The Dubai government announced on Monday that it had been given $10 billion in surprise aid by its neighbour Abu Dhabi. The money would be used to repay an Islamic bond, worth $4 billion, for the property development company, Nakheel and to service the debts of investment company, Dubai World, until the end of April 2010, it said. The announcement was good news for the stock markets in Dubai and Abu Dhabi, which rose by 10% and 7%, respectively. Shares in banks such as Banco Santander, Barclays, HSBC, Lloyds Banking Group and Standard Chartered rose, those which are exposed to debt in Dubai, also rose, as did the values of the pound and the euro.
Elsewhere, Cadbury defended its decision to reject a hostile takeover bid from US rival Kraft Foods. Cadbury chairman, Roger Carr, described the offer as "derisory" and accused Kraft of trying to "buy Cadbury on the cheap." This was the second time Cadbury had rejected a bid from Kraft recently, after it declined an original offer of $10 billion in November. Kraft responded by reiterating that the office price, of 728p a share, was significantly more than the share price before speculation over a takeover bid began earlier in the year.
In other news, following the failure of talks between British Airways (BA) and the Unite union, the result of a ballot on strike action was expected later in the day. Strike action could begin as early as 22nd December, if 12,000 cabin crew vote in favour. The dispute over job losses and changes to pay and working conditions is not the only problem which the beleaguered air line faces; its pension schemes have a combined deficit of £3.7 billion, which means that it must increase its contributions each year.
The result of the strike ballot, announced on Tuesday, revealed that 90% of BA cabin crew voted in favour of strike action from 22nd December. BA said that it was exploring all the options to lessen the impact of a strike, which could affect up to 1 million passengers. Flights were being rescheduled and the possibility of a legal injunction against Unite, to prevent the walkout in the first place, was being explored, according to a spokesman for the airline. A report in the Daily Mail highlighted the behaviour of Lizzane Malone, chairman of the British Airlines Stewards and Stewardesses Association (BASSA) arm of the Unite union, who apparently owns a £400,000 home in Los Angeles and has not flown for over a year as she is recovering from osteoporosis in her foot.
The latest figures from the Royal Institution of Chartered Surveyors (RICS), also published on Tuesday, revealed that housing prices rose for the fourth month in succession in November. The number of members reporting price rises was 35% higher than the number reporting falls – the best performance for 3 years – and RICS said that the trend was likely to continue. RICS' spokesman, Ian Perry, was quoted on the BBC website, saying, "For the fourth month in a row, the survey points towards prices rising, even although the general state of the economy would suggest that the housing market should not be faring as well as it is."
BA and the Unite union resumed talks on Wednesday, despite the announcement of a 12-day strike by cabin crew, due to begin on 22nd December and despite BA continuing to pursue legal action to prevent the strike.
The latest figures from the Office for National Statistics (ONS), published on Wednesday, showed that the number of people out of work in the UK rose by 21,000 to 2.49 million in the three months to the end of October. Despite the total approaching 2.5 million, this was, in fact, the smallest increase for over 18 months. In fact, the number of people claiming unemployment benefit fell by 63,000 to 1,63 million, the first time the figure had fallen since February, 2008. However, the number of 16 to 24-year-olds out of work rose to 952,000, the highest level since records began 17 years ago.
There was more bad news on Thursday, this time for retailers and for Flyglobespan, formerly the largest airline in Scotland. More figures from the ONS suggested that retail sales in the UK fell by 0.3% November, following a rise of 0.6% in October. The fall, blamed on falling sales by department stores and other non-specialist retailers by the ONS, confounded economists, who had expected consumer spending to continue to rise.
Globespan, the parent company of Flyglobespan, went into administration earlier in the week, with the result that all flights were cancelled. This left about 4,500 passengers stranded in Spain, Portugal, Cyprus, Egypt and other locations and an operation by the Civil Aviation Authority and others was under way to repatriate as many of them as possible. Customers who had booked a package holiday were likely to be protected by the ATOL ("Air Travel Organisers' Licensing") scheme, but those who had booked a flight only were not. Flyglobespan operated 12,000 flights last year, carrying over 1.5 million passengers and 800 jobs will be lost as the result of its collapse.
There were yet more figures from the ONS on Friday and, once again, they were lacking in festive cheer. Public sector net borrowing in the UK reached £20.3 billion in November, the highest level since records began in 1993, although even this was more than economists expected. The figure took public sector net borrowing to an eye-watering £884.5 billion, or 60.2% of GDP, or "Gross Domestic Product", in the UK. A year ago, the figure stood at £706.2 billion, or 49.6% of GDP.
Mortgage lending in the UK was down 10% in November compared with October and down 14% compared with the same month last year, according to the Council of Mortgage Lenders (CML). Mortgage lending had been steadily increasing in the preceding months and, although to fall to £12 billion could be attributed, at least in part, to seasonal factors, a drop of 10% was larger than normal, the CML said.