The most recent GDP data from the UK showed that the economy grew by 0.3 per cent in the fourth quarter of last year, a slight upward revision from the initial 0.1 per cent estimate. While the improvement is welcome, and was expected in light of various survey data, the fourth-quarter figure may well have benefited from certain one-off factors, such as consumers bringing forward purchases to beat the VAT increase. The UK's emergence from this recession has been slow, and it is clear the country continues to face significant economic and fiscal headwinds.
Even if the UK avoids a so-called double dip back into recession, the country appears set for a period of relatively anaemic economic growth at best. Bloomberg consensus data indicates that real GDP in the country is forecast to grow by just 1.2 per cent in 2010, and 2.1 per cent in 2011. This compares with expected growth of 3 per cent for both years in the US, and 9.5 per cent and 8.9 per cent in China in 2010 and 2011, respectively.
Furthermore, the next UK government has the unenviable task of attempting to cut the deficit while ensuring it does not snuff out the fragile economic recovery. However, it remains far from certain who will head the next government; recent polls seem to indicate a hung parliament as the most likely outcome.
This uncertainty, combined with a weak economic outlook and a large fiscal deficit, is weighing heavily on sentiment, with sterling suffering widespread and sustained losses against all of the 16 most actively traded currencies and falling to a record low against the Australian dollar.
With the Bank of England remaining bearish on the UK economy, further injections of money into the system cannot be ruled out, and the cranking up of the printing presses would undoubtedly accelerate a further decline in the sterling. The market is now coming to suspect that, given the unavoidably tight fiscal stance that the incoming government would be forced to adopt, a classic solution to the debt mountain will be employed: devaluation, prompted by ultra-loose monetary policy.
While weaker sterling and inflation lowers the real value government debt, if Britain is to avoid insolvency it will need to continue to sell debt at the required rate - which based on Alistair Darling's pre-budget report estimates and the Debt Management Office redemption projections amounts to £210 billion this year, £189 billion next year, and £130 billion in 2013. The bleak reality is that a weaker pound and rising inflation make debt issuance a great deal more difficult.
There are numerous reasons why sterling is tumbling. First and foremost, the UK is carrying a budget deficit of more than 13 per cent of GDP, which is the largest of any major economy. Current UK investment numbers have also worried the market. The fourth quarter of 2009 saw UK firms spend 24 per cent less on new equipment than during same period in 2008, the largest drop on record. This decline in spending clearly signals anaemic future growth.
The Bank of England chief's recent warning that expectations for the UK economy remain "to the downside" has led traders to believe that interest rates will stay lower for longer, which in turn means that they expect returns on a range of sterling assets to be lower.
Then, there is the extent to which the UK has already printed money, otherwise known as "quantitative easing". Since March of last year the UK has tripled its monetary base. The last time this happened was between 1900 and 1948, a period of nearly 50 years. The vast majority of this new money has not hit the UK economy yet. Instead, it remains on the off balance-sheet vehicles of the enormously indebted banks. This cash will eventually move into circulation, the recognition of which that is undoubtedly shaping the market's underlying view of sterling.
There are positives, but these are only temporary. A weakness in sterling makes UK exports cheaper, which theoretically attracts inward investment. It also makes the UK stock market more attractive to foreign investors. On the other hand, a weak pound forces up the cost of imports and, consequently, inflation. With the price of oil hovering around $80 a barrel and likely rising, and all that cash waiting in the wings, the inflation outlook for the UK looks alarming.
Dan Dowding, who is based in Dubai, is senior executive office and investment manager at Killik & Co (Middle East & Asia)
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
Biog
Mr Kandhari is legally authorised to conduct marriages in the gurdwara
He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
Father of two sons, grandfather of six
Plays golf once a week
Enjoys trying new holiday destinations with his wife and family
Walks for an hour every morning
Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
More on animal trafficking
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
List of officials:
Referees: Chris Broad, David Boon, Jeff Crowe, Andy Pycroft, Ranjan Madugalle and Richie Richardson.
Umpires: Aleem Dar, Kumara Dharmasena, Marais Erasmus, Chris Gaffaney, Ian Gould, Richard Illingworth, Richard Kettleborough, Nigel Llong, Bruce Oxenford, Ruchira Palliyaguruge, Sundaram Ravi, Paul Reiffel, Rod Tucker, Michael Gough, Joel Wilson and Paul Wilson.
Mrs%20Chatterjee%20Vs%20Norway
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MATCH INFO
Mainz 0
RB Leipzig 5 (Werner 11', 48', 75', Poulsen 23', Sabitzer 36')
Man of the Match: Timo Werner (RB Leipzig)
Three tips from La Perle's performers
1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.
2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.
3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The bio
Academics: Phd in strategic management in University of Wales
Number one caps: His best-seller caps are in shades of grey, blue, black and yellow
Reading: Is immersed in books on colours to understand more about the usage of different shades
Sport: Started playing polo two years ago. Helps him relax, plus he enjoys the speed and focus
Cars: Loves exotic cars and currently drives a Bentley Bentayga
Holiday: Favourite travel destinations are London and St Tropez
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Ads on social media can 'normalise' drugs
A UK report on youth social media habits commissioned by advocacy group Volteface found a quarter of young people were exposed to illegal drug dealers on social media.
The poll of 2,006 people aged 16-24 assessed their exposure to drug dealers online in a nationally representative survey.
Of those admitting to seeing drugs for sale online, 56 per cent saw them advertised on Snapchat, 55 per cent on Instagram and 47 per cent on Facebook.
Cannabis was the drug most pushed by online dealers, with 63 per cent of survey respondents claiming to have seen adverts on social media for the drug, followed by cocaine (26 per cent) and MDMA/ecstasy, with 24 per cent of people.
AL%20BOOM
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
COMPANY%20PROFILE
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