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What can Brexit change for the UAE? |
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January 31, 2020 will go down in history as the day when the Union Jack Flag was lowered in Brussels, and the United Kingdom has officially left the European Union, the first country to withdraw from the union since its formation in 1957. The UK went through a long and bumpy road to reach this day, since the referendum on the membership of the European Union in 2016 produced unexpected and shocking results, with the new reality settling in everyone's mind - that the island nation was to leave the European Union in the coming years. The rippling effects of this decision will not be limited to Great Britain, and will be felt far beyond its borders, affecting every nation that the UK has established close relationships with, among these, the UAE being UK’s closest partner in the Middle East. Brexit While Great Britain has always been the most Eurosceptic one in the European family, there was little notion that it would leave the EU anytime soon. The first time the matter of being a part of the union came into question happened soon after the formation of the bloc, when the UK held its first referendum on membership in 1975, with the majority voting in favor of ramining a part of the European Communities. When Prime Minister David Cameron announced in 2013 that another referendum would be held, he did so with the intention to settle the issue of the membership for good, being confident that the results would produce a positive response for the UK to remain in the EU. Yet as the results came in on June 23, 2016 it was decided, the majority of those who casted their votes did so in favor of leaving the union, and so Great Britain was sent down a spiral of confusion, uncertainty, and disarray. The decision has polarised the nation, and cost two Prime Ministers their careers, with David Cameron stepping down a day after the results came in, and his successor, Theresa May leaving her the position in 2019, after repeatedly failing to secure the support of parliament on her deal with Brussels. It was Boris Johnson who took it upon himself to see Brexit through, and with Conservative majority in the parliament, it looks like he will be facing little opposition to pass his deal. Capital of Finance What membership of the EU brought for the UK is, that it enabled London to become the financial capital of the world. With uncertainty on the post-Brexit Britain settling in however, we’re likely to see the importance of London diminishing, with the number of leading companies slowly relocating from the UK elsewhere. Yet this comes in as an opportunity for newer players to enter the market, with many doing exactly that, including a list of the best UAE Forex brokers looking to increase their presence and importance on the British Market. The new opportunities for closer relations between the UK and the UAE are not limited to just the financial sector however, with the possibility for new opportunities being seen on the horizon of post-Brexit Britain. New Frontiers While PM Boris Johnson has succeeded in what his predecessor failed to do, withdrawing the UK from the EU is only half the equation. The true challenge for his skills will come post-withdrawal when the framework for new UK-EU relationships will need to be made, and the primary challenge will be coming internally. Although the Conservative party has an undeniable majority in the parliament, the party itself is polarised, being divided among those wishing to maintain close ties with the EU, and those who wish to explore new frontiers for economic opportunity. It is here that UAE factors in, and where new opportunities for closer economic and political ties will emerge. The biggest concern for Brexit came from the fact, that the EU is the biggest trading partner for the EU, and the withdrawal form the union will bring in additional barriers for British goods going to the European market, severely affecting their competitiveness on the Market. However, those among Tories in favor of seeking new trading parties see the greater opportunities of closer ties with the UAE. UAE is already among the UK's leading trade partners outside the Eurozone, with close political ties in place, which in turn played an important role in establishing close economic ties in the first place. These ties ensured that UAE became one of the leading destinations for British food and drinks, with British companies deepening their understanding of the local market and existing demand. The two nations have already started exploring opportunities for deepening existing connections, including the introduction of non-tariff measures and easing bureaucratic barriers. Deeper ties would also enable UAE to play a more active role in the trade between the two nations, with increased exports to the UK bringing in an estimated $425 million in trade revenue. Real estate The real estate business in the UK will likely see the biggest inflow of investments from the UAE. With pound sterling fluctuating, real estate investors coming from the gulf area, UAE in particular are very likely to find extremely lucrative deals in already alluring real estate field in the Great Britain, thanks to the UAE dirham being a dollar-pegged currency, ensuring the likelihood of finding discounted deals on the market. Uncertainty and Oil While there is still uncertainty over the direction that the post-Brexit UK will take, the oil prices will likely continue fluctuations for some time, continuing until a clearer vision of the course of British leadership emerges. While more volatile markets will be hit first, and hardest, the gulf region is unlikely to experience any significant impact, in the short run at least. Conclusion While the path to Brexit has definitely been a rough one for the UK, we are finally seeing the end of it. As the British leadership is deciding the future course their nation will take, it is evident that the UAE, being one of the closest trade partners for the UK, will find benefit in the new opportunities arising from the new reality of post-Brexit Britain. Whether Conservative parliament will seek closer ties with their European colleagues or not, we will definitely be witnessing deepening of relations between the UK and the UAE in a number of fields. |
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