46. Weekly Newsletter

UK COVID Outlook

From the 7thof November travelling to and from Sweden will now require self-isolation upon your entry into the UK. This comes as UK COVID case stop 1.2m with the official death toll just days away from 50,000- however, cases now appear to be levelling out for the moment.

The major headline across the UK, and the world, this week has been the Pfizer “jab which could prevent 90% of people getting COVID”. The successful purchase of 40 million doses (enough for 20m people) would see 5m people vaccinated before Christmas, at the current rate, with experts proclaiming that life could get back to normal by Spring. Plans have been made for the Army to help establish mass COVID vaccination centres for the first wave of patients which will be made up of older care home residents, care home staff and health workers. PM Johnson has made it clear that there is still a long wait ahead and this vaccine cannot yet guarantee any certainty. The markets, in the UK and abroad, also reacted very positively with the struggling FTSE100 and FTSE250 each seeing around 5% growth on Monday.

British Electric Cars

During the 1960s the UK car industry employed around 1 million people and made up 5% of the nation’s total workforce. Today that figure is closer to 0.5% of the employed population (or 5x the fishing industry) but 864,300 jobs remain dependent upon the British auto industry due to well established supply chains and a prosperous export market. The issue the sector may begin to face is that 105,000 people (out of 180,300) of those directly employed in the industry depend upon internal combustion engine manufacturing. However, the British Government are now believed to be on the cusp of banning the sale of new petrol diesel vehicles as early as 2030 which could prove to be devastating to the industry.

Last week (5thNovember), Bentley Motors announced they would shift their business to become ‘end-to-end carbon neutral’ by 2030 which sets them ahead of all their domestic rivals. The British automotive industry is disproportionately invested in the premium sector (e.g. Rolls Royce, Aston Martin, McLaren, etc.) which offers opportunities due to luxury carmakers being able to better absorb the higher battery costs into their steeper prices. However, Jaguar Land Rover have not significantly benefited from this and have recently “fallen silent” about the production of their upcoming flagship electric XJ despite the firm just re-entering profit.

UK House Prices

UK property prices have outpaced wage growth for this millennium and the average house price was more than 8 times average earnings at the end of 2019. Over the last 12 months the average property price has risen by £18,000 despite the economy shrinking 20% this spring. This has been driven by the stamp duty cut, announced by Sunak, this summer which will last until March.

Zoopla’s research and insight director believes the property market will remain strong into 2021 as Britain’s wealthiest sell their city centre homes and move to more rural settings. This has been credited to people wanting to change their lifestyle rather than government intervention. The trend has also seen people selling £1m city homes and moving to £600,000 countryside properties in the South of England which is adding many cash buyers to the market. However, house prices appear to be increasingly over valued (especially compared to the rest of the world) as the average home now exceeds £250,457 but many analysts foresee a fall in 2021 as wages potentially fall further and unemployment rises.

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