4. Weekly Newsletter
UK Economy & US Special Relationship
The Bank of England has stated that 2020 will have been the biggest economic slump for the nation in over 300 years. The central bank even cancelled its annual stress test, with new COVID-related additions set for the future tests, of banks to allow for attention to be diverted towards credit flows in order to prop up the economy. FDI also fell by 100% during the year from $45bn in 2019 to -$1.3bn in 2020; whereas, China ($163bn) and the U.S. ($134bn) continued to post strong results. UK GDP figures for Q4 of 2020 are scheduled to be released on the 12th of February.
Hopes for a UK-US Trade Deal were risen on Saturday as President Biden made his first transatlantic phone call, since his inauguration, to PM Johnson. The two are said to have bonded over their love of trains and the UK leader said he was looking forward to “deepening the longstanding alliance” between the two nations as they push for a “green and sustainable recovery from COVID-19”. However, the UK Government is a trade deal may not be possible in 2021 and the new Biden administration has stated this is not a top priority.
On Monday the UK recorded its lowest daily rise in COVID cases, so far, in 2021 with a total of 22,195 (Sweden: 3,300). This illustrates a 22% week-on-week decline but brings the total to over 3.6m (Sweden: 550,000) with almost 100,000 deaths nationally. The UK’s strict national lockdown has been hailed as the cause of the sharp decline in cases but this has been at the expense of British High Street retailers, health centres and opening up schools again.
The UK’s £12bn vaccine programme has seen over 6.6m vaccines already administered, at a rate of 250 people per minute, with in excess of 80% of over-80 year olds vaccinated. Nevertheless, the path to a vaccinated nation is unclear as the EU has now been scheduled to only receive half of their purchased 100m AstraZeneca doses allocated in Q1; in response the EU decided to threaten blocking exports of the Belgian-made Pfizer jabs which could limit the supply to Britain.
UK Travel Industry
The UK’s increasingly strict COVID rules are now rumoured to soon feature a mandatory hotel quarantine upon arrival into the country. This would come at the personal expense of each passenger and has been labelled, by Heathrow Airport, as having ‘huge ramifications’ for the travel sector. The industry, valued at £106bn in 2019, supports 2.6m jobs and was the fastest growing industry in Britain- representing 7.2% of UK GDP.
The country’s largest independent travel agents, Hays Travel, this week announced 89 of its stores would be permanently closing and comes after the year in which British Airways cut 12,000 jobs. Shares in European airlines have had a tough week with IAG down 8% and easyJet down 7% so far. Johan Lundgren, the CEO of easyJet, suggested that bookings were showing a pent-up demand for travel once restrictions are lifted. Destinations, such as London and Stockholm, are expected to experience strong demand going forward and were both ranked as top 10 destinations for the ‘ultra rich’ this week.