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Just Another Macro Monday

Macro Monday, update on Israel-Gaza conflict, town in Ukraine in full control of Russian forces, and pressure for creation of more public-private partnerships in the UK from insurers.

Macro Monday

Well before the meteoric rise of the smart-phone, online payment services and amazon, in 1914 John Maynard Keynes considered how “the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery up on his doorstep”.  A year before Keynes sipped his tea and marvelled at the international movement of goods, global trade accounted for around 21% of global GDP. According to the World Bank, by 2022 global trade as a percentage of global GDP had risen to 74%. 


Benny Gantz, Israel’s minister without portfolio who currently sits on the country’s War Cabinet (and who served as a general in the army), has indicated that a further offensive will commence in Rafah unless all Israeli hostages are freed by 10 March. According to Israeli authorities, it is thought that Hamas are still holding 130 hostages, having taken 253 during the 7 October attacks.

It is estimated that some 1.5 million Palestinians are taking refuge in the southern city of Rafah, having fled from other parts of Gaza. Gantz’ announcement has been met with widespread humanitarian concern given conditions in Rafah and the lack of announcement over where refugees will be moved in the event of such an offensive.

Over the weekend, the Israeli cabinet unanimously passed a motion which rejected any


“international diktats” on steps to recognise a Palestinian State. The statement said that “Israel will continue to oppose a unilateral recognition of a Palestinian state” while indicating that any future settlement around relations would need to be directly negotiated between Israeli and Palestinian parties (rather than members of the international community).

This development comes as members of the international community have called on Prime Minister Benjamin Netanyahu to consider a pathway which works towards a two-state solution. For example, Foreign Secretary David Cameron recently stated that there was a need to give Palestinians a “political horizon so that they can see that there is going to be irreversible progress to a two-state solution and crucially the establishment of a Palestinian state”.

Russian Forces Take Avdiivka

Russian forces are reportedly in full control of the Eastern Ukrainian town of Avdiivka following months of fighting. It marks the most significant Russian victory since the Kremlin’s forces seized Bakhmut in May 2023. This follows Ukrainian forces retreating from the town earlier last weekend, with General Oleksandr Syrskyi stating that this was “to avoid encirclement and preserve the lives and health of service personnel”. While the town had a pre-war population of some 30,000, it has been devastated by months of fighting.

The Telegraph are citing the Ukrainian military which has said that more than 17,000 Russian soldiers were killed in the battle for the Avdiivka while one Ukrainian military spokesperson Dmitry Likhovy also indicated that some 30,000 Russian soldiers were taken casualty.

According to the Study for War, the Russian victory was in part due to their air superiority and hence the arrival of F-16 jet from Nato – set for June later this year – could not come sooner.

Public-Private Partnerships

UK insurers are pressing for the creation of more public-private partnerships in the UK to enable them to deploy the cash that previous legislation changes unlocked.

Last year the government made changes to the types of assets that insurers could invest in, which would unlock about £100bn in investment capital form the insurance industry. The industry says that it is lacking viable projects to invest into though. Their solution is for more public-private partnerships, where the government also invests into projects and in doing so reduces the risks of the project not performing.

The areas of focus for the newly available capital are energy generation, energy networks and housing – all three of which should have enough track record to provide investment along the lines of known cost and returns, but given the low-risk nature of insurance investments it is perhaps prudent that they are calling on the government to invest alongside them – in fact there was particular criticism at the time the rule changes were made on what could be invested in, that such a move would give rise to significant risks within the sector.

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