Anne Marie Waters
Tuesday 29th June 2021
The effects of COVID-19 are still disproportionately being felt by the travel industry – one industry that is unlikely to return to ‘normal’ on July 19th. The new health secretary Sajid Javid made his first speech in his new role to the Commons yesterday, and insisted that the 19th of July will be the ‘end of the road for lockdown’. At the same time, Germany is calling for UK tourists to be “banned” from the EU. That doesn’t sound very “normal” (it sounds like Brexit-punishment) and it’s not something Javid can do much about. German Chancellor Angela Merkel wants the ban regardless of vaccination status.
Meanwhile, Hong Kong has banned all flights from the UK in response to the newest variant – the Delta variant.
It is incredible. The UK, throughout this pandemic, has allowed flights and travel from just about everywhere (while Brits were locked in their homes), Boris Johnson wants to welcome the residents of Hong Kong to live in the UK, and yet, here we are, banned from flying to Hong Kong and facing a ban from the EU. It may be incredible, but it isn’t entirely surprising. The UK seems to always be open to the world, even when the world shuts out the UK.
The fallout of this is a protest by the travel industry demanding an end to restrictions. According to the BBC this morning:
Travel industry employees are holding a series of protests around the country against coronavirus restrictions.
Airlines and travel companies say current limits on travel have had a devastating impact on the sector.
Ministers are due to update the traffic light system for international travel on Thursday amid calls for more countries to join the green list.
The government said it continued to explore how it could open international travel safely.
Most holiday destinations, including Spain, Greece and Italy, are on the government’s amber list, meaning travellers have to quarantine when they return to the the UK.
As a result, the travel industry has dramatically scaled back its operations.
Elsewhere in the economy, house prices are rising faster than they have in 17 years. This won’t help the homelessness crisis awaiting us around the corner. The price jump is huge – over 13%. This means that the average price has gone from £216,403 to £245,432.
The chief economist for Nationwide said the pandemic had stimulated the increase.
“The pandemic is an unusual kind of shock – it has stimulated housing market activity rather than the shock holding back the market which is normally what happens”.
The market has also been affected by the COVID-19 ‘stamp duty holiday’. The BBC reports:
The market in recent months has continued to be stimulated by stamp duty holidays in England, Wales and Northern Ireland.
From Thursday, those tax breaks start to be withdrawn, and will return completely to the pre-pandemic levels by October.
Nicky Stevenson, managing director at estate agents Fine and Country, said: “Annual house price growth of this magnitude is something no one thought they’d see, particularly with the stamp duty holiday now tapering out.
“The final closure of the stamp duty scheme at the end of September may have no impact at all because other factors are so much more important, namely the race for space, low supply, accidental savings and low interest rates.”
However, some analysts point to the link between housing demand and jobs as key to the future of property prices.
Danni Hewson, financial analyst at AJ Bell, said unemployment would be closely watched.
“How many people will still be in a job once the furlough scheme ends? How many mortgage holidays will result in quick sales? There is no getting away from the fact that the next few months will be difficult for many people once support is withdrawn,” she said.
The final story to catch my eye this week is this – Morrisons set to be subject of imminent bidding war! According to Sky News earlier this month:
One of the world’s biggest buyout firms is weighing a spectacular £5.5bn takeover bid for Wm Morrison, Britain’s fourth-largest supermarket chain by market share.
Sky News has learnt that Clayton Dubilier & Rice (CD&R) is in the early stages of evaluating an offer for the grocer, a move that would send fresh shockwaves through the UK’s food retailing industry.
This sent Morrisons’ share price up. According to the BBC however, Morrisons has rejected the takeover.
Morrisons’ share price has surged by 28% after a US private equity firm made an offer to buy the supermarket group for £5.5bn.
The shares closed at 228p on Monday, just below the 230p-a-share proposed by Clayton Dubilier & Rice.
Morrisons’ board has rejected the offer, saying it “significantly undervalued” the business “and its future prospects”.
However, there is speculation the move may prompt others to bid for the group.
All in all, in reviewing the papers this week, it’s another mixed bag, I suppose that’s the nature of the economy. But as furlough ends and COVID support begins to be withdrawn, I’m afraid things are about to get a bit rougher.
Anne Marie Waters
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