Division and despondency have returned to the Conservative Party amid talk of a financial crisis caused by Chancellor Kwasi Kwarteng's mini-budget, a little over three weeks after the new leadership team took charge of the country.
Politics was put on hold during the mourning period following the death of Queen Elizabeth, meaning it was the first major policy announcement to follow through on promises made during the leadership campaign.
But Tory MPs are openly questioning the path taken by Mr Kwarteng and Prime Minister Liz Truss after turmoil erupted in the markets in the wake of a plan to cut taxes for the richest and increase borrowing in the hunt for economic growth.
After a summer of tearing each other apart in the search for a leader to replace scandal-plagued Boris Johnson, the mood in the party once again plummeted as some MPs hit out at the plans announced on Friday by Mr Kwarteng, with one prominent backbencher calling his party leader’s plan “inept madness”.
It comes as the Bank of England was forced to launch an emergency bond-buying programme to prevent borrowing costs from spiralling out of control and to stave off a “material risk to UK financial stability”.
The International Monetary Fund, in a highly unusual move, has already flagged serious concerns about the mini-budget.
The crisis has prompted Labour and other opposition parties to call for a recall of Parliament, so MPs can hear from the chancellor about his plans to restore market confidence.
There were signs on Wednesday of outright worry within the party, with MPs — some of whom backed Rishi Sunak in the leadership contest — making public their own unhappiness with the political and economic chaos of recent days.
A long-serving Conservative MP told The National that there were now calls for Mr Kwarteng to be sacked as chancellor following his destabilising budget.
“It’s fair to say there’s just sheer disbelief in the party over what has happened in the last few days. We may well see one of the shortest chancellor careers in history with Kwasi getting the sack. What might happen after that is totally unclear. Bring back Rishi?”
Political sources have indicated that the former chancellor, who came second in the race to succeed Mr Johnson, will not attend the Conservative Party conference beginning on Sunday, instead staying at his constituency in Yorkshire.
But his political position has been significantly strengthened by his strong arguments during the leadership campaign against tax cuts before first stabilising spending and inflation.
There is also speculation that parliament will be recalled to deal with the growing emergency but this is likely to be resisted by the Conservatives just as they begin their important conference that could see further division and drama.
With pension funds vulnerable to the growing economic disaster, older Tories will be asking hard questions at the Birmingham conference.
Mel Stride, Conservative chairman of the Commons Treasury Committee, warned “there’s a lot of concern within the parliamentary party, there’s no doubt about that”.
He told Sky News: “I don’t want to speculate on the future of the chancellor other than to say that I think where the party should be at the moment is really uniting at a time of economic crisis.
“The last thing we want now is a political crisis to compound that, and I think really focus on this issue of growth.”
Simon Hoare, the chairman of the Northern Ireland Select Committee, cited the former Conservative chancellor Norman Lamont during the sterling crisis of 1992 as he tweeted: “These are not circumstances beyond the control of govt/Treasury. They were authored there. This inept madness cannot go on.”
Tory MP Robert Largan also came out to label as a “mistake” the decision to cut the top income tax rate when “the Government’s fiscal room for manoeuvre is so limited”.
The High Peak MP tweeted: “This is a deeply worrying time. Elected officials need to be honest about the choices we face and government needs to take a pragmatic, fiscally responsible approach on the short-term support needed for people and long-term strategic thinking to ensure our energy security.”
Unease has been brewing in wider Conservative circles too.
Nick Timothy, who was chief of staff to former PM Theresa May, attacked the government’s plan.
“This is not conservatism,” he tweeted.
“And it is not what conservatives do. Ideology and unnecessary risks with market confidence are supposed to be what the other side does. We do need a different plan — but this is a disaster that should never have happened.”
Nonetheless, some defenders of the prime minister have been vocal, with one Conservative peer suggesting that the crisis in the markets was driven by concerns over the possibility of a Labour government.
Daniel Hannan, one of the key Conservative voices behind the push to leave the EU, wrote an article for the ConservativeHome website playing down market concerns about the £45 billion package of tax cuts announced by Mr Kwarteng.
In the piece, which was published on Wednesday and immediately mocked online, Lord Hannan wrote: “What we have seen since Friday is partly a market adjustment to the increased probability that Sir Keir Starmer will win in 2024 or 2025 — leading to higher taxes, higher spending, and a weaker economy.”
He suggested the reaction to the mini-budget was driven by “motivated reasoning”.
“Some pundits don’t like Truss, others have never forgiven the Tories for Brexit, yet others are horrified by the idea that growth, rather than equality, should be the government’s priority.
“Fair enough. But let’s be clear-headed about what is happening.”
Lord Hannan downplayed the significance of the tax cuts in historical terms.
“To blame these tiny tax reductions for the fall in the pound is akin to a fly alighting on an exhausted shire horse as it lies down to sleep, and telling itself that it wrestled the mighty beast to the ground.”
The article was praised by Lord Frost, the former Brexit negotiator, who called it an “excellent piece”.
However, many mocked the article online and rubbished the peer’s analysis.
Sir Keir also called the comments “complete nonsense”.
The Labour leader told C4 News: “That’s just a ridiculous assertion. I don’t even think the Tory party are taking that seriously.
“It’s very obvious that this is a direct result of the budget on Friday.”
Elsewhere, Julian Smith, a Tory MP and former cabinet minister, reacted strongly to comments by Lord Frost dismissing the concerns of the IMF.
“Arghhhhhhhhhhhhhhhhh,” he tweeted.
But Ms Truss's supporters dismissed the concerns about the Treasury's plans.
Sir John Redwood, a Tory MP, said: "[The IMF] didn't warn us or the other central banks in the run-up to the big inflation, that the monetary policies of 2021 were far too loose, interest rates far too low, and the money printing was getting out of control.”
He said the government should be prudent, but “the truth is if the austerity policies have their way and we have a big recession, the borrowing won't go down, the borrowings will soar”.
“My message today is that the government are right to see the main threat for the year ahead is recession not inflation, because the good news is that all forecasters say inflation will come down a lot next year, and the sooner the better.”
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Results
%3Cp%3E%3Cstrong%3EStage%203%3A%3C%2Fstrong%3E%3Cbr%3E1.%20Einer%20Rubio%20(COL)%20Movistar%20Team%20-%204h51%E2%80%9924%E2%80%9D%3Cbr%3E2.%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%20-%2014%22%3Cbr%3E3.%20Adam%20Yates%20(GBR)%20UAE%20Team%20Emirates%20-%2015%22%3Cbr%3E%3Cstrong%3EGeneral%20classifications%3A%3C%2Fstrong%3E%3Cbr%3E1.%20Remco%20Evenepoel%20(BEL)%20Soudal%20Quick-Step%3Cbr%3E2.%20Lucas%20Plapp%20(AUS)%20Ineos%20Grenaders)%20-%207%22%3Cbr%3E3.%20Pello%20Bilbao%20(ESP)%20Bahrain%20Victorious%20-%2011%22%3C%2Fp%3E%0A
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
How will Gen Alpha invest?
Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.
“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.
Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.
He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.
Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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.”
Top investing tips for UAE residents in 2021
Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.
Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.
Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.
Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.
Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.
Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.
Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”
Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.
UAE squad
Esha Oza (captain), Al Maseera Jahangir, Emily Thomas, Heena Hotchandani, Indhuja Nandakumar, Katie Thompson, Lavanya Keny, Mehak Thakur, Michelle Botha, Rinitha Rajith, Samaira Dharnidharka, Siya Gokhale, Sashikala Silva, Suraksha Kotte, Theertha Satish (wicketkeeper) Udeni Kuruppuarachchige, Vaishnave Mahesh.
UAE tour of Zimbabwe
All matches in Bulawayo
Friday, Sept 26 – First ODI
Sunday, Sept 28 – Second ODI
Tuesday, Sept 30 – Third ODI
Thursday, Oct 2 – Fourth ODI
Sunday, Oct 5 – First T20I
Monday, Oct 6 – Second T20I
Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.
RESULTS
5pm: Maiden (PA) Dh80,000 2,200m
Winner: Arjan, Fabrice Veron (jockey), Eric Lemartinel (trainer).
5.30pm: Maiden (PA) Dh80,000 1,400m
Winner: Jap Nazaa, Royston Ffrench, Irfan Ellahi.
6pm: Al Ruwais Group 3 (PA) Dh300,000 1,200m
Winner: RB Lam Tara, Fabrice Veron, Eric Lemartinal.
6.30pm: Shadwell Gold Cup Prestige Dh125,000 1,600m
Winner: AF Sanad, Bernardo Pinheiro, Khalifa Al Neyadi.
7pm: Shadwell Farm Stallions Handicap (PA) Dh70,000 1,600m
Winner: Jawal Al Reef, Patrick Cosgrave, Abdallah Al Hammadi.
7.30pm: Maiden (TB) Dh80,000 1,600m
Winner: Dubai Canal, Harry Bentley, Satish Seemar.
