Theresa May’s surprise decision last week to call a general election in the United Kingdom represents an attempt to strengthen her personal authority before the immensely difficult negotiations on Britain’s departure from the European Union that will begin this year. Whether a general election will reconcile polarised opinions in Britain remains a moot point. In addition, Mrs May’s quest to build a “Global Britain” revitalising old partnerships and seeking new friends could also run into trouble as geopolitical realities and the perils of forging a new independent global trading role become more apparent.
Although her opponents fear that Mrs May’s previous rhetorical posturing heralds dramatic rupture with the EU, it is more likely she is preparing the ground for a compromise that will leave the UK closely aligned with its European neighbours.
Since Mrs May’s Brexit means Brexit mantra started to take on the more tangible form of a concrete policy this year, she has wavered from a confrontational attitude towards Europe and a more conciliatory tone. After threatening to walk away from the talks rather than settle for a bad deal, she struck a more emollient note when Article 50 was triggered last month. On that occasion, she stressed the value of European unity and pledged that Britain would continue to seek a close relationship with Brussels.
The prime minister’s new moderation signifies an increasing realisation of Brexit’s complexity and the immense difficulty of the negotiations to come. She has conceded that some kind of “transition period” would be needed when the UK leaves the bloc as scheduled in March 2019. This outcome, and the likelihood Brexit will dominate UK political life for the foreseeable future, largely explains why she has gone to the country now. In addition to shoring up her majority, she will also gain more time and political credit to reconcile a starkly divided electorate to the inevitable imperfect compromises that will be agreed.
Since the UK’s referendum on EU membership last year, the more strident Brexit advocates have lauded the vote as the dawn of a new golden era in which “Global Britain” would strike out in pursuit of lucrative commercial opportunities while bolstering its international political, diplomatic and cultural influence.
Mrs May’s newfound moderation reflects a more sombre appraisal of the real risks the UK runs of being marginalised as international trade relations increasingly revolve around agreements between large blocs of nations.
Although Mrs May’s visit to US president Donald Trump in January was presented as a revival of the Anglo-American “special relationship”, there are signs that Washington is positively re-evaluating the value of its relationship with the EU. Thanks to active German diplomacy, there is a growing likelihood that the stalled Transatlantic Trade and Investment Partnership (TTIP) agreement will be revived at the expense of a quick trade deal between the US and UK. While many in Washington are sympathetic to Mrs May’s predicament, Britain faces the prospect of being relegated to the “back of the queue” in a manner predicted by former US president Barack Obama before last year’s referendum.
The constraints on London’s ability to break free of Europe will be also be tested in those markets where Britain already has a strong presence such as the Arabian Gulf. Mrs May’s visit to the GCC summit last December indicates the immense importance she places on a trade relationship already valued at more than $37 billion (Dh135bn) per year in addition to efforts to strengthen long standing political and security links in the region.
The problem is that while there is certainly great potential for increased trade between the UK and the GCC countries, it will be some years before such ambitions are translated into reality. Mrs May’s hints at a transitional deal with the EU will probably lead to the UK remaining subject to the rulings of the European Court of Justice and payments into the EU budget. It is likely that the UK will also have to abide by the EU’s common external tariffs, with restrictions on its freedom to unilaterally pursue free trade deals with third countries.
The prospect of accepting such close ties with EU institutions after 2019 reflects the growing political and economic imperatives towards compromise. Politically, Mrs May will be tempted to seek a moderate Brexit to reach out to disaffected remain voters and take the wind out of the sails of the Scottish nationalists who have threatened a further independence referendum of their own.
Economically, while the pound’s recent drop in value has boosted British exports, it is notable that a large proportion of these new sales of goods and services are meeting revived demand in slowly recovering Eurozone economies.
Mrs May’s government is starting to wake up to the reality that the UK cannot simply walk away from the EU and magically transform itself into a buccaneering global trade champion. Winning a new mandate will thus give Mrs May scope to manage expectations downwards after the spasm of nationalist fervour unleashed by the Brexit vote.
She will also gain time to convince domestic opinion that maintaining access to the EU’s single market and its 440 million inhabitants will remain the key to the UK’s economic prosperity.
Stephen Blackwell is an international politics analyst
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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.”
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
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
RESULTS
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Winner: Dalil De Carrere, Bernardo Pinheiro (jockey), Mohamed Daggash (trainer)
5.30pm: Maiden (TB) Dh 70,000 (D) 2,000m
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6.30pm: Maiden (PA) Dh 70,000 (D) 1,600m
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8pm: Maiden (PA) Dh 70,000 (D) 1,000m
Winner: AF Lewaa, Bernardo Pinheiro, Qaiss Aboud.
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.
UAE currency: the story behind the money in your pockets
Roll of honour: Who won what in 2018/19?
West Asia Premiership: Winners – Bahrain; Runners-up – Dubai Exiles
UAE Premiership: Winners – Abu Dhabi Harlequins; Runners-up – Jebel Ali Dragons
Dubai Rugby Sevens: Winners – Dubai Hurricanes; Runners-up – Abu Dhabi Harlequins
UAE Conference: Winners – Dubai Tigers; Runners-up – Al Ain Amblers
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Our family matters legal consultant
Name: Hassan Mohsen Elhais
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
The Details
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Produced by: Cinestaan Studios, T-Series
Directed by: Sandeep Reddy Vanga
Starring: Shahid Kapoor, Kiara Advani, Suresh Oberoi, Soham Majumdar, Arjun Pahwa
Rating: 2.5/5
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