Britain will slash tariffs if MPs vote on Wednesday to leave the world’s largest trading bloc without a deal, the government announced.
The tariff proposals were published amid political chaos after a heavy defeat for prime minister Theresa May on Tuesday that has left officials and MPs scrabbling over what happens next.
Britain’s newspapers were damning over the failures to secure a deal with the front page headline of middle-market tabloid the Daily Mail declaring “The House of Fools” that had chosen to “plunge our despairing nation into chaos”.
Europe's chief negotiator Michel Barnier said on Wednesday it wa sup to the UK to come up with a new plan that could stave off the threat of a no-deal Brexit.
"We are at a critical point. the risk of a no deal has never been higher," he told the European parliament in Strasbourg.
In the event of a no-deal that severs the UK's links with the EU at a stroke on March 29, the government detailed plans that would see 87 per cent of all imports to the UK subject to tariffs, up from 80 per cent.
Mrs May was chairing a cabinet meeting on Wednesday at the start of another crucial day which could see the UK still leave the EU without a deal or result in MPs trying to delay the departure date in the hope of finding a way through the impasse.
Britain’s main employer’s organisation warned the temporary tariff move would take a “sledgehammer” to the economy and complained that businesses had not been consulted over the changes. Organised crime could also exploit the situation, the government warned.
“What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century,” Carolyn Fairbairn, the head of the Confederation of British Industry, told the BBC.
“This is no way to run a country.”
The changes would see a shift in the burden of tariffs to the EU and away from the rest of the world. The government said it would not introduce any new checks or controls on goods moving across the border on the island of Ireland.
The government said there would be “challenges and risks” including from organised crime seeking to exploit any new system to smuggle goods into the UK.
“That is why we are clear that this approach will only be strictly temporary,” the government said in a statement.
Trade Policy Minister George Hollingbery said: “This balanced approach will help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest.
“It represents a modest liberalisation of tariffs.”
The announcement came after the defeat on Tuesday cast into doubt Britain’s prospects of leaving the EU with some MPs pushing for a second referendum on the issue. The 2016 vote saw Britons back leaving the EU by 52 per cent to 48.
MPs rejected Mrs May's deal agreed last with EU officials after months of talks by a majority of 149 after minor tweaks to the plan failed to convince Eurosceptic MPs that they would not remain tied to rules imposed by Brussels for years after departure. Mrs May lost a previous parliamentary vote on the deal by 230 in January.
The EU had warned that Tuesday's vote was the last opportunity to secure a negotiated deal on Britain’s departure.
MPs will vote on Wednesday on whether or not the UK should leave on March 29 without a deal.
If MPs block a no-deal exit they are expected to request a delay from the EU on Thursday.
The votes come amid the backdrop of a deeply divided country with polls showing roughly even splits for the competing options of scrapping Brexit entirely, backing Mrs May’s plan, or leaving the EU without any future agreement in place.
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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.”
