Brexit fears were overdone from UAE viewpoint

It’s about seven weeks since the supposed “end of the world”: the shock vote by Britain to leave the European Union. As far as I can tell, the sun is still rising each morning, the tides still ebb and flow, and there is – as yet – no sign of the four horsemen of the apocalypse galloping over the horizon.

In fact, in the twitchy world of global finance, not much seems to have changed. World equity markets have actually hit all-time highs, continuing the great 2016 bull charge that was only temporarily and margin­ally affected by the Brexit vote and confounding all those – such as the IMF – who thought the vote for a UK exit would be disastrous for equities.

Bond yields continue to plumb new lows; the oil price continues to be subject to the vagaries of supply and demand, rather than any geopolitical factors such as Brexit; and dollar strength shows no sign of abating.


So all the basic global eco­nomic and financial indicators have been virtually unaffected by the Brexit vote, and will remain subject to other forces, separate from the political choices of a small island of 60 million people on the edge of Europe. So much for the global Brexit “catastrophe” some of the Cassandras were forecasting.

It looks rather different if you’re a resident of London, or anywhere else in the UK. There, you will have seen the value of your home decline by about 10 per cent; sterling keeps plummeting to new lows; and the key indicators of output look distinctly shaky, with a theoretical recession on the cards by the end of the year.

But heigh-ho, it was never going to be easy to get out of the EU quagmire. The UK’s economic woes should be seen as the price of democracy, which I’m sure all in the UK would agree.

From a UAE perspective, it all does not seem to matter very much. If you’re going to buy a property in the UK now is a better time than any, but if your expat income here is paid in sterling you’re feeling the pain. Otherwise, there seems to have been little fallout in the Arabian Gulf region from the Brexit vote.

There are two straws in the wind, however, that suggest the UAE could be in for a Brexit bonus. One is the appointment of Liam Fox as UK minister for international trade. He is a long-standing friend of the UAE and the region, and you can expect one of his earliest official visits to be to the country to see what arrangements can be put in place on UK-UAE trade in the new circumstances. A wide-ranging free trade deal is being suggested.

The other is the position of Priti Patel as the UK’s new international development secretary. She is also a regular visitor to the UAE, and is now in charge of about US$14 billion of foreign aid. Although the UAE does not need foreign aid, it would not be surprising if some of the “leverage” Ms Patel has is not employed in the Middle East, further enhancing UK-UAE trade.

fkane@thenational.ae

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