5 November 2024: Another broken promise

The Government announced yesterday that university fees will increase by around 3.5%.

Usually, the fees for individual courses are known at the outset of the course, normally three or five years, to allow students to budget for their entire stay at university, but the Education Secretary confirmed that the rise will apply just for the current academic year.

During the past two years when he was the leader of the opposition, Sir Keir Starmer said on several occasions that university tuition fees would not rise under a Labour Government, while his deputy, Angela Rayner, criticized the system of tuition fees, which were introduced by the previous Labour government and later increased by the Conservative government. Rayner advocated for a review of the tuition fee system and has expressed support for reducing the financial burden on students.

She has been overruled which has meant that students along with pensioners and farmers, three powerful and militant sectors of the public, will be both upset and angry about broken promises.

Growth in UK retail sales slumped in October, according to industry figures that suggest shoppers have put off spending in anticipation of Black Friday promotions and because of a later school half-term break.

Figures from the British Retail Consortium (BRC) show total sales grew by 0.6% year-on-year in October, significantly weaker than September’s and less than half the three-month average growth rate.

Fashion sales took the biggest hit as mild weather deterred spending on winter clothes, while industry leaders said shoppers were holding back on buying goods as they prepared to go hunting for bargains in the US-inspired Black Friday sales event.

Investors from several Arab States, including Saudi Arabia and the UAE, face significant changes to their UK tax affairs.

The reform of the rules for non-domiciled individuals means that a sector of the economy that has provided significant foreign investment has been effectively closed.

As part of her Budget announcement Last week, Rachel Reeves looked to energize investment in several sectors of the economy, including clean energy and net zero.

She announced the new Investment rule, which allows borrowing for capital investment, will unleash £100 billion of added investment over the rest of this Parliament.

The biggest chunk of that capital wave will be aimed at developing a net-zero energy system. The Climate Change Committee estimates that total public and private investment in the net-zero transition has to increase from £10 billion a year to £50 billion a year by 2030 to get on track to our climate targets, helping build the critical infrastructure needed, such as gigafactories, green steel plants and a clean power system.

The pound had something of a roller coaster ride yesterday as the U.S. election increased volatility around the dollar index and its constituents. It opened significantly higher, reaching 1.2998 but fell back later in the London session to post a low of 1.2935, eventually closing at 1.2952.

Election day has finally arrived. What started as something of a slow burn, characterized by questions over President Biden’s mental acuity, has exploded into a mud-slinging match which has seen no equal.

Vice President, Kamala Harris, has been dragged into what has been a singularly unsavoury and childish campaign, during which insults have become equally important as policy statements.

Attempting to decipher what will change once the smoke of battle has cleared, it is likely that should Donald Trump be victorious whenever the result is declared, America’s relationship with the world will change, possibly forever.

The country will adopt a far more protectionist stance, leaving several countries in danger of being swamped. America has a huge influence over Israel, and that may change with Gaza, Palestine and Lebanon being left to lurch even further towards Tehran.

Trump has mentioned several times his sympathy towards Vladimir Putin, having been left with little alternative but to invade Ukraine given NATO’s continued advance eastwards.

The American contribution to the Ukrainian war effort will likely be tempered, while Trump’s disregard for NATO and its budget is well known.

The “Special Relationship” between the U.S. and UK will be shelved for at least four years, possibly permanently. UK Reform Party Leader Nigel Farage has Trump’s ear and is unlikely to have anything complimentary to say about Sir Keir Starmer.

Global trade will take a severe hit should Trump follow through with his threat to attach tariffs to finished goods imported from some of the country’s major suppliers, including China and the European Union.

She has also made special mention of Mexico, saying that if U.S. manufacturers want to build factories there, they will have to pay significant amounts for the privilege, making them economically unviable.

A Harris victory meanwhile would see the national debt likely increase in both absolute terms and as a percentage of GDP.

Her policies will mostly follow from those of her predecessor, although she has said she will push for stronger action on undocumented migrants.

Both Jerome Powell and Janet Yellen will keep their jobs, with both fiscal and monetary policy considered to be in safe hands.

This week will see an increase in market volatility, which started yesterday. Once the result of the election has been declared, the market will be assailed by the result of the latest FOMC meeting. A cut of twenty-five basis points is the market’s prediction for the likely result but given the significant fall in job creation in October, a fifty-point cut is still possible.

The dollar experienced significant volatility yesterday. The index fell to a low of 103.58 but recovered to close at 103.89.

There are two sides to every story.

Recently, Spain has seen, apart from the devastating floods which brought about a tragic and overwhelming loss of life and significant loss of both property and infrastructure around the area of Valencia, protests right across the mainland and several of the islands regarding the effect that tourism is having on the culture and “personality” of the country.

The flip side of that coin is that the country’s significant surge in tourism since the Pandemic has seen it outgrow both Germany and France.

Spain’s economy has outperformed Germany and France this year as international tourism climbs to record highs. But its strong economic performance may be curtailed by the worst flooding in decades.

The country’s gross domestic product expanded by 3.4% year-on-year in Q3, compared to 3.2% in Q2, the National Statistics Institute reported on Wednesday. That beat analysts’ forecasts of 2.9%.

Spain received 9.6 million international tourists in September, or 9.1% more than in the same period a year ago, official data showed. In the first nine months of 2024, 73.9 million tourists travelled to the Mediterranean country.

Strict quarantines imposed during the Covid-19 pandemic hit the world’s top three most visited countries. However, since an approximately 88% drop in domestic tourists in Spain in 2020, “tourism has rebounded and continues to hit record levels,”

However, many towns and cities feel that they are close to breaking point with protests held in San Sebastián, Madrid and Seville last weekend.

Barcelona, which is suffering similar but thankfully less devastating storms as Valencia, has been beset by what it calls “the Airbnb” disease, where tourists rent properties for a stay of three or four days and then leave without contributing anything to the city’s culture.

The growth of short-term rentals is also pushing up property values, precluding young locals from being able to participate.

Elsewhere in the Eurozone, the region’s Economy Commissioner, Paolo Gentiloni, offered further insights from the economic forecast being drafted, and a new call for reforms, adding a request for “Common resources for Common priorities”.

The Commission will not produce its economic forecasts until ten days from now (Nov. 15). Still, Gentiloni is already offering a small foretaste that will not please Italy, the only country among the major eurozone economies not mentioned by the Economy Commissioner. The concern harboured by Italy’s Transport Minister Matteo Salvini is, once again, materializing, i.e., Spain doing better than Italy to the point of undermining and ousting it from the podium of economic engines.

Germany appears to have dragged its long-time economic shadow, France, into the mire.

The two countries, both previously significant growth engines for the region, are struggling but for different reasons. While Germany is struggling to reform its outdated economic model, France is suffering budgetary issues.

The euro is being buffeted by the dollar’s current bout of volatility. Yesterday, it rallied to a high of 1.0914 but settled back to close at 1.0875.

Have a great day!