UK & GLOBAL NEWS UPDATE ALY SHAMSI UK Update: Brexit negotiations have reached crunch point with the transition period ending on the 31st December. The main sticking points remain: fishing, agreeing ‘level playing field’ measures for businesses and resolving future disputes. Rishi Sunak, Chancellor of the Exchequer, announced a Spending Review to set out his plans for the economy next year. Public sector pay is set to be frozen whilst foreign aid will be cut from 0.7% of GDP to 0.5%. The Chancellor believes that the economy will not return to its pre-COVID-19 size until 2022 with the Office for Budget Responsibility (OBR) forecasting rates of GDP growth of 5.5% in 2021 and 6.6% in 2022. The OBR has also decreased its forecast for the peak unemployment figure from 12% (July estimate) to 7.5%. This would represent the lowest recessionary peak in unemployment since the 1970s, and significantly lower than that seen after the 1990-1991 and 2008-2009 recessions. UK public borrowing is set to reach a post-war high of £394bn or 19% of GDP this year however most importantly the cost of servicing this debt will reach a post-war low due to the current interest rate of 0.1%. UK supermarkets Tesco, Sainsbury’s, Morrisons, Aldi and Lidl and a number of other retailers are returning over £1.9bn in business rates relief.
Global Update: The OECD (Organisation for Economic Co-operation and Development) revised up its forecasts for the global economy and predicted a faster recovery if vaccines are rolled out quickly. The Dow Jones (share index) surged passed 30,000 points for the first time driven by the announcement of the COVID-19 vaccine approval for use. American President Elect Biden announced Janet Yellen as the first female Treasury Secretary. Activity in manufacturing and services accelerated in China in November, underlining the resilience of the world’s second largest economy. Argentina has been suffering with a recession for several years with the IMF intervening to provide a US$57 bn programme following their currency crisis. · The UN warned that the pandemic is likely to push an additional 44m people into extreme poverty by 2030.