Welcome to the latest in our weekly client updates – now with less than a month to go to Christmas.
Earlier this week, the man leading the island’s Covid response, Dr Ivan Muscat issued a warning saying that despite a current dip in Corona Virus cases there was a significant potential for numbers to rise this Winter and Islanders must not get complacent and be fooled by the recent figures which showed a fall of cases, however on Thursday 35 new cases were reported, allegedly most of these originated from one hospitality event. Currently there are 181 positive cases in the island of which 3 people were in hospital.
Meanwhile after gaining approval from the states to legally enforce the wearing of masks in specified indoor public places, the island’s health minister Deputy Richard Renouf said “ The order has not yet been made but will be drafted over the next few days and I hope that by next week face masks will be mandatory in shops, supermarkets and other public spaces”. Once the legislation is introduced, breaches could result in a fine of up to £1,000.
Until the law comes into effect the wearing of masks in indoor spaces remains a strong recommendation. The minister was also given similar powers to legally enforce restrictions on the number of people who can attend public gatherings.
This was also the week that brought us Chancellor Rishi Sunak’s Spending Review; when the US Dow Jones index broke through the 30,000 barrier and two people claimed the credit – and when ‘lockdown’ became the Word of the Year.
We have looked at all the main stories below. As usual, the stock market figures quoted were correct at close of business in the relevant market on Wednesday evening, and the commentary was written on Thursday morning, so that it could be with you on Friday.
The Latest News
The big news story of the week was the Chancellor’s Spending review in the UK. Rishi Sunak had long since cancelled the Autumn Budget because of the economic uncertainty, instead presenting a 30 minute outline of the Government’s spending plans for next year.
Despite the continuing costs of the pandemic – and despite Government borrowing for October being the highest on record – he outlined some lavish commitments, including what he described as a £100bn “once in a generation” investment in the nation’s infrastructure.
This came despite a forecast of Government borrowing reaching £394bn this year, with the Office for Budget Responsibility forecasting that the economy will contract by 11.3%. Unemployment is forecast to reach 7.5% next year, with 2.6m people out of work.
October saw UK car production fall again: it has been a disastrous year for the motor industry, with production last month just 20% of that recorded in October 2019. There was, though, a boost for the retail sector, with sales up 1.2% as we all started our Christmas shopping early.
The end of November approached with still no sign of a trade deal between the UK and the EU. The Governor of the Bank of England auditioned for ‘the ghost of Christmas future’ by warning that a no-deal Brexit would be “more damaging to the economy than the virus.” As talks with the EU continued, the UK signed a rollover trade deal with Canada.
In America it appears that the Presidential election may finally be over. Donald Trump has not formally conceded, but he has now accepted that the incoming Biden administration must be allowed to start making plans for government. Joe Biden has named the key members of his cabinet, with many of them veterans of the Clinton and Obama administrations. Perhaps most tellingly, though, Twitter has handed the @POTUS account over to Joe Biden. What more proof could you need?
The Stock Markets
It was another good week for the stock markets we cover in the Update. The only market to fall was India, and that only by 1%. There were no spectacular gains, but when you are reporting on a weekly basis you don’t expect that. In the Far East both Japan and South Korea were up by 2% to 26,297 and 2,602 respectively, with the other two major markets in the region – China and Hong Kong – unchanged in percentage terms at 3,362 and 26,670.
In Europe it was another flat week for the UK’s FT-SE 100 index – relatively unchanged at 6,391 – but the German market was up 1% to 13,290. The French stock market rose by the same percentage to 5,571.
In the US the Dow Jones index closed Wednesday night at 29,872 – up 1% in the week. the more broadly based S&P 500 index was up 2% at 3,630.
Finally – despite some worries over the levels of Government borrowing – the pound ended the week up 1% against the dollar, trading at $1.3384.
The domestic agenda this week was dominated by the Chancellor’s Spending Review. He made no mention in his speech of how the bill for the spending – or the continuing fight against Coronavirus – will be paid for. You suspect that he will start to present the bad news in the March Budget, and there were plenty of rumours of tax rises flying around before his speech, with changes to both Capital Gains Tax and pensions being mooted.
He has, at least, given us a four month ‘window’ and any clients who think they may need to take action before the Budget shouldn’t hesitate to contact us.
Matt Hancock is speaking later today (Thursday) and it seems inevitable that by the time you read this a tougher set of tiers will have been announced. As I write the BBC is suggesting that very few areas will be in the lowest Tier 1 when lockdown ends next week, with most of us being in Tiers 2 and 3. Although the Health Secretary is saying that the tiers will be reviewed before Christmas, you suspect that they will continue long into the New Year. Worryingly, there is a new spike in the virus in South Korea, a country that has previously been considered one of the more successful at coping with the pandemic.
Despite all this, world stock markets have once again proved resilient. Although it had fallen back by Wednesday, the US Dow Jones index broke through the 30,000 barrier on Tuesday, closing at an all-time high of 30,046. Both the President and the President-Elect claimed the credit…
As we have commented previously, the majority of the markets we cover are up over the last 12 months. With progress continuing to be made in the development and roll-out of vaccines, we’re feeling positive about next year.
Let us try and leave you on an even more positive note. Every year the Collins Dictionary chooses a ‘Word of the Year.’ This year – to no-one’s surprise – it’s lockdown: the imposition of stringent restrictions on travel, social interaction and access to public spaces.
But is there an early front runner for next year’s WotY? Given that the Oxford vaccine currently being developed apparently costs less than a coffee, could next year’s word be ‘Vaccaccino?’
Let’s hope so. And let’s hope that by this time next year ‘lockdown’ is as relevant as some previous Words of the Year. The 2008 winner in the US was ‘moofing.’ Today it’s not even recognised by the spellchecker – and a bonus point if you know what it means…