Britain said on Wednesday it would eliminate import tariffs on a wide range of goods and avoid a so-called hard border between Ireland and Northern Ireland in the event of a no-deal Brexit.
The government announced the measures, which it said would be temporary, ahead of a vote by policymakers later on Wednesday to decide whether Britain should leave the European Union without a deal, a prospect that alarms many employers with the scheduled March 29 Brexit date fast approaching, according to Reuters.
Prime Minister Theresa May suffered a second, heavy parliamentary defeat on the withdrawal deal she struck with the EU on Tuesday, leaving open the possibility of an abrupt, economically damaging Brexit without a transition arrangement.
However, policymakers are expected to vote against a no-deal Brexit and then, on Thursday, vote in favour of seeking a delay to Brexit.
Under the Temporary Tariff Regime, a no-deal Brexit that would last for up to 12 months, 87 per cent of total imports to the United Kingdom by value would be eligible for tariff-free access, up from 80 per cent, Bloomberg said.
The new system would mean 82 per cent of imports from the EU would be tariff-free, down from the current 100 per cent, while 92 per cent of imports from the rest of the world would pay no duties at the border, up from 56 per cent.
Some protections for British producers would remain in place, including for the country's car makers and beef, lamb, pork, poultry and dairy farmers.
The UK will also retain existing tariffs in areas including fuel and ceramics as a protection against “unfair global trading practices”, such as dumping.
“This is no way to run a country,” Carolyn Fairbairn, director general of the Confederation of British Industry, told the BBC. “What we are potentially going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner. This is a sledgehammer for our economy.”
Cutting tariffs on imported goods would ease the blow to British consumers from an expected jump in inflation in the event of a no-deal Brexit, which would probably cause sterling to tumble and make imports more expensive.
It would also expose many manufacturers to cheaper competition from abroad and, if maintained, low or zero tariffs would deprive Britain of ammunition for extracting concessions from other countries in future trade talks.
On the Irish border, the British government said it would not introduce any new checks or controls on goods moving from the Irish Republic to the British province of Northern Ireland in the event of a no-deal Brexit, stressing the plan was temporary and unilateral.
"The measures announced today recognise the unique circumstances of Northern Ireland," Karen Bradley, Britain's secretary of state for Northern Ireland said. "These arrangements can only be temporary and short-term."
Britain would seek to enter discussions urgently with the European Commission and the Irish government to agree long-term measures to avoid a hard border.
Goods crossing the border from Ireland into Northern Ireland would not be covered by the new import tariff regime.
Britain, Ireland and the EU have said they want to avoid physical checks on the border, which was marked by military checkpoints before a 1998 peace deal ended three decades of violence in the region. But they disagree on the "backstop", or insurance mechanism, to exclude such border checks.
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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.”
