Long queues of travellers at French border control before boarding ferries in Dover, UK, on Friday. Bloomberg
Long queues of travellers at French border control before boarding ferries in Dover, UK, on Friday. Bloomberg
Long queues of travellers at French border control before boarding ferries in Dover, UK, on Friday. Bloomberg
Long queues of travellers at French border control before boarding ferries in Dover, UK, on Friday. Bloomberg


Are the British Conservatives in big trouble?


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July 27, 2022

Some problems are personal. Some are political. But when the personal and political collide, governments often find themselves in trouble. That’s because if a political problem touches voters personally, the public mood changes quickly.

It happened in Britain in the 1970s. Many voters believed that weak governments needed to stand up to strong trade unions because labour unrest in public services meant rubbish on the streets, and endless strikes. Margaret Thatcher came to power because she was seen as the new face to bring about change. It happened again in the 1990s. Tony Blair swept away Thatcher’s tired Conservative party. It may be happening in Britain right now, because after 12 years of Conservative governments the personal and the political are colliding unhappily yet again.

Imagine, for example, that you want a summer holiday. A few weeks ago, you realised your British passport was about to expire. Thinking ahead, you filled out the renewal forms and sent them to the Passport Office. Unfortunately, as far back as May 2021 the government minister involved, Priti Patel, was warned by Home Office officials that the Passport Office service run by a private company, Teleperformance, was “unsatisfactory". Trouble lay ahead. Now trouble is here.

Just because governments cannot solve everything does not mean they can solve nothing

An estimated half a million British passports are stuck in what has been described as the Passport Office “meltdown”. You are furious that you can’t go on holiday abroad, but then, suddenly you cheer up. That’s because if you had managed to get your passport renewed, you would be among the thousands of British drivers stuck in cars up to 20 hours trying to board a ferry or Eurotunnel train from England to France.

Travel experts explain that before Brexit, most British travellers would be waved through EU border crossings without rigorous passport checks. But since Brexit, as a result of the British government “taking back control”, every passport has to be checked on every border crossing. The mathematics are simple. If each check takes one minute, for a car containing a family of four, that’s four minutes. Multiply those four minutes by tens of thousands of checks a day and – voila! – you have 20 hours in a traffic queue.

So now you have a valid passport but you are stuck in a queue and you turn on the radio to hear the news. The news headlines remind you why you need a holiday. One says that the much-loved British National Health Service faces “the greatest workforce crisis” in its history. There are fears of a very bad winter ahead, according to a cross-party group of MPs. But for you this is not just political news. This is a serious personal problem. You tried to get a routine doctor’s appointment, but couldn’t do so. You couldn’t even speak to a doctor on the telephone. Your elderly neighbour had to wait several hours for an ambulance. Your mother needs a hip replacement operation, but that has been delayed. Again.

A ward at the Royal Liverpool University Hospital, Liverpool. Persistent understaffing in the NHS is creating a serious risk to patient safety, MPs have said in a damning report. PA Wire
A ward at the Royal Liverpool University Hospital, Liverpool. Persistent understaffing in the NHS is creating a serious risk to patient safety, MPs have said in a damning report. PA Wire

The cross-party MPs’ report says that there is an “absence of a credible government strategy” to solve these problems, which leave the UK short of at least 8,000 doctors and almost 40,000 nurses. It takes seven years of study to become a doctor. Seven years. Then this political problem becomes personal in another way, too. Can you afford to join the estimated 4 million British people who already have private health insurance? Maybe you will be forced to borrow money to pay for self-funded private treatment. According to the Private Healthcare Information Network, there were 69,000 self-funded treatments in the UK in the final three months of 2021. That’s up from 50,000 during the same period before the pandemic.

My own problem is personal in another way. My five-year-old laptop has died. I can’t switch it on, and when I took it for repair I was told that “supply chain issues” mean spare parts are in short supply. A repair will take “up to a month”. I looked at new laptops, but the one I liked is “unavailable for up to six weeks, maybe longer” thanks to those infamous “supply chain issues”. Now, I do not expect any government to solve my personal laptop crisis or every kind of other problem. No one does. Coronavirus has produced all kinds of economic, supply chain and social dislocations. So has the war in Ukraine, the threat to food supplies, global warming, drought, and inflation. Serious issues require long-term commitments, fresh ideas and international co-operation.

But just because governments cannot solve everything does not mean they can solve nothing. Worse, there are some politicians who appear to prefer to create problems rather than solve them. Right now in Britain, the public mood is sour and apprehensive, and it may turn into an unstoppable demand for change. Since the end of the British empire, the country's political elite sometimes had delusions of grandeur. They now appear to have delusions of competence.

And if that doesn’t change, it will be a hard winter ahead – for the British government, as well as the British people.

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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.”

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Updated: July 27, 2022, 1:42 PM