was 6.6% annual rise, to 13.2k transactions, with apartments accounting for 76% of the total, townhouses 17% and villas 7%. When it comes to luxury homes, (considered to be over US$ 5.45 million), there was a 22.9% annual hike to five hundred and ninety homes; 67% of sales were for off plan properties, whilst the average property price was up 16% to US$ 418 per sq ft.

There was a marked slowdown in rentals, with Q1, 1.0% higher on the quarter, compared to 14.4% on the year, (the slowest pace in two years), driven by the growing supply of new units and the implementation of the Dubai Smart Rental Index. Although some areas, such as Dubai Investments Park, International City, and Downtown Jebel Ali, still have 10.3% rental returns for apartments, and Industrial City with a 6.0% villa rental return, average rental yields  for apartments and villas at 7.3% and 6.0% remain attractive.

According to fäm Properties, Dubai saw May property sales worth US$ 18.20 billion – 49.9% higher, compared to May 2024 – whilst the 18.69k monthly transactions is the second-highest month on record for volume. In May 2020, there were 1.4k transactions, valued at  only 627 million – how times have changed over the past five years!

Despite some doomsayers pointing to a 15% correction by the end of the year, there is no doubt that the emirate’s real estate market will continue its upward trend for the remainder of 2025, driven by robust economic performance, growing foreign investment, and evolving buyer behaviour. With prices in ‘old’ Dubai reaching new highs and presenting an affordability question for an increasing number of investors, they are expanding their reach to new outlying

communities, mid-market opportunities, and assets with stable long-term returns. This is in an environment where economic indicators point to a very healthy Dubai economy – GDP is expected to grow by 5% – 6%, diversification policies now see non-oil sector accounting for 70% of Dubai’s economy, the DFM having reached a seventeen-year high, FDI 15% higher on the year and local tourism is booming, (up 7.0% to 7.15m in the first four months of 2025).

Meraas has launched the twin tower, Jumeirah Residences Emirates Towers, featuring seven hundred and fifty-four branded residences. The development, with a distinctive cantilevered architectural form and designed by SCDA Architects, will house one-to-four-bedroom apartments. Both towers offer sweeping views of the Museum of the Future and Downtown Dubai, with each residence having complete privacy. There will be a private entrance under the striking cantilever leading to a double-height lobby, serene garden courtyard and lounge. The three exclusive sky terraces feature infinity-edge pools, landscaped lounges and open-air entertainment spaces. Other features will include a state-of-the-art fitness centre, with dedicated studios, an executive co-working lounge, a private cinema, a resort-style family pool, padel courts, a children’s play zone and well-curated social and dining venues. Residents will have access to bespoke wellness treatments, personal fitness coaching, twenty-four-hour concierge services and vehicle management; they will also have access to private chefs.

This week saw Dubai South Properties launch of ‘South Square’, a new luxury residential development, located along Sheikh Mohamed bin Zayed Road, and near to Al Maktoum International Airport. Located within the project, ‘S4 Tower’ was completely sold out within just three hours. South Square offers five hundred and fifty apartments, with completion slated for Q4 2028. 2024 residential sales in Dubai South exceeded US$ 5.18 billion.

The last two penthouses, at Bulgari Lighthouse on Jumeirah Bay Island, have sold for a combined US$ 77 million plus. A five-bedroom residence, spanning 11.7k sq ft, garnered US$ 40 million and the other for US$ 77 million. The project – with less than forty residences -was designed by Antonio Citterio and Patricia Viel. It has a ‘coral-inspired façade’ shielding each home ‘while framing uninterrupted views of the Arabian Gulf and Downtown’s skyline’. Terraces feature private infinity pools, and ‘double-height salons are finished in Italian marble, warm oak and hand-laid silk panelling’.

H&H has launched Eden House Za’abeel, with architecture by DXB Lab, complemented by Tristan Auer’s interiors and landscaping by Vladimir Djurovic. The building’s distinctive textured concrete facade and a sculptural silhouette will make it stand out in the area, with the tower enveloped in pockets of rich greenery, including open courtyards. The development comprises a range of one-to-three-bedroom apartments, with prices starting at US$ 1.29 million, and built-up areas from 1.13k sq ft to 3.04k sq ft. Completion is slated for June 2028.

Some forget that there is more to Dubai’s real estate sector than the residential sector, and includes commercial, industrial, retail, and hospitality segments. All indicators point to upward momentum in all sectors, mainly driven by strong investor demand, new economic policies, and a continued appetite for prime space. JLL’s Q1 2025 Market Dynamics report shows Dubai office occupancy rates has just 8.6% vacancy – a new low – with prime areas having a near-zero vacancy rate (0.2%).

Industrial and warehouse rents continue to surge with warehouse rents climbing 12.5% on the quarter. Dubai’s top-tier malls posted a mega 29.5% jump, at US$ 225 per sq ft, as super-regional and regional malls came in with average 9.0% rentals.

With a Q1 2.5% increase in overnight visitors, to 5.31 million, economic indicators registered impressive returns; average occupancy was at 82.2%,  average daily rate, 28.1% higher on the year, at US$ 206, as revenue per available revenue rose to US$ 165. It is estimated that there will be 4.7k new keys by year-end, mostly in the luxury segment.

Following the successful launch of Dubai’s first tokenised property in May 2025, which was fully subscribed within twenty-four hours, the second off the block was Kensington Waters at Mohammed Bin Rashid City. With a total valuation of US$ 409k, with fractional ownership starting at US$ 545. DLD’s second tokenised real estate project, which attracted one hundred and forty-nine investors from thirty-five nationalities, sold out in a record one minute and 58 seconds, marking a world-first for blockchain-backed property investment speed. Participants in the project received official Property Token Ownership Certificates, issued by the DLD, ensuring legal recognition of their fractional ownership. The tokenisation platform, PRYPCO Mint, is operated as a joint initiative between Dubai Land Department and PRYPCO and is licensed by the Virtual Assets Regulatory Authority.

As it is working on a US$ 812 million land deal, with Amlak Finance, to buy a land package in Ras Al Khor, it was welcome news that Emaar Properties’ credit rating has won an upgrade from both S&P Global and Moody’s. The ratings upgrade from S&P and Moody’s puts ‘Emaar’s position as a financially resilient and strategically agile market leader’. S&P upgraded Emaar’s long-term issuer credit rating to BBB+ from BBB, and Moody’s to Baa1 from Baa2 with a stable outlook. As of end March 2025, Emaar had a revenue backlog of about US$ 34.6 billion, providing for ‘strong revenue and cash flow visibility through 2028’.

What will become the emirate’s largest privately-owned logistics development has been announced by two Dubai companies – Dutco and Sweid & Sweid. Terralogix, a 3.3 million sq ft project, will be located in Warsan, an area of Dubai that has comparatively limited industrial development, at a time when demand is at all-time high. Construction of Phase One is already underway, with completion scheduled for Q3 2026. The founder of one of the stakeholders, Maher Sweid, noted that “together, we will be delivering Terralogix as a landmark project to spearhead the evolution of Dubai’s industrial sector”. The development is well located with direct links to major highways and easy access to Dubai’s airports and seaports.

Last December, Dubai’s Roads and Transport Authority announced that it awarded a  US$ 5.59 billion contract to three prominent Turkish and Chinese companies – Mapa, Limak, and CRRC – to construct the emirate’s new Blue Line. It will carry 46k passengers per hour – each way – and will service nine key districts across the city — Mirdif, Al Warqa, International City 1 and 2, Dubai Silicon Oasis, Academic City, Ras Al Khor Industrial Area, Dubai Creek Harbour, and Dubai Festival City. The development will span thirty km, with twenty-eight trains, bringing the current railway network to seventy-eight stations and one hundred and thirty-one km. It will feature fourteen stations, including three interchange stations: Creek Station at Al Jaddaf on the Green Line, Centrepoint Station at Al Rashidiya on the Red Line, and International City 1 Station on the Blue Line; five of the stations  will be underground, one of which will be the largest underground interchange station in the network, spanning over 44k sq mt,  with a projected daily capacity of 350k. The new line will also include the first Dubai Metro bridge crossing Dubai Creek, which is expected to stretch over an area of 1.3k mt. It is expected that the first trip on the Blue Line will take place on 09 September 2029 – twenty years after Dubai Metro was inaugurated at exactly the ninth second of the ninth minute at 9pm on 09-09-2009. It was no coincidence that the Dubai Ruler laid the foundation stone for the new Metro line on 09 June.

During the ceremony, the design of the Emaar Properties station — the highest Metro station in the world, at seventy-four mt and covering some eleven sq mt— was unveiled, showcasing a regal golden cylinder-like structure, with motifs embossed on its exterior. The RTA revealed that Emaar had secured the naming rights for the station for the next ten years, starting from its official inauguration in 2029. The design for the new station, inspired by the concept of a crossing gateway, was designed by the renowned American architectural firm Skidmore, Owings & Merrill (SOM),

It was not long ago that many so-called analysts were forecasting the end of cryptocurrencies, but they have been proved wrong, as they are rapidly becoming part of life in Dubai. Last month, an agreement, between Dubai’s Department of Finance and Crypto.com, will enable digital payments for government services. With adoption rates surging, residents can already pay utility bills, food bills etc in an increasing number of establishments.

The FT has posted that a special judicial committee in Dubai has reportedly asked the parent company of MAF to restructure its board, trying to end years of turmoil, after the death of its billionaire founder, and secure the future of the owner. The group’s founder, Majid Al Futtaim, died in 2021, with Dubai’s Ruler, HH Sheikh Mohammed bin Rashid, establishing a special judicial committee to look after his estate; two of its aims are to look after the estate and guide it through generational change. MAF Capital, which oversees its group of companies, has stated that the changes “reflect a shareholder-led effort to evolve governance in line with the long-term interests of the Group. These changes do not affect the operations or governance of Majid Al Futtaim Holding. Majid Al Futtaim continues to operate under an independent board and strong oversight.” MAF’s revenue topped US$ 9.0 billion in 2024.

Alvarez & Marsal’s latest report indicates that the Q1 aggregate net income of the top ten local banks in the country surged, quarter on quarter, by 8.4%, to US$ 6.05 billion. They shape over 80% of the UAE’s banking activity, providing a reliable proxy for sectoral trends. Growth was reported in deposits by 5.8%, (driven by a robust 7.6% rise in current and savings accounts outrunning loan increases), as operating expenses declined by 7.8%. The top ten listed banks assessed in the report was headed by First Abu Dhabi Bank, with Emirates NBD, Dubai Islamic, Mashreq, and Commercial Bank of Dubai ranked second, fourth, fifth and seventh respectively. The local banking sector has been benefitting from a healthy economic environment, progressive government policies and an upbeat economy.

RAKBank, in partnership with RFI Global, released its latest SME Confidence Index, covering 1.2k UAE-based SMEs, and collected in Q4 2024, highlighting a promising outlook for sector. The SME Confidence Index dipped four points, on the year, to 57, measured against a base score of 50, with the findings reflecting a stable and optimistic sentiment against a dynamic economic environment. 68% of SMEs surveyed saw the future business environment as favourable, and more than 60% reporting revenue growth over the past two years. The report noted that consumer and retail services remain the highest-performing sector, attributable to a continued rise in consumer spending. While consumer and retail services SMEs achieved a sector confidence score of 60, construction and manufacturing (57), transport (57), and trading (58) remained steady in confidence, while public services and professional services saw more notable declines to 56, largely due to increased costs and lower confidence in debt servicing. Over 67% of SMEs experienced higher operational costs, while only 39% expressed confidence in meeting debt obligations, down from last year. 22% of SMEs now sell their products or services online, and 45% use digital banking channels monthly. RAKBank has over US$ 2.72 billion exposure to the SME segment and has recently strengthened its SME lending through a US$ 272 million co-financing partnership with Emirates Development Bank.

Under its US$ 20 billion Global Medium Term Note Programme, the Industrial and Commercial Bank of China Limited listed three, three-year Green Bond issuances totalling US$1.72 billion on Nasdaq Dubai. The listings included ICBC Hong Kong Branch, Singapore Branch and Dubai (DIFC) Branch for US$ 1.0 billion Floating Rate Notes, US$ 300 million 4.125% Notes and CNH 3.0 billion 2.00% Notes. The bank is both the leading Chinese issuer and the leading RMB denominated bond issuer on the bourse, with a cumulative total of US$ 5.6 billion outstanding bonds in the UAE. Following this listing, Nasdaq Dubai’s total debt listings have reached US$ 136.0 billion, including US$ 40.0 billion in bonds and US$17.0 billion in Green Bonds. The exchange’s ESG, (environmental, social and governance) related issuance portfolio stands at US$ 29.0 billion.

Last week, Nasdaq Dubai welcomed Mashreq’s début first US$ 500 million listing, issued under Mashreq’s US$ 2.5 billion Trust Certificate Issuance Programme. The five-year Trust Certificates are being admitted as a secondary listing following strong demand in the primary market. This marks an important milestone for Mashreq as it makes a successful return to the international debt capital markets and strengthens its presence in the Islamic finance space. The orderbook was 5.8 times oversubscribed, with participation by over ninety global investors, with a fixed profit rate of 5.03% pa. This issue takes the total value of Sukuk listed on Nasdaq Dubai to US$ 97.2 billion, with the overall value of debt securities listed on Nasdaq Dubai at US$ 140 billion, across one hundred and sixty-three issuances. These figures point to Nasdaq Dubai’s position as one of the world’s largest centres for Islamic fixed income and Dubai’s enhanced appeal as a gateway for regional and international investment.

Last Tuesday, shares of the Emirates Islamic Bank stopped trading on the Dubai Financial Market, after Emirates NBD decided to buy up all shares in EIB not held by it.  At the mandatory February offer date, ENBD owned 5.42 billion shares in EIB, which adds up to 99.89% of the latter’s ordinary share capital. EIB will continue to operate under the normal course of business and maintain its operations, working as the Islamic banking subsidiary of ENBD.

Announcing its first dividend since 2019, the Dubai-listed Emirates REIT has confirmed a final cash dividend. This was approved by shareholders of the parent entity, Equitativa (Dubai), to distribute a final cash dividend of $7 million (or $0.02 per ordinary share) for the 2024 period.

The DFM opened the week, on Monday 09 June, six hundred and eighty-two points higher, (13.4%), on the previous nine weeks, took a hit of one hundred and seventy-one points (3.1%), to close the trading week on 5,365 points, by Friday 13 June 2025. Emaar Properties, US$ 0.06 higher the previous week, shed US$ 0.22, closing on US$ 3.42 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.75 US$ 6.02 US$ 2.31 and US$ 0.44 and closed on US$ 0.74, US$ 5.78, US$ 2.29 and US$ 0.41. On 13 June, trading was at four hundred and sixty-two million shares, with a value of US$ three hundred and ten million dollars, compared to three hundred and eighty-nine million shares, with a value of US$ two hundred and fifty-four million dollars on 04 June 2025.

By Friday, 13 June 2025, Brent, US$ 2.63 higher (2.2%) the previous week, gained US$ 7.31 (11.0%) to close on US$ 73.84. Gold, US$ 207 (6.6%) higher the previous fortnight, gained US$ 129 (3.9%) to end the week’s trading at US$ 3,453 on 13 June.

After the initial attack by Israel and the retaliation by Iran, concerns mounted about disruptions to the ME oil supply. Consequently, Brent crude futures jumped nearly 8.9% on Friday morning – its highest level since 27 January 2025 and the highest intraday move since the 2022 Russian invasion of Ukraine. It does seem that the ailing Israeli prime minister, BiBi is aiming to rule the world as he wants to prevent Tehran from building an atomic weapon but has no problems with his country having nuclear capability. The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate. To date, the Strait of Hormuz, through which 20% of the world’s supply passes through, is still open as usual. What next? In other markets, stocks dived and there was a rush to safe havens such as gold and the Swiss franc, whilst Bitcoin and other cryptocurrencies sank.

It seems that every man and his dog come up with a global economic forecast and then amends it every three months because they got it wrong in the first place. On the world stage, the three biggest culprits are the IMF, OECD and the World Bank. This week, it appears to be the latter’s turn to predict that the economy will see the slowest decade for global growth since the 1960s, as the effect of Donald Trump’s tariffs are felt – and to prove its point, the bank has cut nearly two thirds of the world’s nations forecasts. It now sees 2025 growth to come in on 2.3%, compared to its 2.7% forecast in January. Guess what the OECD has decided – to cut global growth forecast by 0.2% to 2.9%.

Suzuki Motors becomes the first Japanese car maker to become a casualty from China’s April restriction on its rare earth exports, having to suspend production of its flagship Swift subcompact. Production, except for the Swift Sport version, was halted on 26 May; full resumption is expected to return on 16 June, as the “prospect of parts supply is clearer”. China’s decision has spooked many industries, with dependency on a wide range of rare earths and related magnets, has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors. Many automakers have become concerned that this will have a negative knock-on impact on production, with some European auto parts plants having suspended output and/or ways to protect against shortages of rare earths.

There are reports that struggling River Island is drawing up a radical rescue plan which could put significant numbers of stores and jobs at risk. The family-owned well-known clothing chain employs over 5.5k in its two hundred and thirty stores. Disappointing 2023 financials indicated that its turnover dropped 19% to US$ 782 million resulting in a US$ 45 million loss.

In its latest accounts at Companies House, River Island Holdings Limited warned of a multitude of financial and operational risks to its business, including increasing competition, supply chain disruption and increased economic uncertainty. Some of the blame must be laid at the door of Chancellor Rachel Reeves who, in her October budget, announced tax changes, including raising employers’ national insurance contributions by 1.2% to 15.0%. This added an estimated US$ 9.8 billion in extra costs for retailers. Over the past seven months since her budget, Lakeland and The Original Factory Shop have been forced to seek new owners, with the same ending looking likely for Poundland, the discount retail chain.

SponsorUnited, which tracks sponsorship and advertising across all sports, estimates that Formula 1’s 2024 revenue touched US$ 2.04 billion, second only to the NFL’s US$ 2.5 billion in total sponsorship revenue; it is well ahead of other sports organisations including the likes of NBA, MLB and NHL. Another estimate, from Liberty Media, expects F1’s revenue to climb by at least 20%, to over US$ 2.5 billion, this year. The largest sponsor for any F1 team is the Williams US$ 30 million contract, with Australian software corporation Atlassia, whilst Pepsi, with a ten year US$ 2.0 billion, has the most significant singular sponsorship commitment in the NFL this gives the company exclusive rights at all NFL events and use of the league’s trademark in advertising. This compares to F1’s top individual sponsor agreement a ten-year US$ 1 billion pact with luxury conglomerate LVMH, which holds a portfolio anchored by TAG Heuer, Louis Vuitton and Hennessy.

The Food and Agriculture Organisation has forecast a 2.1% record hike in global cereal production of 2.911 million tonnes, as worldwide consumption of cereals is predicted to grow by 0.9%, with feed use expanding by 0.5%; it is expected that world cereal stocks are predicted to expand by 1.0% in 2025/26 to 873.6 million tonnes, after contracting in the previous year.  Next year, global cereal trade is also predicted to rebound by 1.9% to 487.1 million tonnes, including a 3.8% growth in wheat trade expected but an 0.7% contraction for rice.

Q1 Eurostat figures indicate that the EU, seasonally adjusted GDP increased, on the quarter, by 0.6% both in the euro area, by 0.3% and in the EU, (0.4%); compared with Q1 2024, seasonally adjusted GDP increased by 1.5% in the euro area and by 1.6% in the EU in Q1 2025. The top three nations, with the highest increases, were Ireland, with a very impressive 9.7%, Malta and Cyprus with 2.1% and 1.3%. Highest decreases, posting contractions, were Luxembourg, Slovenia, Denmark and Portugal with 1.0%, 0.8%, 0.5% and 0.5%. In Q4, employment had increased by 0.1% in the euro area and 0.2% in the EU, with Q1 figures showing 0.7% and 0.4% rises over the year; Q4 annual increases were 0.8% and 0.6%. Nations with the highest and lowest increases in Q1, were Croatia and Spain, (with 1.0% and 0.8%)), and Romania (-2.1%), Estonia (-0.8%), Lithuania and Poland (both -0.6%). Based on seasonally adjusted figures, it is estimated that in Q1, 219.8 million people were employed in the EU, of which 171.6 million were in the euro area.

Having once seen the bare-foot MF Husain in Dubai, it was interesting to read that twenty-five of his paintings were auctioned yesterday in Mumbai; they had been locked up in a bank vault since 2008. Indian authorities had seized them from businessman Guru Swarup Srivastava who had acquired them from the artist in a  billion rupees deal; the CBI later alleged he and associates had misused a loan from a government-backed agricultural body. Often called the “Picasso of India,” he was one of the country’s most celebrated – and controversial – artists. His works have fetched millions, but his bold themes often drew criticism. He died in 2011, aged 95. It was rumoured that he had two villas in Emirates Hills – one to live in and the second his art gallery.

Qantas’ low-cost arm, and Singapore-based budget airline, Jetstar Asia is to close down at the end of July, (with the loss five hundred jobs), but this will not impact the operations of Australia-based Jetstar Airways, nor those of Jetstar Japan. It appears that the carrier, which has been running for over twenty years, has been badly impacted by rising supplier costs, high airport fees and increased competition in the region. Sixteen routes across Asia will be impacted by the shutdown, including flights from Singapore to destinations in Malaysia, Indonesia and the Philippines. Its closure will provide Qantas with US$ 326 million, (AUD 500 million), to invest towards renewing its fleet of aircraft, as it will also redeploy thirteen planes for routes across Australia and New Zealand. The discount airline is set to make a US$ 23 million loss this financial year.

This week’s figures from the Australian Bureau of Statistics show that for the first time ever, the average home in the country is now worth more than AUD 1 million, (US$ 652k) as at the end of Q1, up 0.7% on the quarter; there are some 11.3 million dwellings in the country whose population will touch twenty-seven million in the coming months, and growing at the rate of 2.3%.  While the average price of homes climbed in all states and territories, the annual growth rate is slowing. A dearth of social housing rental availability has also been a problem in recent years, further exacerbated by not enough social housing to meet demand either. Driven by a gamut of reasons – including inadequate investment in social housing, a growing population, an inventory shortfall, too much red tape, and tax incentives for property investors – the country has an increasing number of its population unable to buy or rent residential property, making Australia home to some of the least affordable cities in the world. In recent years, the problem has continued to worsen as home prices continually outpaced wages – widening the affordability gap and the net not only to catch lower income households but starting to also catch medium-income households. Australia is not the only country in the world grappling with a housing affordability crisis there are many other countries – including the UK and Canada – facing the same conundrum.

In May, China’s foreign exchange reserves nudged 0.11% higher, on the month, to US$ 3.2853 trillion at the end of May. It is reported that the increase was due to the combined effects of currency exchange rate movements and changes in asset prices. With the country’s economy recovering, and the quality of economic development improving, China’s foreign exchange reserves are becoming more stable.

May China’s exports rose 4.8%, on the year, (following an 8.1% hike in April) lower than expected as shipments to the US fell nearly 10%. Imports declined 3.4%, leaving a trade surplus of US$ 103.2 billion. China exported US$ 28.8 billion to the US in May, while its imports from the US fell 7.4% to US$ 10.8 billion.

US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer met their Chinese counterparts, including vice premier, He Lifeng, in London for talks aimed at resolving a trade dispute between the world’s two largest economies that has kept global markets on edge. This comes after Donald Trump spoke with President Xi Jinping last Thursday and agreed to visit one another in a rare leader-to-leader call. Both countries have been sniping at each other, as the economic environment has become increasingly tense. China is concerned that the US has curtailed key imports including chip-design software and nuclear plant parts, and the global economic impact of Trump tariffs whilst China is closely controlling over the rare earth mineral exports of which it is the dominant producer. Last month both nations pulled a ninety-day deal to roll back some of the triple-digit, tit-for-tat tariffs they had placed on each other. After two days, both parties had agreed in principle to a framework for de-escalating trade tensions which will include the lifting of restrictions on rare earth minerals and magnets and that tariffs on Chinese goods will go to 55%. In return, Trump said the US will provide China “what was agreed to,” including allowing Chinese students to attend American colleges and universities. He wrote on social media that a trade deal with China is “done.” China reiterated that the two sides should act in the same direction, keep their promises and fulfill their actions, show the spirit of integrity in abiding by their commitments and the efforts to implement the consensus.

With the US adding Switzerland to a list of countries being monitored for unfair currency and trade practices, the Swiss National Bank confirmed it would intervene in foreign currency markets where necessary to keep inflation on track. After last week’s publication of the US Treasury Report, the SNB repudiated that it was a currency manipulator and confirmed it would continue to act in Switzerland’s interests as the strong franc helped push inflation into negative territory in May. It also indicated that last year, the SNB bought only US$ 1 billion in foreign currencies, equating to just 0.1% of the Swiss GDP, well below the Treasury’s threshold of 2%of economic output. Ireland has also been added to the US list which includes China, Germany, Japan, Singapore, South Korea, Taiwan and Vietnam,

Not surprisingly, April US imports decreased at record levels, ahead of the impact of Trump tariffs, as the trade gap slumped by 55.5%, to US$ 61.6 billion. Imports decreased by a record 16.3% to US$ 351.0 billion, with goods imports diving by a record 19.9% to US$ 277.9 billion, including a US$ 33.0 billion decline in imports of consumer goods, mostly pharmaceutical preparations from Ireland, and of cell phones and other household goods dipping by US$ 3.5 billion. Earlier, March data showed that the trade deficit widened to an all-time high of US$ 138.3 billion but this narrowed markedly, by the most on record, a month later.  Declines in imports were noted in various sectors including industrial supplies and materials, (by US$ 23.3 billion) and motor vehicle, parts and engines, (US$ 8.3 billion). A rush to beat import duties helped to widen the trade deficit in Q1, but the impact of front-loading of imports could continue in Q2, as higher duties for most countries have been postponed until next month, while those for Chinese goods have been delayed until mid-August. Although imports from Vietnam and Taiwan were the highest on record, those from Canada and China were the lowest since May 2021 and March 2020.

Meanwhile, exports rose 3.0% to a record US$ 289.4 billion, with goods 3.4% higher, at US$ 190.5 billion, assisted by a US$ 10.4 billion increase in industrial supplies and materials. Mainly driven by travel, exports of services rose US$ 2.1 billion to US$ 98,9 billion.  A US$ 1.0 billion hike was registered in the exports of capital goods, those for of motor vehicles, parts and engines fell by US$ 3.3 billion. Although here were record goods trade deficits posted for Taiwan, Thailand and Vietnam, there were record levels for Hong Kong, Switzeraland and the UK; the trade gap with Canada was the smallest since April 2021.

The number of Americans filing new applications for unemployment benefits increased by 0.5% to 247k – a seven-month high last week. This points to softening labour market conditions amid mounting economic headwinds from tariffs. The number of people receiving benefits, after an initial week of aid, dipped 3k to a seasonally adjusted 1.904 million during the week ending 24 May. The Labor Department report shows that, in an uncertain economic environment, workers losing their jobs are having a tough time landing new opportunities, with many employers reluctant to increase headcount. However, it was noted that companies were generally hoarding workers after struggling to find labour during and after the pandemic. The Federal Reserve’s Beige Book report showed “comments about uncertainty delaying hiring were widespread,” and that “all districts described lower labour demand, citing declining hours worked and overtime, hiring pauses and staff reduction plans”.

Not before time, bosses at six water companies Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities and Southern Water – have been called out and belatedly banned from receiving bonuses for the last financial year. All have committed the most serious ‘Category 1’ pollution breaches of environmental, customer service or financial standards which have led to restrictions on performance-related pay; this included breaches of financial resilience regulations when its credit rating was downgraded. The new rules, which came into effect last Friday, give water industry regulator Ofwat the power to retrospectively prevent bonuses paid in cash, shares or long-term incentive schemes to chief executives and chief financial officers for breaches in a given financial year. However, it cannot prevent lost bonuses being replaced by increased salaries as has been happening in the banking sector.

CK Infrastructure Holdings has contacted Sir Adrian Montague, the chairman of embattled Thames Water, requesting to rejoin its board’s equity-raise process, roughly three months after submitting a multibillion-pound proposal to take control. UK’s biggest water utility has been plunged back into crisis by a decision last week by KKR, the private equity firm, to pull out as preferred bidder. Thames Water’s biggest group of creditors – accounting for approximately US$ 17.62 billions of its vast debt-pile – has submitted what it described as a US$ 23.47 billion proposal to recapitalise the company – this would comprise US$ 4.07 billion of new equity and more than US$ 2.71 billion of debt funding, and see existing shareholders completely wiped out, while there would also be several billion pounds of debt write-downs aimed at restoring financial resilience and improving services. With CKI owning large swathes of British infrastructure, including Northumbrian Water, Northern Gas Networks and UK Power Networks, it has history and expertise at running major utilities on the scale of Thames Water.

In preparing her spending review, Rachel Reeves must have upset some of her cabinet colleagues who missed out on extra funding and even faced cuts. Two of her aims were to win back Labour voters, who have lost confidence with the administration, and reverse the party’s decline in the polls. Listed below are some of the winners and losers, following the Chancellor’s presentation last Wednesday:

NHS                            Received a boost of up to US$ 40.73b at the expense of other public services. For the next three years, its budget will rise by 3.0% each year for three years, equivalent to a cash increase of US$ 39.37b billion by 2028

Housing                      Was promised US$ 52.95 billion over the next decade to bankroll affordable housing, with monies going to local authorities, private developers and housing associations. Annual investment will rise by 73.9% to US$ 5.43b within four years

Nuclear projects        Saw US$ 22.67b going to nuclear power projects, including US$ 19.28b for the new Sizewell C power plant in Suffolk

Regional transport    US$ 21.18b of transport spending in England’s city regions as part of a US$ 153.40 investment package. The US$ 21.18b package for mayoral authorities included metro extension funding  in Tyne and Wear, Greater Manchester and the West Midlands, plus a renewed tram network in S Yorkshire and a new mass transit system in W Yorkshire

Borders                       Up to an annual US$ 380m to the Border Security Command to tackle people smuggling gangs. Ending the use of asylum hotels by 2029 will save an annual US$ 1.36b  

Schools                       A promise of US$ 6.11b increase in the budget for schools plus an extra US$ 3.12b each year to fix “our crumbling classrooms”. Caps on the cost of school uniforms

Confirmation that all children with a parent claiming universal credit will be eligible for free school meals

Other                          US$ 17.92b plan to insulate people’s homes. An annual US$ 29.87b into R&D funding. US$ 2.72b specifically for the government’s AI action plan and US$ 8.15b to encourage start-ups to grow

Some will argue that the problem with the UK is that there are too many civil servants and too much red tape. Over the past twelve months, the UK Civil Service workforce has grown by 3.8% to stand at 516.5k full-time equivalents (FTEs) in March 2025. In the five years from Q1 2015 to Q1 2020, the numbers rose by 5.7% to 423k and over the next quinquennial to Q1 2025 by 22.1%. Full marks then to whoever came up with the idea that government departments across the board will have to find US$ 18.69 billion in efficiency savings down from using AI and cutting back-office costs by at least 16%.

There is no doubt that the UK is becoming known for developing ground-breaking tech companies and then selling them off to overseas, (usually US) interests. This week started with Qualcomm acquiring London-listed chip designer Alphawave IP Group in a US$ 2.44 billion takeover. The American MNC, with its HQ in San Diego, creates semiconductors, software and services related to wireless technology. Then it was announced that talks were ongoing between industrial group Spectris, who have attracted the interests of the US private equity firm Advent. It has offered a possible cash deal of US$ 51.00 per share for the maker of precision instruments and software; this would value the deal at US$ 5.96 billion. The third company, that could be moving over to the States, is Oxford Ionics, a specialist in quantum computing, being taken over by IonQ in a US$ 1.08 billion deal.

With such news, it appears that the UK has become like some football clubs that have an academy and develop players until they are ready to go to the bigger clubs. They make their money by a transfer fee and then further fees if the player moves again. Undoubtedly, UK has created ground-breaking tech companies, but, in many cases, struggle to hold on to them in the face of overseas interest. With real concerns that the country is lagging behind many developed nations, this week Nvidia has launched several partnerships in the UK to reportedly boost the country’s AI capabilities including a pledge to help train 100k people in AI over the next five years. Its CEO Jensen Huang commented that the UK is in a “Goldilocks circumstance”, and that “I think it’s just such an incredible, incredible place to invest”’ and “the ecosystem is really perfect for take-off – it’s just missing one thing” – referring to a lack of homegrown, sovereign UK AI infrastructure. He also noted that the country “has one of the richest AI communities anywhere on the planet, along with “amazing startups” such as DeepMind, Wayve, Synthesia and ElevenLabs. It has to be noted that Huang was speaking on a panel with Keir Starmer and Investment Minister, Poppy Gustafsson and that Nvidia is a listed company – and not a charity.

Lates figures show that wages are nudging higher but at its slowest pace since last September, slipping 0.4% to 5.2% on the month to April. The unemployment rate was 0.1% lower at 4.5%, with job vacancies 8.6% lower at 736k – the thirty-fifth consecutive quarterly decline. Payroll employees fell 0.9% to 30.2 million. Despite the April hike in the national living wage, pressure eased in the month, with further falls expected during the rest of the year. With the equation of a softening unemployment rate and payrolls falling, allied with wage growth easing normally adds up to further rate cuts on the horizon.

Another Starmer broken promise is all be inevitable, with Savills posting that the government will only deliver 56% of the 1.5 million new homes it intimated would be done in the first five years of parliament. The property agent reckons that there will be in the region of 840k home completions over that time period, with two main drivers being subdued demand from first-time buyers and housing associations, allied with falling planning consents. However, it does indicate that the target could only be met with “very significant demand support” through a new Help to Buy or similar scheme because developers will only build what they can sell.

As expected by many, probably with the exception of the Chancellor, the UK economy, in April, contacted by 0.3%, compared to a positive 0.2% a month earlier – and not helped by the Trump tariffs. Even Rachel Reeves described the figures as “disappointing”, but she seems to have forgotten that her drive for economic growth would be impacted by a triple whammy of employer national insurance contributions moving 1.2% higher to 15.0%, the rising of the minimum wage and additional business costs all started in April. The biggest contributors to the figures were manufacturing and service dipping by 0.4% and 0.9%, with the largest ever monthly fall in goods exported to the US. To add to the country’s economic woes, higher stamp duty depressed house buying and car manufacturing performed badly after a first quarter boost.

To the surprise and dismay of many pensioners, Rachel Reeves decided, in her now infamous October budget, that she should limit winter fuel payments to those on pension credit and on incomes of over US$ 15.45k (GBP 11.40k); this resulted in some ten million pensioners losing the allowance. After a major kick in the pants for the Labour administration at the May local elections, and the disastrous results therefrom, Keir Starmer quickly stood up at PMQs to announce a U-turn on winter fuel payments. Now all pensioners will get payments of US$ 270k (GBP 200) or US$ 407 (GBP 300) for over eighties. However, the two million pensioners, with incomes over US$ 47.3k, (GBP 35k), will be paid this initially but will have it clawed back through the tax system later. This is ‘Heath Robinson’ at its best, and an indicator that this ‘rescue package’ had not been well thought out. It is estimated that the new funding will cost US$ 1.69 billion. However, it appears that the saving from not making the payment universal this winter from US$ 609 million, (GBP 450m), to as low as US$ 41m (GBP 30m). The Chancellor has never apologised for this glaring error, arguing that at the time, the money saved would be needed elsewhere. How times have changed – she has argued that the economy was on the up, when everybody else realised that reality would hit home in April, and that the winter fuel repayment could be reinstated at a time when wage growth was heading south, with unemployment heading in the other direction. Forty-five years ago, Margaret Thatcher said “The Lady’s Not For Turning” – maybe Rachel Reeves is trying to emulate the Iron Lady and for her it appears that Sorry Seems To Be The Hardest Word!