The loss of thousands of jobs this month at Bombardier, a train manufacturer based in Derby, belies the idea of a UK revival in the sector. Christopher Furlong / Getty Images
The loss of thousands of jobs this month at Bombardier, a train manufacturer based in Derby, belies the idea of a UK revival in the sector. Christopher Furlong / Getty Images

Sideshow distracts UK from economic storm clouds ahead



Most front-page news stories have a natural life of about three weeks.

And so the story that is the current British obsession - the fallout from allegations that tabloid journalists hacked into the voicemail messages of victims of crime, as well as celebrities and politicians - looks set to be relegated to the inside pages, even if only for a while.

But while British politicians have been consumed by this saga for more than three weeks, no parliamentary time has been found to pore over the problems that are threatening to drag the British economy back to the dark days of the 2008 financial crisis.

As the US faces potential credit ratings downgrades and a fiasco over Europe's sovereign debt crisis was narrowly avoided, for now, the UK cannot remain immune from the coming storm.

And regardless of the problems of its neighbours and trading partners, the UK has four pressing economic problems of its own to deal with.

The first is the country's alarming lack of growth. Figures out this week showed the economy flatlining. Britain has benefited from a 20 per cent currency devaluation and record low interest rates for more than two years, but its economy showed only 0.2 per cent growth in the second quarter of this year.

Pledges by the government to rebalance the economy away from financial services towards manufacturing also appear to have had little success.

While manufacturing has grown according to some surveys, the wider measure of industrial output has actually fallen. The loss of thousands of jobs this month at Bombardier, a train manufacturer based in Derby, belies the idea of a UK revival in the sector.

And so to the country's second major problem - the one that never went away - the absurdly overheating or seriously undercooked housing market. In London it remains overheated; elsewhere, decidedly tepid.

Average house prices across England and Wales peaked in August 2007 at £199,612 (Dh1.2 million). Today they are 18 per cent lower. Many of those who bought after 2006 are in negative equity.

Even if they are prepared to sell at a loss, they no longer have the deposit that banks will require to fund their next home. Experts reckon that more than 1 million people are effectively now prisoners in their own homes, unable to move to the next rung of the ladder and blocking the supply of properties suitable for first-time buyers.

The average deposit for first-time buyers is now £31,000 as loan-to-value ratios have moved from 90 per cent in 2007 to 77 per cent now. That means first-timers must find more than a year's worth of income. Is it any wonder they are now having to rent until their late 30s?

And so we come to the UK's third major problem: bank lending. To appease critics of the banks and bankers, the government has continued to demand more lending, particularly to homebuyers and small businesses.

On the housing front, ministers have cooked up a taxpayer-backed scheme in which £1.8 billion will be spent on helping first-time buyers.

In other words, it is propping up developers at a time when, outside London and a few attractive southern towns, all the signs are that house prices could continue to fall. It is an intervention too far.

For small businesses, all the evidence shows that banks are restricting credit to the smallest and most vulnerable businesses.

However, this may be no bad thing. The government is interfering with commercial lending decisions merely to take the heat out of popular accusations that it has done nothing to curb either the bankers' most dangerous activities or their rewards.

Which finally brings us to the fourth and perhaps most potentially serious problem in the long term. Energy prices in the UK are soaring.

One in five households spends more than 10 per cent of its disposable income on heating and petrol, and diesel prices are significantly higher than they are on mainland Europe. This is putting great strain on household finances, when real incomes are stalling, and adding considerably to the costs of many businesses. Long term, there is little sign that things will get better as the UK's supply of fossil fuels is depleted and ageing nuclear power stations are taken offline.

Nuclear power, which the consensus had finally come to consider the only realistic low-carbon solution to fossil fuels, is once again on the back burner, thanks to Fukushima.

With such an intractable in-tray, you can see why it has been tempting for Britain's politicians to get sidetracked by the sensational scandal surrounding the Murdoch empire.

But it really is about time the government (and the media) got down to the business of rescuing the economy.

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Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Rating: 4/5
The specs: 2018 Mercedes-Benz GLA

Price, base / as tested Dh150,900 / Dh173,600

Engine 2.0L inline four-cylinder

Transmission Seven-speed automatic

Power 211hp @ 5,500rpm

Torque 350Nm @ 1,200rpm

Fuel economy, combined 6.4L / 100km

The specs: 2018 Ducati SuperSport S

Price, base / as tested: Dh74,900 / Dh85,900

Engine: 937cc

Transmission: Six-speed gearbox

Power: 110hp @ 9,000rpm

Torque: 93Nm @ 6,500rpm

Fuel economy, combined: 5.9L / 100km

Titanium Escrow profile

Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue  
Stage: Early stage
Investors: Founder's friends and Family

VEZEETA PROFILE

Date started: 2012

Founder: Amir Barsoum

Based: Dubai, UAE

Sector: HealthTech / MedTech

Size: 300 employees

Funding: $22.6 million (as of September 2018)

Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC

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Director: S Sashikanth

Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan

Star rating: 2/5

Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

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)

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