Somethin’ Stupid! 26 July 2024
With three other projects ongoing, two in Jumeirah Village Circle – Condor Castle and Condor Concept 7 – as well as its almost sold-out Condor Marina Star in Dubai Marina, Condor Developers has launched its fourth residential project – Condor Sonate Residences – in Jumeirah Village Triangle. This thirty-one storey project, encompassing 397k sq ft, will include two hundred and thirteen premium apartments, comprising forty-eight studios, one hundred and thirty-four 1 B/R, twenty-eight 2 B/R and three 3 B/R units. Prices will start at US$ 196k. There will also be more than 3.2k sq ft of retail area, as well as a leisure and recreation area of 18.5k sq ft, featuring open cabanas, sun loungers and green jogging pathways. Its leisure and recreation facilities will feature rest areas, an infinity pool, outdoor cinema, separate sauna and steam rooms for men and women, a wellness sanctuary, a landscaped rooftop, fitness studio and a padel tennis court plus a kids’ play area, splash pool and mushroom shower. The company is confident that, by taking advantage of the ongoing boom in the emirate’s surging property sector, it is on its way to boost its realty investment value to over US$ 680 million by 2027.
Expo City Dubai has announced the launch of plots of land, (from 7.5k to 12.5k sq ft), for sale at its Expo Valley residential project; buyers will have “the flexibility to combine areas to suit their needs”, with prices starting at US$ 3.0 million (AED 11 million). Expo Valley, a gated community which will welcome its first residents in early 2026, comprises five hundred and thirty-two villas, townhouses and semi-detached properties. The project will be home to a nature reserve, a lake and a wadi.
JLL’s UAE Real Estate Market Overview for Q2 2024 posted that the emirate’s office market sector saw an additonal 20k sq mt in office gross leasable area (GLA), bringing the total stock to 9.26 million sq mt, including Grade A quality offices, in Umm Ramool; H1 will witness a further 18k sq mt being added to Dubai’s growing office portfolio. Betterhomes noted a slight 2.3% decline in transaction volumes to 2,915, with the total sales value down 6.0%, attributable to significant events, including historic rains in April and two sets of week-long public holidays (Eid Al Fitr and Eid Al Adha), which traditionally reduce market activity. Interestingly, Q2 transactions in the office market increased by 1.0% on the year, with the sales value jumping by 17.0% to US$ 371 million. According to Betterhomes’ data, the following are the top five locations for Q2 office transactions in Dubai – Business Bay, (with 43% of all office transactions), Jumeirah Lakes Towers (32%), Dubai Silicon Oasis (5%), Arjan (4%) and Jumeirah Village Circle (4%). The Q2 average selling price for secondary office spaces in Dubai has risen 22.0%, on the year, to a record high of US$ 372 per sq ft. This surge underscores the strong demand and limited availability of high-quality office spaces, driving prices higher. Despite ongoing development projects, the persistent supply crunch for premium office spaces has led to increased competition among businesses, driving up prices and maintaining high occupancy rates. Robust demand and rising leasing activity drove rents higher, with average Grade A rents in the central business district 15.0% higher, on the year, reaching US$ 717 per sq mt; at the same time, CBD vacancy rates, fell to 8.0% in Q2.
The retail market demand kept its upward momentum going into Q2, with an annual 16.0% increase in average rental rates in primary and secondary malls. Capitalising not only on limited availability, and growing demand to move rents higher, landlords are also able to negotiate a combination of rent and turnover agreements. There were no new completions recorded in the emirate, resulting in the retail stock remaining stable at 4.8 million sq mt. In H1, it is anticipated that an additional 58k sq mt of retail GLA will be introduced in the emirate.
In the first five months of the year, and despite the onset of the slower – and much hotter – summer season, Dubai hotels posted a credible 10.0% annual increase in international visitors. Average Daily Rates grew by 5.0%, year on year, contributing to a 6.0% annual growth in Revenue per Available Room. In H2, it is expected that 4.5k keys will be introduced to the portfolio of Dubai’s hotels.
Dubai warehouse rents across all submarkets saw an average 14.0% annual growth in Q2, and in such a buoyant sector, it was no surprise that developers were confident enough to launch new plans to deliver additional stock. Dubai Industrial City announced a 1.3 million sq mt expansion plan on the back of 97% occupancy rate in Q1, accompanied by a healthy 9.0% growth in rental rates. Similarly, JAFZA and Dubai South also unveiled new projects.
Boeing’s well noted problems have had a negative impact on flydubai’s operations, with it having to significantly curtail its expansion plans, caused by ongoing delays in the plane maker’s delivery schedule. The problem has been ongoing for the past three years and several revisions have seen fewer aircraft being delivered since 2021, so that the planes already delivered in H1 were from the backlog of previous years, and that the carrier will not now be receiving the fourteen planes originally scheduled for this year. It had already made certain operational decisions, including extending its growing network, employing new staff and gearing up to meet the strong demand for travel after the pandemic. To mitigate the delays in aircraft deliveries, and to meet the surge in demand for travel and add capacity, as it enters its peak season, flydubai has been forced to enter Aircraft, Crew, Maintenance and Insurance (ACMI) agreements, further reducing its margins. Furthermore, the carrier has also invested in an extensive retrofit programme for its fleet of Next-Generation Boeing 737-800 aircraft to ensure a more consistent onboard experience for its passengers and to align the cabin product. The carrier has also extended the lease on some of the aircraft which were scheduled to be returned to the lessors under its Sale and Leaseback agreements, which has led to the airline incurring further costs. Fewer aircraft being delivered this year has added pressure on flydubai’s fleet utilisation. With six new routes scheduled to launch over the next few months, the airline is currently reviewing its frequency of operations across its network which will again impact margins.
Flydubai’s CEO, Ghaith al Ghaith commented that “we are extremely disappointed to learn that Boeing will not be able to fulfil its commitment to deliver more aircraft for the remainder of the year. Boeing’s short-noticed and frequent delivery schedule revisions have hindered our strategic growth plans resulting in significant disruptions to our published schedules. The reduced capacity will ultimately affect our customers, as well as our projected financial performance”.
It is reported that, at this week’s Farnborough International Airshow, flydubai will issue a tender for new narrow-body planes, that would turn out to be the carrier’s biggest ever order in its fifteen-year history; in 2017, the airline made a record purchase of one hundred and seventy-five Boeing 737 aircraft. Issues with Boeing have slowed the carrier’s growth plan and have had a detrimental effect on its new routes and flight frequencies on existing destinations. The ongoing delivery delays will have a “financial impact for sure”, but the extent of that will depend on how far it can increase its aircraft utilisation. Flydubai has ordered 251 of Boeing’s 737 jets in total and has yet to take delivery of one hundred and twenty-seven of the aircraft. Flydubai currently operates a single fleet-type of eighty-eight Boeing 737 aircraft – twenty-nine Next-Generation Boeing 737-800, fifty-six Boeing 737 MAX 8 and three Boeing 737 MAX 9 aircraft. It has an order book for a further one hundred and twenty-five 737 MAX and thirty wide-bodied 787 Dreamliners.
Emirates president Tim Clark expects the first of the company’s two hundred and five Boeing 777X aircraft to enter service by 2026, only after the wide-body aircraft attains full certification at the end of next year, as the US regulatory authorities finally tighten their testing requirements before going into service. The 777X is the industry’s biggest twin-engine plane, with about four hundred seats, but its entry into service has been pushed back by five years because of problems including certification delays. Once the planes are in service, the problem is to ramp up production as quickly and as safely as possible from its three aircraft a month in 2026 to more than sixty a year by 2028. It is estimated that the order book for the 777X is four hundred and eighty-one, of which Emirates has ordered two hundred and five. Due to delays in 777X deliveries, Emirates was forced into expensive redesigns of its cabin interiors. As a result, the airline had to retrofit many of its planes to extend their lifespans. The delays also forced an expansion of its retrofit programme to include more aircraft, raising the total cost to US$ 3 billion,
Abu Dhabi-based Excellence Premier Investment, the parent company of Excellence Driving Centre, has sold 51% of shares in the company to Emirates Driving Company, a subsidiary of Multiply Group; no financial details were available. ECD posted a 1.3% rise in annual profit to US$ 17 million in 2023 profit. This latest move is part of EDC’s strategy of sustainable growth, via local and regional opportunities, and will enhance its network of over twenty local strategic locations. The acquisition will help both entities to develop advanced training curricula and customise training programmes.
Dubai’s GDP topped US$ 31.34 billion, (AED 115 billion) in Q1, with its economy growing 3.2% on the year, attributable to 5.6% rises in the transportation, financial services, and insurance sectors, with hospitality and real estate both moving higher, along with information/communications, accommodation/food services and trade showing gains of 3.9%, 3.8% and 3.0%. In 2023, annual trade, at US$ 116.89 billion was 3.3% higher compared to 2022.
Dubai’s Roads and Transport Authority is set to spend US$ 300 million on six hundred and thirty-six buses, including forty electric vehicles, with its Director General, Mattar Al Tayer, commenting that “the deal illustrates RTA’s determination to make public transport the preferred mobility mode for residents to increase the share of public transport journeys to 25% by 2030. Ahmed Hashim Bahrozyan, CEO of the Public Transport Agency, said, “the purchase of the new buses focused on the compatibility with the latest global standards, including compliance with European carbon emissions specifications, low floors for easy access of people of determination, bike racks, special seating for children, Wi-Fi service, mobile phone charging points, and intelligent systems”.
Earlier in the week, HH Sheikh Mohammed bin Rashid Al Maktoum and Pravind Kumar Jugnauth, Prime Minister of the Republic of Mauritius, witnessed the signing of a Comprehensive Economic Partnership Agreement (CEPA) between the two countries. Although the UAE has already signed several CEPAs with other countries – including Cambodia, Georgia, India, Indonesia, Israel and Turkiye – this is the first with an African nation. It is expected to enhance the UAE and Mauritian GDPs by 0.96%, and 1.0% respectively by 2030 and will also result in Mauritius eliminating 99% of tariffs on imports from the UAE, while the UAE will be eliminating 97% overall. The UAE is the eighth-largest investor in Mauritius, with US$13.2 billion invested in the country, supporting projects in tourism, real estate, renewable energy and technology. HH Sheikh Mohammed noted that the “UAE has consistently endeavoured to build bridges of friendship and cooperation with nations that share our vision of building a brighter future for the next generation.” These Comprehensive Economic Partnership Agreements, which have already enhanced UAE’s access to about two billion people, (25% of the world’s population), are a critical pillar in reaching its target of US$ 1.1 trillion in total non-oil trade by 2031.
With a 9.0% H1 growth in the number of Chinese companies operating out of the DMCC to nine hundred, the DMCC concluded its latest Made For Trade Live roadshow in Shanghai and Shenzhen, its second in China for 2024, where it also held a special briefing on the findings of its latest Future of Trade 2024 report. The visit came as bilateral trade was set to reach US$ 200 billion by 2030, boosted by the rise of new regional trade blocs, such as BRICS+. Its report notes that are big opportunities for the UAE and China to collaborate more closely on tech and environmentally-sound technologies (ESTs). DMCC executives highlighted that the UAE’s advanced trade infrastructure, supportive economic policies, and the dedicated business ecosystems for high-growth areas, have resulted in the district becoming home to 15% of the estimated 6k Chinese businesses in the UAE.
Dubai Taxi Company, which claims to have a 45% market share, posted healthy H1 financial results, with both revenue and EBITDA showing gains – 14% year-on-year to US$ 297 million and 12% to US$ 84 million. Increases were noted in both the limousine and bus segments; the former came in 6% higher at US$ 17 million, (with completed trips 4% higher to twenty-three million journeys), and the latter up 26% to U$$ 20 million. The bike segment saw revenue grow nearly threefold.
In H1, the Commercial Bank of Dubai posted a 10.1% annual rise in operating income to US$ 738 million, driven by net interest income, fees and commissions, with operating profit 9.8% higher, at US$ 563 million, and net profit up 30.2% to US$ 396 million. The bank said that the strong H1 growth in its loans resulted in a solid net interest outcome, which was supported by non-funded income and lower cost of risk that more than offset higher expenses and the corporate tax charge. Margins were improved by high global market as interest rates continued to contribute to the solid net interest income outcome.
H1 figures from Emirates Integrated Telecommunications Company PJSC, (du) show a 54.2% annual surge in net profit to US$ 323 million. Meanwhile, the company’s revenue grew 5.7% to US$ 1.96 billion. Q2 figures showed increases revenue, net profit and EBITDA – by 7.3% to US$ 981 million, 46.3% to US$ 158 million and 3.2% to US$ 436 million.
The DFM opened the week on Monday 22 July, 203 points (5.1%) higher the previous seven weeks, gained 99 points (2.4%) to close the trading week on 4,280 by Friday 26 July 2024. Emaar Properties, US$ 0.30 higher the previous six weeks, gained US$ 0.10, closing on US$ 2.38 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 4.78, US$ 1.62 and US$ 0.35 and closed on US$ 0.64, US$ 5.03, US$ 1.61 and US$ 0.35. On 26 July, trading was at three hundred and twenty-nine million shares, with a value of US$ 135 million, compared to two hundred and eighty-three million shares, with a value of US$ 86 million, on 19 July.
By Friday, 26 July 2024, Brent, US$ 3.96 lower (4.6%) the previous fortnight, shed US$ 1.38 (1.7%) to close on US$ 81.20. Gold, US$ 20 (3.9%) lower the previous week, shed US$ 9 (0.4%) to end the week’s trading at US$ 2,386 on 26 July 2024.
With air travel now returning to pre-pandemic levels, Boeing has estimated that there will be an annual 3.2% demand for new commercial planes to reach 44.0k by 2043, with 75% of that total expected to be single-aisle jets. It sees that the number of wide-body planes will more than double to 8.1k, over the same period, with the twin-aisle variants accounting for 44% of the ME’s fleet; regional jets and freighters would account for 1.5k and 1.0k, respectively. Overall, the aviation sector’s global fleet would hit 50.2k aircraft in 2043, nearly double its estimated number at present. Passenger air traffic, meanwhile, is projected to grow at an annual average of 4.7%. Meanwhile, Airbus reckons that the total will reach 48.2k jets by 2043, from its current total of 24.2k, with an annual 8.0% growth through to 2027, before flattening to 3.6%. Boeing expects the global air cargo fleet to grow by 67%.With its Q2 profits nosediving by 46.0%, to US$ 436 million, Ryanair says it expects summer fares will be much lower than last year, with cost-conscious passengers cutting back; the timing of Easter holidays also impacted on earnings. Although average passenger fares fell by 14.6% in the quarter, to an average US$ 45.53, the carrier said it would have to offer more discounts in the coming months, with supremo, Michael O’Leary noting that “fares are now moving materially lower than the prior year and pricing… continues to deteriorate”. With passenger numbers nudging higher, revenue only dipped by 1.0% in Q2. Ryanair said it now expected fares between July and September to be “materially lower” than last year, rather than “flat to modestly up” as it previously expected. It appears that customers are typically waiting longer than usual to book summer holidays, which is thought to be partly a result of the ongoing effects of the cost-of-living crisis.
It seems that investors, already not too impressed with Tesla shares dumping 12%, (and losing US$ 100 billion in market cap), after posting its lowest quarterly profit margin in five years, were later more than disappointed with Elon Musk’s talk of humanoid robots and driverless taxis. They are becoming increasingly worried whether the revenue of such ventures will be enough to offset the reduction in Tesla’s finances, and that its valuation may continue to head south.
It was all but inevitable that the UK’s water utility, Thames Water, would see its credit rating more than diluted to “junk” status by Moody’s; this makes it even harder and more expensive for the country’s biggest water provider, already weighed down by US$ 21.20 worth of debt, to raise funding. It has already defaulted on some loan payments and will run out of money by next May if it cannot raise any investment from current shareholders who described the company as “uninvestible”.Thames Water cannot meet water regulator, Ofcom’s requirements to maintain an “investment grade” debt ranking.
The new Starmer administration was quick to reject Harland and Wolff’s request for a US$ 258 million (GBP 200 million) loan guarantee, noting that offering the loss-making shipbuilder meant “a very substantial risk that taxpayer money would be lost”. Business Secretary, Jonathan Reynolds, added that “this decision was based on a comprehensive assessment of the company’s financial profile and the criteria set out in our risk policies”, and “the Government believes, in this instance, that the market is best placed to resolve the commercial matters faced by Harland and Wolff.” The company is now in talks with its lender, Riverstone, and is hopeful of agreeing additional funding within days. Its shares are currently suspended, after it failed to file audited accounts on time, with the company appointing Rothchild Bank to review strategic options which could include a sale of the business.
PWC, the administrators of Carpetright, has announced that Tapi Carpets & Floors has agreed to save three hundred and eight jobs, fifty-four stores, two warehouses and the Carpetright brand name. However, two hundred and twenty-nine stores will have to close and over 1.5k employees retrenched, with Tapi’s MD, Jeevan Karir saying, that initially it had wanted to save Carpetright in its entirety but it “quickly established” that doing so was “unviable”. Kevin Barrett, chief executive of Carpetright’s parent firm Nestware Holdings, said its focus for the past week has been looking for extra investment to shore up jobs. He added that the deal would not affect Carpetright stores in Europe or other Nestware brands like Keswick and Trade Choice.
Israeli cyber-security firm Wiz has rejected a US$ 23.0 billion takeover bid from Google parent company Alphabet. Wiz founder and chief executive, Assaf Rappaport, indicated that the four-year old company would instead seek to reach US$ 1 billion in revenue before undertaking an IPO; its latest annual accounts see revenue at US$ 500 million. During a US$ 1.0 billion fundraising launch in May, it was valued at US$ 12.0 billion.
Last week’s historic global IT outage continues to cause problems for many, with CrowdStrike still working to sole the entire problem which downed an estimated 8.5 million Microsoft Windows devices globally. As noted last week, airlines were one of the biggest sectors to be impacted and none more so than Delta which has had to cancel over 5k flights since last Friday and posting that it could be several more days for operations to return to normal. As of Tuesday morning, it had already cancelled more than four hundred flights and delayed hundreds of others, following more than 1,15k cancellations a day earlier. In April, the Biden administration finalised a rule requiring that airlines promptly and automatically refund passengers for significant changes to their travel, and other issues. Transportation Secretary Pete Buttigieg said Delta must provide passengers with refunds and other compensation for disrupted travel as required by law. Indeed, last year, Southwest Airlines was hit by a US$ 140 million penalty to resolve a Department of Transportation investigation, launched after a storm disrupted service led to many cancellations during the busy 2022 holiday travel period. The US has opened an investigation into Delta Airlines as it struggles to recover from last week’s global IT outage.
In an effort to placate its ‘teammates and partners for the extra workload resulting from the outage last Friday, which knocked out millions of computers worldwide, (that cost companies and governments millions), CrowdStrike gave them US$ 10 vouchers. It seems the firm recognised the “additional work” the 19 July incident caused “and for that, we send our heartfelt thanks and apologies for the inconvenience”. To exacerbate their problems, some recipients have posted on social media that the vouchers failed to work.
Some of the leading global luxury brands have been impacted by China’s economic slowdown and the government’s crackdown on displays of wealth. Their revenue has been also hit by local shoppers cutting back on expensive purchases and government censors closing down social media accounts of influencers who have shown off their luxury goods online. In Q2, LVMH sales in Asia, which include China but not Japan, fell by 14%, (following a 6% dip in Q1), LVMH, which is the world’s largest luxury group, also said its overall revenue growth had slowed to 1% for the period. Shares in the world’s largest luxury goods group – including the likes of Louis Vuitton, Dior and Tiffany & Co among its seventy-five high-end brands – have fallen 20% over the past Many of its peers have seen similar disappointing financials:
- Up market UK fashion label Burberry posted those sales in mainland China had slumped by more than 20% on the year
- Swatch Group – the Swiss watchmaker which owns Blancpain, Longines and Omega – said weak demand in China helped push down H1 sales by 14.4%
- Richemont, which owns Cartier, saw Q1 sales in China, Hong Kong and Macau, sink 27% year-on-year in the quarter
- German fashion giant, Hugo Boss, downgraded its sales forecasts for the year on concerns about weak consumer demand in markets like China and the UK
- Other major luxury goods industry players, including Hermes and Gucci-owner Kering, are due to report their latest financial results this week
- Based on recent improvements in its governance and economic policies, (and “more specifically the decisive and increasingly well-established return to orthodox monetary policy”), Moody’s Investors Service has upgraded Turkey’s sovereign credit rating, from B3 to B1, with a positive outlook – the first such rating action in more than a decade. Although moving two notches higher, a B1 grade is still highly speculative and four levels below investment grade. (A non-investment grade makes it more difficult for a country to get access to capital markets and raise funding when it wants to borrow). In May, S&P Global had upgraded the country to B+. With domestic demand strengthening, Q1’s GDP grew by 5.7%, but the currency remains one of the worst performers among emerging market currencies – almost 10% lower YTD. Although its inflation rate stood at 69.8% in April, the regulator is confident that it will decline to 38.0% by year end and to 14% by December 2025. Another boost to the country’s economy, and investor confidence, has been its exit from the Financial Action task Force ‘grey list’.
Mid-week, financial markets in the US and Asia fell sharply, as investors sold off tech shares, with AI stocks taking the brunt of the hit. On Wednesday, two major New York bourses – the S&P 500 and the tech-heavy Nasdaq – shed 2.3% and 3.6%, in their biggest one-day falls since 2022; the Dow Jones Industrial Average dropped by 1.2%. The major losses were seen in major firms including Nvidia, (down 6.8%, and 15.0% over the fortnight), Alphabet, (minus 5.0%), Microsoft, Apple and Tesla (12.0%). It seems that investors have finally woken up to the fact that there has been little revenue (and profits) to date, in relation to the huge amounts of expenditure, and are now looking for some sort of operating return. They are also concerned about two other factors – the presidential election and the timing of any US rate cuts.
This year’s Henley Passport Index, which shows that Singapore, with a new record with 195 visa-free travel destinations, continues to be the most powerful passport in the world, indicates that access to visa-free travel has generally improved worldwide but the gap between those ranked at the top and bottom is also at its widest.Trailing behind in second place were Spain, France, Italy, Germany, and Japan, with a score of 192, and in at number three were Austria, Finland, Ireland, Luxembourg, Netherlands, South Korea, and Sweden – each with visa-free access to 191 global destinations. In fourth spot were the UK, Belgium, Denmark, New Zealand, Norway, and Switzerland, achieving a visa-free score of 190, followed by Australia and Portugal with a 189 score. The UAE was in ninth place with 185 points, along with Latvia and Lithuania. Afghanistan, Syria, Iraq, Yemen, Pakistan, and Somalia took out the six lowest spots, with visa-free access scores of 26, 28, 31, 33, 33, and 35 respectively. The five countries with the biggest difference between their own visa-free access and their openness to other nations are Somalia, Sri Lanka, Djibouti, Burundi, and Nepal, while those with the least discrepancy are Singapore, Bahamas, Malaysia, Hong Kong (SAR China), and Barbados.
Brazil’s Ministry of Planning and Budget has reportedly lifted its primary deficit projection this year to the limit of the tolerance range, (established in the nation’s fiscal framework) of US$ 5.2 billion. In May, the government had anticipated a gap of US$ 2.6 billion which was higher than the US$ 1.6 billion posted in March. Finance Minister, Fernando Haddad, added that the government will freeze around US$ 2.7 billion in spending from this year’s budget to comply with the tolerance band., but some analysts think that this should be double that amount to eliminate this year’s primary budget deficit. Whilst acknowledging that these concerns are legitimate, Treasury Secretary Rogério Ceron expressed confidence that Brazil’s government will meet its 2024 fiscal target. On Monday, President Luiz Inácio Lula da Silva confirmed that the administration would freeze budget resources whenever necessary, to allay fears that he would not cut spending to hit budget targets.
The Xinhua News Agency reported that China created a total of 6.98 million new urban jobs in H1, whilst last month, the country’s surveyed urban unemployment rate stood at 5.0%, with the employment situation remaining generally stable. The Ministry of Human Resources and Social Security attributed the stable job market performance to the country’s economic recovery, a rise in service consumption, and faster industrial growth. It has set an annual target of creating more than twelve million new urban jobs this year, and also aims to maintain the surveyed urban jobless rate at around 5.5% this year.
China’s General Administration of Customs posted that H1 oil imports fell by 11.0% to 75.88 million bpd, (11.95 metric tonnes), attributable to weak refining margins and poor fuel demand; 2023 imports had seen imports surging to a decade high after independent refineries boosted purchases of discounted oil blended from Russian barrels. In H1, buying has weakened, with monthly imports heading south, with June imports of 1.49 metric tonnes being 31% down on the month and 45% lower on the year.
Ahead of Modi’s 3.0 budget presentation last Tuesday, the Finance Minister, Nirmala Sitharaman, noted that there would be a real GDP growth of up to 7.0% in 2024-25, and that the world’s fourth largest economy, (destined to surpass Japan by the end of the decade to third position), had its headline inflation rate “largely under control”, down to 4.5% and 4.1% over the next two years. However, as with other global economies, the usual caveats apply – unpredictable weather patterns, growing financial market uncertainties in developed economies and geopolitical complexities. He added that “going forward, the government’s focus must turn to bottom-up reform and the strengthening of the plumbing of governance so that the structural reforms of the last decade yield strong, sustainable, balanced, and inclusive growth”. The survey estimated that India will require significant job creation until 2036 to accommodate its growing workforce, and that the country needs to recognise and address challenges posed by its dependence on China for critical minerals.
The Australian Securities and Investment Commission has charged four people with market manipulation utilising a scheme known as ‘Pump and Dump’. It is alleged that they were involved in a coordinated scheme to pump up shares in Australian stock values before dumping them at inflated prices. The four were charged with conspiracy to commit market rigging and false trading, in September 2021, with ASIC alleging that the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the ‘ASX Pump and Dump Group’. The group has also been charged with dealing with the proceeds of crime, in relation to the money they each allegedly obtained from selling shares in the so-called pump-and-dump activity.
Two days ago, Nationwide became the first to offer a mortgage with an interest rate below 4% by reducing its five-year fixed mortgages, for new customers moving home with a 40% deposit, to a rate of 3.99%. This is the first step in a price war between the country’s biggest building society and its rivals, as competition between lenders intensifies ahead of the BoE’s rate decision, on 01 August. Rates still remain at sixteen-year highs of 5.25%. What is worrying to some 1.6 million existing borrowers is when their fixed term rate deals – usually for two but up to five years – expire, they will have to move off a rate of less than 2.0% to the “normal” rate of 5.25%. The average five-year and two-year fixed homeowner mortgage rates are currently 5.40% and 5.81%.
Ofcom has fined BT nearly US$ 23 million for what it called a “catastrophic failure” of its emergency call handling service that happened in June 2023, resulting in at least 14k 999 calls not being connected. The regulator noted that the telecoms giant was “ill-prepared” to respond to the problem and fell “woefully short of its responsibilities”, whilst BT admitted its guilt caused by an error in a file on its server, which meant systems restarted as soon as call handlers received a call.
According to the Competition and Markets Authority, in 2022, drivers overpaid US$ 1.16 billion at supermarket fuel sites alone, and that the cost to all motorists from the previously identified increase in retail fuel margins since 2019 was over US$ 2.06 billion in 2023 alone. The watchdog said it was supportive of continuing efforts to secure a compulsory fuel price monitoring system to help consumers make informed choices at the pumps. RAC Fuel Watch data showed average unleaded costs at US$1.87 per litre and diesel just shy of US$ 1.94, with its website indicating that prices should be falling. CMA noted that “last year we found that competition in the road fuel market was failing consumers, and published proposals that would revitalise competition amongst fuel retailers. One year on and drivers are still paying too much”.
Although the paper £20 and £50 stopped being legal tender in October 2022, (having been replaced by plastic currency), about US$ 9.29 billion, (GBP 7.2 billion), in old bank notes, have not been cashed in across the UK.; the Royal Mint also notes that seventy six million old £1 coins that have not been returned, but of the 1.6 billion that have been returned, about 1.8 million were counterfeit. The Bank of England said three hundred and ninety-five million paper banknotes remain in circulation:
- 110 million £5 notes withdrawn from circulation – May 2017
- 62 million £10 notes withdrawn from circulation – March 2018
- 171 million £20 notes withdrawn from circulation – September 2022
- 52 million £50 notes withdrawn from circulation – September 2022
- Although the use of cash slumped during the pandemic and accelerated a downward trend for the use of notes and coins, it still accounted for 12% of all payments in 2023, making it the second most-popular way to pay, after debit cards. New Financial Conduct Authority rules aim to secure access to cash for consumers and businesses are being stepped up because of solid demand for notes and coins despite payment declines. As from 18 September, banks and building societies will face greater obligations, if local communities lack access to services, like branches and ATMs, and to plug “significant gaps” in the provision of basic services including the ability to bank cash. The regulatory framework covers the operations of the fourteen largest lenders on the high street.
The annual Scottish Widows’ retirement report indicates reveals that the percentage of people not on track for even a minimum retirement lifestyle has risen 3%, (equating to 1.2 million people), on the year to 38%; it puts the annual figure at US$ 18.6k (GBP 14.4k) and US$ 28.9k, (GBP 22.4k) for a single retiree and for a couple. Its definition of a minimum retirement lifestyle covers all the needs of a retiree “with some left over for fun and social occasions” – a holiday in the UK, a meal out once a month and “affordable leisure activities about twice a week”. Retirees can expect to normally claim a pension of US$ 14.8k (GBP 11.5k), at the age of sixty-six. Some 54% of responders expect the state pension to eventually form “a meaningful portion of their retirement income”, with 75% calling it “hugely important” in helping them pay for everyday necessities, and that 42% felt able to save anything for retirement after covering day to day costs.
Gordon Brown’s infamous 1997 tax raid on pensions, shortly after he became chancellor, did lasting damage to what was previously Europe’s strongest and best-financed occupational pensions system, with estimates that since then, at least US$ 322.60 billion has been withdrawn. Furthermore, it hastened the demise of ‘defined benefit’ (sometimes known as ‘final salary’) pension schemes in the private sector. In 2012, the Blair administration introduced ‘Auto Enrolment’ that required every employer to set up a workplace pension scheme into which all employees aged above the age of twenty-two, and on an annual salary of more than US$ 12.9k, (GBP 10k) would be automatically enrolled unless the worker specifically asked to opt out. The good news is that 79% of workers are now in an occupational pension scheme – up from under 50% twelve years ago. The bad news is that contributions of 8%, (companies – 3% – and employees 5%) are not high enough. The Pensions and Lifetime Savings Association estimates that a 12% figure (split equally between both parties, 6% and 6%) would be more realistic but the new government’s Pensions Bill, published in last week’s King’s Speech, failed to include this measure.
The release of a Treasury audit next Monday is expected to reveal a US$ 25.74 billion, (GBP 20 billion) black hole in public spending. The Chancellor confirmed, “I’ll give a statement to parliament on Monday, but I have always been honest about the scale of the challenge we face as an incoming government and let me be crystal clear – we will fix the mess we have inherited,” and is expected to reveal the state of the public finances. During the election campaign, Labour promised not to raise income tax, VAT or National Insurance – which means she could turn to capital gains tax, pension tax relief and inheritance tax as potential options in the budget. The situation has been made worse by the fact that it is reported that independent pay review bodies have reportedly told ministers millions of public sector workers should be given a 5.5% pay rise, which could add US$ 12.27 billion to public expenses.
The government may need to deliberately put people off travelling between Birmingham and Manchester by rail because scrapping HS2’s northern leg is likely to mean trains can take fewer passengers. Following the then PM’s decision, last October, Rishi Sunak announced that sections of the high-speed railway linking Birmingham with Manchester and with the East Midlands would no longer be built, and that only the stretch between London and the West Midlands would go ahead, although new trains built for HS2, will run over the entire line. Now the national Audit Office has reported that these trains “may have fewer seats than existing services”, and HS2’s delivery company estimates that capacity between Manchester and Birmingham could be reduced by 17%. New HS2 trains will travel to Manchester on existing tracks but they will have less space than current services. The Department for Transport is looking at how longer HS2 trains could be used, but existing stations such as Crewe would have to be adapted. The agency will also “need to assess options for addressing capacity issues on the west coast”, such as dissuading passengers from travelling by train at certain times – if at all. The NAO’s report also stated that the previous Conservative government had spent US$ 765 million buying up land and property along now-cancelled parts of the route, and that since 2020, construction costs have increased by US$ 7.75 billion. You could always rely on the Conservative government to do Somethin’ Stupid!
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