Economic cost of US military flight
GLIDING down to land on the 9000ft-long runway at RAF Lakenheath, Suffolk, the shark-like jet fighters of the US Air Force’s 48th Fighter Wing are a powerful and imposing symbol of America’s military might, not to mention financial firepower.
But their presence in the skies above East Anglia will be a bittersweet reminder to local people that several local air bases are to be axed following a Pentagon costcutting review. US warplanes will remain in England for the foreseeable future, with the new F-35 Joint Strike Fighter, pictured – components of which are made by a host of British companies including BAE Systems and Martin-Baker – due to arrive here by 2020.
However, the Americans are leaving Mildenhall, moving most of the aircraft based there to Germany and others to an as yet undisclosed location in Britain. Another two smaller bases at RAF Alconbury and RAF Molesworth in Cambridgeshire are also being handed back to the Ministry of Defence.
Historic links between the US military and East Anglia stretch back to the Second World War when the rich and glamorous Americans arrived to help fight the Nazi tyranny, pouring much-needed currency as well as consumer goods into the towns and villages near their bases.
RAF Lakenheath and its neighbour RAF Mildenhall have been leased to US forces for decades and have been on the frontline of every conflict from the bombing of Libya to Afghanistan and both Iraq wars.
Besides playing a crucial role in the NATO alliance, the pair make a vital contribution to the local economy, together pumping in around £500m a year.
That partly comes from the near 2,000 civilian staff who work at Lak- enheath along with a further 400-500 at Mildenhall, including locals doing everything from serving coffee in the cafeterias to scaring birds away from the runways. British civilian firefighters work side-by-side with their US service counterparts.
The bases are consequently small towns and economic centres in their own right. The knock-on effect of the closure will hit local businesses such as the builders and office suppliers who provide vital services to the base. Many officers and airmen now live off site in the local communities such as Bury St Edmunds, spending cash in the shops and businesses from the hairdressers to the chiropractors, the sandwich shop to the dry cleaners.
West Suffolk MP Matthew Hancock has insisted he will do everything in his power t o support those affected and to ensure t he t own of Mildenhall gets the support it needs to adjust. He has pledged to chair a newly-created Mildenhall, Alconbury and Molesworth Working Group to lead the transition.
Local media reckon about £220m of economic benefits will be lost with the departure of the US Air Force, while the expansion at nearby Lakenheath will bring in £55m, leaving a net £165m hit to the economy.
Change during a time of hardpressed military budgets is somewhat inevitable. But it will doubtless be hard for this largely rural area of East Anglia to adapt.
New Year windfall
NEWS that Tesco is scrapping its final dividend has sparked fierce debate: where among Britain’s big- gest listed companies to look for solid yields during 2015?
Capita Asset Services reckons it has the answer. The firm has crunched the numbers and predicts investors in UK-quoted companies can look forward to an £85.8bn windfall this year, surging ahead of 2014 when one of the few bright spots was the £16bn special dividend from Vodafone following its exit from a joint-venture with Verizon.
Once that is stripped out, Capita has calculated pay- outs were around £79bn.
Last year was hit by the effects of a strong pound, largely because around two-fifths of the UK’s annual dividends are declared in US dollars.
While the pound has begun to fall against the dollar it remains strong against the euro, i mportant because Europe remains Britain’s biggest export market.
Nevertheless, the current rate of sterling is low enough to boost dividends this year, if only by a small margin.
Additionally, weak corporate earnings and a sluggish global economy are key factors influencing dividend growth going forward.
Capita also notes that bigger companies are more exposed to global trends compared with smaller ones, which have higher domestic exposure.
For the year ahead, Capita’s Justin Cooper says the most important factor will be the performance of company earnings.
Until those begin to flow through more strongly, he notes, it will be hard for dividends to make more rapid progress.
Income investors will be keeping close tabs on developments.