There are many things about the Brexit reaction that annoy me: the arrogance of "young people" in appearing to disregard a democratic decision; the moans of correspondents of The Guardian newspaper that they feel ashamed of their passports; the assumption that to vote against the autocrats and bureaucrats of Brussels is the same as declaring yourself a racist xenophobe.
Not that I’m a British citizen, but if I had been voting I would have probably gone – marginally – for “remain”, largely because of a desire for economic and financial stability, and despite my suspicion of the European Union’s anti-democratic integrationism.
But that’s all in the past now and Britain will have to live with and manage the fallout from its decision. I’ve no doubt the country – as one that has met and overcome much greater challenges in the past – will do that and even turn Brexit to its economic advantage.
In particular, the City of London has proved to be the world’s most adaptable financial centre. World wars, recessions, global crises have come and gone and the Square Mile has maintained its century-long position as the leading European hub, just behind New York in the global rankings.
I can’t see why that should change. I recall interviewing the head of the Deutsche Borse sometime around 1990. “Frankfurt to London: We will bury you” was the headlined threat from him back then. Well, it didn’t happen, and there’s no reason why it should now, a quarter of a century later.
The latest Brexit-related matter to get my goat was the suggestion that Britain’s exit from the EU would be damaging for the UAE. British banks would foreclose on debts, especially those owed by Dubai; tourism from the UK would dry up as newly impoverished Brits opted for “staycations” in their dismal island; British investors would boycott the UAE’s dollar-lagged property sector.
I don’t see any of that happening. True, the UAE has some chunky financial obligations to meet in the coming years and debts to UK institutions will be significant: the UAE is the biggest debtor among the $94bn in GCC maturities estimated by HSBC to be falling due this year and next, and Dubai is the biggest element in that.
But these debts were known about well before the Brexit vote. If anything, interest rates are likely to fall in Britain post-Brexit and the Fed is less likely to raise rates in the turmoil that has followed. That amounts to cheaper terms for Dubai and UAE entities seeking to refinance or raise new money.
Bond market experts report that spreads for emerging-market debt (which includes the UAE) have tightened in the wake of the UK vote, which is traderspeak for more demand by international investors, including UK investors and therefore means cheaper loans.
UK property investors may take pause but there is no reason they will stay away for ever.
If anything, life in the UAE should be more appealing to the British. They will realise quickly that Brexit is not the end of the world and may be the beginning of a better one.
fkane@thenational.ae
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