Drill Baby Drill! 24 July 2026
Once again, driven by ongoing demand for homes, (valued at over US$ 2.72 million), three hundred and seven June sales of luxury off-plan residential market garnered US$ 1.01 billion, from 0.31k sales, with an average price of US$ 3.30 million. Unsurprisingly, apartments took the lion’s share, accounting for 54.1%, (0.17k units), of the market share, valued at US$ 578 million, whilst the balance (0.14k) being taken up by villas/townhouses, worth US$ 439 million. A further thirty villas valued at US$ 113 million were sold, as well as thirty-three sales valued at US$ 130 million. In the US$ 1.36 million to US$ 2.72 million (AED 5 million to AED 10 million), bracket, there were two hundred and ten sales with 0.11k sales of apartments, (52.9% of total sales), worth US$ 197 million and 0.10k sales of villas, worth US$ 174 million.
Dubai Islands, with forty-eight June sales, recorded the highest number of off-plan luxury transactions, followed by Dubai South’s thirty-nine transactions and Palm Jumeirah’s twenty-two – a big thumbs up for waterfront and master-planned communities. In the ultra-luxury sector, US$ 5.45 million to US$ 13.62 million, (AED 20 million – AED 50 million), seven villas changed hands for a combined US$ 56.6 million and five In the US$ 13.62 – US$ 27.25 million, (AED 50 million to AED 100 million) for US$ 93.98 million. Apartment sales also remained robust with eighteen sales of US$ 142.1 million in the US$ 5.45 million to US$ 13.62 million category and three, worth US$ 54 million, in the higher sector. A penthouse in Business Bay was sold for US$ 54.5 million.
This week also saw the sale of a US$ 45 million luxury off-plan apartment in Dubai for over US$ 45 million – an indicator of the sustained demand for ultra-prime homes in the emirate. Located in Jumeirah Second, within the Aman Residences Dubai development, the property spans 10.02k sq ft, with an average price of US$ 4.52k per sq ft. In H1, sales of residential units in the luxury market, (over US$ 10 million), posted sales of over US$ 4.51 billion, (equating to an 11.5% increase on the year, involving two hundred and sixty-nine deals) – 11.2% higher.
A new report by Anarock indicates that in H1, Indian, UK and Chinese expatriates continued to dominate the Dubai residential property market listing accounting for 22%, 17% and 14% of the total that pushed total sales to US$ 69.67 billion – and this includes four months of the ME crisis. The consultancy posted that more than one hundred and fifty nations invested in the sector last year and that in this H1, transactions totalled US$ 61.50 billion, with buyer confidence returning quickly after a brief slowdown. Overall H1 residential prices averaged about US$ 518 per sq ft – 6.0% higher on the year. The consultancy also noted that “residential prices softened by just 4% – 7% in the February to April period, significantly outperforming the Dubai Financial Market Real Estate stock index, which had crashed 34% at its peak.
With off-plan properties accounting for between 70% and 77% of residential transactions, during the period, and that around 80% of transactions were cash purchases, it points to a recovery backed by robust market fundamentals, whilst reflecting sustained buyer confidence, despite short-term uncertainty. The Anarock report also noted that last year there was an annual 23% increase, in the number of new investors entering the Dubai property market, to 129.6k entering the property market last year whilst the population grew by more than 6.0% to around 4.1 million. Among buyers, 38% purchased homes for their own use, 28% for rental income, 21% to qualify for the UAE’s Golden Visa programme, and 13% cited capital preservation as their main motivation. It also sees a 4% to 7% growth in property prices, (attributable to continued population growth, expanding international buyer demand and government initiatives), but pointed to the continuing crisis being the main downside risk to the market.
Due to the ongoing regional conflict, Q2 transaction volumes in Dubai declined sharply, sinking 28.6% on the year, across both off-plan and secondary markets; property sales were at US$ 23.95 billion. According to JLL, Dubai is expected to deliver around forty thousand residential units in H2, driven by government initiatives to improve housing affordability. Looking at the market from both the off-plan and the resale segments, the former posted quarterly and annual declines of 14.7% and 23.1%, whilst the latter registered falls of 30.3% and 41.8%. There was moderate price growth, with annual increases of 2% to 6% across property categories, with villas showing the highest gains, whilst quarterly 2% – 3% declines were noted, with apartments seeing the largest decreases. Q2 saw the Dubai Land Department launch the Flexi Rent initiative, allowing tenants to pay rent monthly, quarterly, or semi-annually, easing their financial burden. Mouhammad Takieddin, JLL’s Regional Head and CEO, commented that, “for savvy investors and occupiers, this evolving landscape creates distinct opportunities. Combined with the UAE’s strong economic fundamentals, the market remains robust and well-positioned for continued growth”.
ValuStrat’s Q4 market review shows that the Dubai property market is showing signs of stabilisation, with residential price declines slowing significantly while commercial property sectors continue to post record-breaking gains. The residential market posted its second consecutive quarterly decline, falling 4.0%, on the quarter, to 220 points and 10% since the crisis started on 29 February. Monthly declines since then have seen 6% in March, 2% in April and 1% in both May and June. Despite this market correction, (which could have been a lot worse), the average Dubai villa was valued at US$ 3.54 million, (AED 13 million), up 2.0% on the year; apartment values fared a little worse averaging US$ 488k, (AED 1.79 million), down 3.0% annually.
The Q2 rental index rose 1.7% on the year, with average villa rents increasing 2.2%, to US$ 120k annually, and apartment by 1.3% to US$ 29k. The main driver influencing this sector of the market appears to be supply delays, with only about twenty thousand homes, (15.5% of the forecast total), being delivered in H1, against an annual 129k expectation. It is obvious that ME crisis has played a major role in this slowdown, with rising construction costs and ongoing supply-chain disruptions slowing project handovers across the city. ValuStrat’s managing director, Haider Tuaima, noted that “the trend suggests that the pace of house price declines eased considerably during the second quarter, pointing towards a gradual market stabilisation”.
In what would be the firm’s largest annual delivery programme in its history, Dubai-based developer Sobha Realty expects to hand over 6.82k residential units across five major projects in 2026. The units, with a combined sales value of US$ 5.89 billion, are spread across Sobha Hartland, Sobha Hartland II, Sobha Reserve, Sobha One and Verde by Sobha – with the value exceeding the total of all its previous deliveries. The company said its in-house development model, known as Backward Integration, allows it to control key stages of the construction process, including design, engineering, construction and finishing. Sobha posted that it is expanding through a portfolio of sixteen masterplans in the UAE, including its US$ 13.62 billion Sobha Sanctuary project in Dubai and Sobha City, a planned US$ 10.90 billion development that will mark its entry into the Abu Dhabi market.
A CRC Property commented that the emirate’s Q2 commercial real estate market came through the challenging period, with office and retail property sales posting triple-digit annual growth, despite a slowdown in overall transaction activity. Both value-wise and volume-wise, posted double-digit declines – by 36.0% to US$ 6.61 billion and by 10.6% to 2.84k deals – attributable mainly to the regional conflict. Despite this blip, the commercial market is still in rude health as indicated by office sales value surging 190% on the year, and retail sales value by 178%. The agent’s MD, Behnam Bargh, noted that “while transaction volumes corrected, institutional-grade capital continued to flow into premium office assets, and the city has once again shown its ability to weather near-term disruption while staying anchored to the fundamentals that continue to attract capital from around the world.”
Although, in Q2, the office segment, fell 35.8% on the quarter, recording 1.00k transactions, sales value slipped by a comparatively modest 8.0% to US$ 2.04 billion. However, comparison to figures a year earlier tell a different story when the quarterly figure came in on just US$ 708 million. 43.9% of all Q2 deals were made in Business Bay, with 0.44k transactions, followed by Al Sufouh 1 and Jumeirah Lakes Towers. Units smaller than 1.5k sq ft accounted for more than 60% of transactions, indicators of robust demand from small businesses, start-ups and owner-occupiers. Office capital values climbed 3.7% on the quarter and 13.9% on the year, pushing the ValuStrat office price index to a record 299.5 points. The surge has been driven largely by a shortage of high-quality Grade A space, with average office values nearly tripling since 2021. Dubai’s industrial and logistics sector remained one of the strongest-performing segments. Warehouse and logistics capital values rose 8.4% quarter-on-quarter and 17.7% annually, driven by e-commerce growth, localisation initiatives and sustained demand from third-party logistics operators. With modern warehouse space in short supply, asking Q2 rents surged 11.9% in the second quarter alone.
A delegation from the IMF has concluded a ten-day visit to the UAE, after holding talks with senior officials on the country’s economic performance, financial outlook and policy priorities. The global body praised the UAE’s ability to withstand regional geopolitical challenges, saying strong economic fundamentals, swift government action and targeted support measures helped protect financial stability, maintain supply chains and sustain market confidence. It also noted that the UAE’s banking sector remains well-capitalised, with strong liquidity and continued credit growth, whilst highlighting the Central Bank’s proactive measures to strengthen the resilience of financial institutions. Preparations for the 2026 Article IV Consultation Mission were also discussed during the visit. The IMF added that resilient trade, aviation and logistics sectors, along with strong domestic demand, have continued to support economic growth. It also expects the UAE to maintain a fiscal surplus, backed by higher oil prices, prudent budgeting and low public debt.
Releasing impressive H1 trade financials, HH Sheikh Mohammed bin Rashid, in his capacity of Vice President and Prime Minister of the UAE, noted that “these figures are not just trade data… but numbers that reflect the strength of our economy… the effectiveness of our development choices… and the world’s confidence in the UAE”. The Dubai Ruler noted that the country’s non-oil:
- foreign trade was 13.1% higher at a record US$ 527.79 billion, (AED 1.937 trillion)
- exports were 23.9% higher at US$ 123.38 billion (AED 452.8 billion)
- trade volume under the CEPA programme reached US$ 82.92 billion, (AED 304.3 billion)
In the four months, to 30 June, (and since the start of the hostilities), trade flows worth US$ 9.24 billion, (AED33.9 billion), between 01 March and 30 June 2026, were maintained, as well as supporting business continuity for thousands of companies. The measures and packages approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, has also provided almost US$ 22 million in liquidity to four hundred and twenty-eight companies in the private sector. Some of the measures taken included extending deadlines for suspended duty cases, (6.61k deferments of up to one hundred and twenty days), allowing customs duties to be paid in instalments and reducing financial penalties by up to 80%. In the early days of the crisis, Dubai Customs launched the Green Corridor to keep trade flowing through alternative routes and ensure goods continued to reach markets smoothly, facilitating the movement of more than 203.24k containers and over 3.16 million tonnes of goods worth more than US$ 9.20 billion from one hundred and eighty-eight countries. A further analysis shows the split of goods travelling via the Green Corridor:
food products US$ 1.44 billion
machinery/electrical equipment US$ 1.16 billion vehicles US$ 1.15 billion plastics US$ 0.41 billion
iron/steel products US$ 0.30 billion
miscellaneous US$ 5.34 billion
Newly signed Al Ansari Financial Services PJSC agreements see the DFM-listed payment service company tie up with Bahrain Financing Company, in Bahrain, and Bahrain Exchange Company , in Kuwait, which will give customers wider access to Western Union’s international money transfer services, covering more than two hundred countries and territories. In Bahrain, customers will be able to use Western Union services through BFC’s network of fifty-four branches across the country. In Kuwait, BEC customers can access the service through fifty-three branches. Al Ansarti customers will also benefit from faster transactions, improved digital services and easier access to secure international transfers.
Tax Star is but one of forty-two tax and compliance software companies to have been a pre-approved e-invoicing service provider by the UAE Ministry of Finance. This pre-approved status means the Ministry of Finance has reviewed Tax Star’s application and confirmed it meets the requirements to offer e-invoicing services in the UAE, with a final round of approval still to come. E-invoicing, which will soon be required by law, is being rolled out in stages. Large businesses, those earning over US$ 13.62 million (AED 50 million), must choose a provider by 30 October 2026 and start using e-invoicing by 01 January 2027; smaller businesses have until 31 March 2027 to choose a provider and until 01 July 2027 to start. Government bodies have similar deadlines later in 2027. Companies that miss these deadlines could face a fine of US$ 1.36k for every month.
Following a Central Bank launch, UAE Banks and licensed financial institutions have begun issuing the Jaywan cards in stages, with cardholders able to carry out online purchases and cash withdrawals. Its chairman, Sheikh Mansour bin Zayed, noted that the move represents a strategic step that enhances the UAE’s sovereignty over its financial infrastructure and contributes to establishing an advanced national payment system that keeps pace with international trends. This first home-grown payment scheme includes a number of benefits and offers covering travel, retail and entertainment.
In H1, and despite weaker net interest income, Commercial Bank of Dubai’s net loan book crossed US$ 27.25 billion, (AED 100 billion), for the first time, attributable to lending growth and higher non-funded income helping to lift profit higher. Operating income and operating expenses both rose on the year – by 2.7% to US$ 790 million and by 3.4% to US$ 211 million – as net loans/advances moved higher to US$ 28.39 billion – 3.1% higher on the December 2025 return and 4.4% on the year. Net profit after tax increased 1.2% to US$ 469 million, while profit before tax rose 1.3% to US$ 515 million, with the bank delivering an after-tax return on equity of 20.92%. Customer deposits reached US$ 29.35 billion, up 0.6%, whilst gross loans and advances increased 3.4%, on the year, to US$ 29.48 billion and 2.7% higher than at the end of 2025. CBD’s total assets rose 2.6% from a year earlier to US$ 42.10 billion at the end of June. The bank reported a capital adequacy ratio of 14.13%, with its Tier 1 and Common Equity Tier 1 ratios both at 13%.
Emirates NBD posted a H1 17.4% growth in its loan book, to US$ 210 billion, driven by strong growth across its core markets and the consolidation of India’s RBL Bank. Both pre-tax profit, at a record of US$ 4.41 billion, and profit after tax, at US$ 3.51 billion, posted increases of 5.0% and 3.0% on the year. Double-digit growth was noted for total income, by 16.0% to US$ 7.60 billion, (backed by a 13% rise in net interest income and 25% growth in non-funded income), operating profit before impairment climbed 17% to US$ 5.31 billion, and expenses by 15% to US$ 2.26 billion, while the cost-to-income ratio stood at 29.9%. Impairment allowances reached US$ 381 million. Customer deposits increased 13% to US$ 243.05 billion, and the group’s balance sheet surpassed US$ 354.22 billion following continued organic expansion and the addition of RBL Bank, which added US$ 20.16 billion in assets, US$ 11.99 billion in gross loans and US$ 11.72 billion in deposits to the group. Lending grew by 17% to US$ 210.08 billion. Asset quality remained stable.
Meanwhile, Emirates Islamic posted increases for total income to US$ 872 million, (8.0%), operating profit to US$ 599 million, (10.0%, attributable to higher funded and non-funded income, asset growth and cost management), and net profit to US$ 463 million; its net profit margin was at 3.1%. Operating expenses rose 3%, year on year, to US$ 245 million, including US$ 68 million for impairment charges. Its cost-to-income ratio stood at 29.1%. Customer financing grew 9.1% to US$ 26.43 billion, with deposits 8.3% higher to US$ 30.14 billion, with total assets – up 5.5% to US$ 41.91 billion, driven by growth in customer financing and deposits. Current and savings account balances represented 65% of total deposits, providing the bank with a large proportion of lower-cost customer funding. During H1, EIB became the first Islamic bank in the UAE to offer digital gold and silver investments through its EI+ mobile application, providing customers with access to Sharia-compliant investment products.
The DFM opened the week on Monday 20 July on 5,814 points, and having shed two hundred and forty-five points (4.0%), the previous fortnight, lost twenty-seven points (0.5%), to close the week on 5,787 points. Emaar Properties, US$ 0.26 lower the previous fortnight, shed US$ 0.02 to close on US$ 3.02 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.72, US$ 7.98, US$ 2.00 and US$ 0.39. 6 US$ 8.53, US$ 2.12 and US$ 0.41, and closed on 24 July at US$ 0.72, US$ 8.23, US$ 2.00 and US$ 0.38. On 24 July, trading was at two hundred and two million shares, with a value of US$ one hundred and twenty-one million dollars, compared to one hundred and forty million shares, with a value of US$ one hundred and fifty-seven million dollars, on 17 July.
By 24 July 2026, Brent, US$ 15.09 (21.0%) higher the previous fortnight, gained US$ 11.50 (13.2%), to close the week on US$ 98.38. Gold, US$ 185 (4.4%) lower the previous fortnight, gained US$ 52 (1.3%), to end the week’s trading at US$ 4,052 on 24 July. Silver was trading at US$ 55.88 on 17 July – and closed today, 24 July, US$ 2.10 (6.4%) higher on the week at US$ 57.98.
Brent crude has risen to its highest level, in more than six weeks, in yesterday’s trading, as Yemen’s Houthis targeted oil tankers in the Red Sea and the US launched a new round of strikes on Iran. Having closed last week 15.0% higher on the week, at US$ 88.10, the latest move sees Brent 8.6% to US$ 95.70. Brent crude closed at $88.1 a barrel last week, having risen 15 per cent over the week. A matchbox calculation by the US Federal Reserve shows that a US$ 10-per-barrel increase in the price of crude oil raises inflation by 0.2% and sets back economic growth by 0.1%.
By today, 24 July 2026, oil prices had climbed back to above the US$ 100 a barrel level, for first time since May – some US$ 20 lower than its April peaks, but still US$ 28 higher than pre-war levels. The latest driver behind the uptick in prices was attacks on Saudi vessels in the Red Sea by Houthi rebels loyal to Tehran. UK natural gas prices have been moving in sympathy with oil and are up a staggering 52% this month – 90% higher on the year. Since last week, diesel has moved 4.2% higher to US$ 2.29 per litre with petrol up 2.5% at US$ 2.07. It is estimated that if petrol were to rise a further US$ 0.06, it would surpass its Iran war high seen on 28 May.
A move, that could see tens of thousands of new jobs being created in Arizona, Taiwanese chipmaker TSMC has indicated it will invest a further US$ 100 billion in Arizona, as it expands its production in the US, which in turn will prove a boost for the US President, as he aims to bring more advanced manufacturing to the US. The tech giant, which makes the most advanced chips designed by companies such as Nvidia and Apple, said it will build four new plants in the state as its total investment in the US tops US$ 265 billion. TSMC, Asia’s most valuable company, with a market cap of around US$ 2.0 trillion, announced a 77.4% jump in Q2 net profits to US$ 22.0 billion; YTD, its share price has jumped by more than 55%.
Yesterday, 23 July, shares of Google and Tesla tanked by nearly 7.0% and 14.5%, as investors were spooked by the ever-increasing amounts of money being spent on AI. The double whammy, for both tech giants, was registering negative free cash flow – the money retained after paying for operations and investments – as well as pledges to expense billions more in capex. Google and Tesla posted negative cash flows of US$ 5.9 billion and US$ 1.1 billion. Indeed, this was the first time, since it became a public company in 2004, that Google cash reserves had gone negative. Many investors are becoming increasingly concerned about if and when their investment will show any economic benefit. Alphabet, Google’s parent company, is planning to spend as much US$ 205 billion this year, mainly on AI projects and infrastructure, whilst Tesla expects this year to spend up to US$ 25 billion on unspecified projects.
Despite opposition from its directors, a creditor has successfully applied to have Woodville Consultants, the litigation funder, placed into administration – a day after its chief executive warned backers that such an outcome would not be “good for our investors”. He was proved right, with the company left owing thousands of small investors at least US$ 334 million, in what is now going to be one of the biggest corporate failures in the sector. There have been recent claims of missed repayments from the company that used to provide loans to UK law firms to pursue litigation related to the car finance scandal by raising money from “loan notes” and bonds. There have been concerns raised about the company’s business model and governance, and insolvency practitioners from Kroll have now been appointed by the High Court to sort out the financial mess. According to official records from Companies House, the 2024 accounts showed a US$ 334 million loan book, and debts of more than US$ 322 million in bonds and “other loans”.
Matthew Wright, the ex-CEO of Southern Water, along with three other employees, face a charge of conspiracy to defraud the Environment Agency and Ofwat between 01 January 2012 and 31 December 2017. All four are accused of manipulating the Operator Self-Monitoring compliance testing regime which requires water firms to take samples at their wastewater treatment works and report the results to the EA. Last Wednesday, the High Court threw out an appeal by Wright that the EA did not have the power to issue the summons against the former CEO. An EA spokesperson responded, “we can confirm that we are taking criminal proceedings against Southern Water Services Limited and a number of former employees”. They were accused of conspiring to “defraud persons performing public duties in respect of environmental and financial regulation” of Southern Water, including the EA and Ofwat, by “the implementation of artificial no-flow events at wastewater treatment works”.
In that period, rules under the OSM regime were that if the discharge flow during a time of testing was insufficient to take a sample, it was not regarded as a fail, then permitting no samples to be taken for the rest of the testing period. Southern Water is accused of dozens of offences of failing to comply with or contravening an environmental permit condition between 2013 and 2017 at multiple wastewater treatment works.
This week, JD Wetherspoon issued its fourth full-profit warning in seven months, as the FTSE 250 chain, which runs almost eight hundred pubs across the country, suffered from higher costs and slightly lower than expected sales growth in its Q4. This week, it updated its shareholders ahead of its published audited accounts in October. Its founder and chairman, Tim Martin, expects “profits for the year are likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher costs in the areas of food, labour, repairs, energy and business rates”. He also noted that there was a 4.0% rise in like-for-like sales, on the year, in the twelve weeks to 19 July, with like for like sales YTD 4.3% higher.
On Monday, Trump tariffs again became an issue for the Carney administration, with the introduction of 50% tariffs on more goods from Canada, with an official claiming the measures are in response to the country’s “continued discrimination”; the levies apply to imports of Canadian motor vehicles, dairy, cement, clothing, fishing equipment, sporting goods, furniture, wine and alcohol, but exclude energy products, potash, fish and critical minerals. The Canadian Prime Minister said it was his country’s “right” to match any tariff measures imposed by the US and said his country had shown it was willing to take “the necessary actions to support our economy, defend our workers, farmers, businesses and families”. However, he added that he was “ready to intensify” talks to resolve the dispute with Washington and “modernise” the USMCA; latest tariffs are due to come into effect by 19 August. It is also known that the two leaders met on the sidelines of the FIFA World Cup Final, where “the president has asked for options on tariffs, in retaliation for recent Canadian wildfires that affected the US, “and options are being shared with him”. More than 75% of Canada’s exports go to the US – with US$ 2.54 billion of Canadian goods crossing the border daily.
Still to be approved by the twenty-seven-nation bloc, the EU has unveiled controversial proposals that would slow cuts to businesses’ greenhouse gas emissions limits. This comes at a time when more than a dozen member countries broke their June temperature records, with some countries, such as Hungary, Czech Republic and Germany, having recorded temperatures above 40C. It proposes that some industries could obtain a four-year extension to emission allowances until 2038 – on condition, they commit to investing in decarbonisation efforts. Explaining the turnaround, EU climate commissioner Wopke Hoekstra, noted that “we are adopting a more business-friendly and may I say so, savvy approach”. The EC added that its Emissions Trading System, (introduced in 2005), was aligned with the EU’s goal to reduce carbon emissions by 90% by 2040, compared with 1990 levels. Many member countries are unhappy with Europe’s ETS, (its main tool for curbing greenhouse gases), with Italy in particular condemning the trading scheme as a de facto tax that has helped keep energy prices artificially high. Under the legislation, all the twenty-nine countries’ industries and power plants need to purchase a permit, or allowance, for every tonne of carbon dioxide they emit, creating a financial incentive to invest in cleaner technologies.
With energy prices rising and dipping all the time since the onset of the ME crisis, June proved to be a “good” month for the UK economy, with the CPI measure of inflation dipping 0.2%, on the month, to 2.6%, mainly attributable to a fall in diesel prices – the way things are going July will probably see the opposite happening. Core inflation, which excludes energy, food, alcohol and tobacco prices, was unchanged at 2.6%. Food prices also declined, along with clothing prices, in line with the start of summer sales, with bigger discounts than last year.
Data from the Office for National Statistics, for the quarter to 31 May, confirmed that private sector wage growth, at 2.9%, has fallen below 3% for the first time since 2020. This indicates that private sectors’ employees’ salaries are marginally above the 2.8% mark and means pay increases for the vast majority of workers are only just keeping up with the rate of price rises, with the inflation rate at 2.8%. This is in contrast with those in the public sector who have seen wage growth of 5.5% with the report noting that public sector pay “remains elevated” due to the timing of recent NHS pay awards. Overall, May weekly earnings rose faster, on the month, reaching 4.5%, as average earnings, excluding bonuses, remained at 4.3%. Data showed the unemployment rate remained flat at 4.9% – having come down from 5.2% in January – but still above the jobless 4.2% rate when Labour took office two years ago. There were 18k fewer jobs available compared to the same period in 2025. Such figures with no change in the quarterly earnings figure would seem to indicate that there will be a possible 0.25% rise in rates at the next BoE Monetary committee meeting, as rising energy costs have been the main cause of the inflation rate nudging higher
Of the total 2026-27 government spend programme of US$ 1.887 billion (GBP 1.416 billion), 80.0% – US$ 1.510 billion (GBP 1.133 billion) – is taken by six sectors:
Social Protection US$ 533 billion
Health 292 billion
Education 193 billion
Debt 180 billion
Defence 120 billion
Transport 92 billion
with the balance of US$ 377 billion (GBP 283 billion) taken by five other sectors – Public Order & Safety, Industry, Agriculture & Employment, Personal Social Services, Housing & Environment and Other.
In his first week in office, the new UK Prime Minister, Andy Burnham, seems to have hit the ground running with a number of spending announcements, totalling some US$ 2.00 billion. These are small commitments, equating to just 0.1% of public spending, , which is projected to be around US$ 1.877 billion this year, (as listed above). His first commitment was to “to end rough sleeping in our country”. This would cost some US$ 450 million over the next five years, and is expected to support at least three thousand of the estimated four thousand, eight hundred people sleeping rough. This money would come from existing “uncommitted” budgets in the housing department. The second measure was to cut VAT from domestic electric bills, in the current financial year, saving US$ 60 from the average bill. The total cost, which is unfunded, will be US$ 1.13 billion and that funding could come via scrapping the previous government’s digital ID scheme, which had been estimated to cost US$ 2.40 billion over the next three years. A further US$ 670 million is to be spent by reducing the cap on bus fares in England, by 33.3%, to US$ 2.66, though this does not include London.The fourth measure, funded at a cost of US$ 135 million, is a 20% cut to business rates for pubs, saving the typical pub US$ 1.45k, as from April 2027. The discount will apply to nearly 32k hospitality businesses in England but will not be available to the very largest live music venues.
Burnham ended his first week as PM by working out of the new No 10 North, based at Heron House in Manchester’s city centre, which he claimed will be the “situation room for making Britain better”. There will be no additional cost to taxpayers, as “the running of “No 10 North will be covered by exiting Cabinet Office budgets”, even though there is expected to be some three hundred civil servants moving to Manchester over the next twelve months. A move of part of the power base to the north is most welcome and not before time. The North-South divide has long been a drag on economic growth and a stain on government operating solely out of Westminster. One frightening statistic is that in 2026, a boy born in Blackpool can expect to live for 73.7 years, eleven years less than a boy born in Westminster.
Burnham will have to act quickly on many problem areas:
Cutting sickness and disability payouts
US$ 77.25 billion cost of benefits is being paid for people of working age. The biggest driver of the increase is the number of people claiming Personal Independence Payments (PIP) – a working age benefit designed to support people with disabilities that increase their living costs – which is expected to rise by 25% to five million by 2030
Housing
The government promised to deliver 1.5m new homes in England over the five years of this Parliament but managed only 204k in the first year. Burnham has also said he wants to deliver “the biggest council house building programme since the post-war period”. However, in 2025, English councils built just 1.97k homes , down from a construction rate of almost 200k a year in the 1950s.
The Starmer government has already committed to spend US$ 5.33 billion a year in state subsidies to deliver around 30k “social and affordable” homes a year, which includes homes for people to buy. It is estimated that to deliver such quantities could require a further US$ 17.32 billion on top of the US$ 5.33 billion existing spending commitments
Defence
After a delay of almost a year, Starmer finally published the government’s Defence Investment Plan in June, that only took defence spending to 2.7% of GDP by 2030; because some of this balance was not funded, savings have had to be extracted from other Whitehall departments. There is pressure on the new PM to lift defence spending to 3% of GDP by 2030 but that would mean finding another US$ 12.0 billion
Social care
In a world where there are two million older UK citizens living with unmet care needs, the social care system in England – which is delivered mainly by independent providers rather than the NHS – is widely perceived as underfunded and unfair; Burnham has called it a “broken” system. It is estimated that some 10% of people, aged sixty-five and over, face lifetime care costs above US$ 133k for their care. Labour’s 2024 manifesto pledged a new “national care service”, with Starmer deciding to put this on the back burner by commissioning Baroness Casey to produce a review on options for reform, instructing her to deliver her final report by 2028. The ex-Manchester mayor may request her to produce the report by the end of 2026 and may then implement her recommendations.
Neets (Not in Employment, Education or Training)
Amazingly, there are over one million young people in the UK, aged 16-24, (about 14% of that demographic). In 2015, the UK’s Neet rate was in the middle of the pack of EU countries, but last year it was ranked second highest to Romania. One of the drivers is that the number of 19- to 24-year-olds starting apprenticeship courses Has fallen by 20% since what is widely regarded as a botched reform of the system in 2016 by a previous government. Burnham may wait for the findings of an ongoing report by former Labour minister Alan Milburn, who described it as an “urgent national crisis”, and will probably act on his recommendations. Burnham has been known to say that the school system is too focused on the university route.
Getty ImagesTo act on any of the above will cost a lot of money – more money than is what is currently available to the Exchequer. It is unlikely that he will touch the four main taxes – income tax, national insurance, VAT and company tax – which account for 75% of all tax receipts, split 30%, 19%, 18% and 8%. However, he has already indicated that he may ask people to pay “a little more” in tax, as the country faces major spending pressures from an ageing population and a need to rebuild its armed forces. Of the rest, council tax/business rates, other indirect taxes/excise duty, fuel duty and capital tax, (including CGT and Inheritance Tax) account for 9%, 10%, 2% and 4% and make up 25% of total taxes. Burnham could look at capital tax as a tax on the rich after he told told Labour Party members last year that Britain “overtaxed labour and undertaxed” wealth. He has to maintain the fiscal rules of Rachel Reeves, which require him to balance day-to-day spending with tax revenues within three years. Council tax is the main tax on residential property in Britain and makes up 5% of revenue. It is based on an estimate on what a property would have been worth in 1991 — leading to outcomes which Burnham has called “highly regressive”. If Burnham were to replace council tax and stamp duty land tax on property purchases with an annual 0.48% levy on up-to-date property values, that would push up tax payments by people in London and other areas with high housing costs and lower them in cheaper areas — and bring potential windfall gains and losses in property values for landlords and homeowners in the most affected areas.
The other option is for him to reassess existing spending, across the whole government, to see whether cuts could be made.
In the short-term, he could introduce a windfall tax on the profits of both the energy and financial sectors – both benefitting from higher-than-normal prices, and returns. He could also look further north and decide to adopt a controversial approach, with reports indicating his government is considering allowing further oil and gas production in the North Sea, in the Rosebank and Jackdaw fields. This would put the cat among the pigeons but could be a short-term solution for Andy Burnham, as he starts to put the country back on track after two years of financial mismanagement by the dynamic duo of Starmer and Reeves. Drill Baby Drill!
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