LONDON // Investors will remain hesitant until there is more clarity on Britain’s withdrawal from the European Union, the former head of one of the Arabian Gulf’s biggest sovereign wealth funds has said.
Ahmed Al Sayed, the former chief executive of the Qatar Investment Authority and Qatar Holding – which has invested billions in the UK in assets ranging from Barclays Bank to the iconic Harrods department store – said there would be a “wait and see” approach given the uncertainty over when the ‘Brexit’ will take place.
“Investors in general need clarity, are seeking clarity,” he told The National.
His comments came amid grim news that Britain’s economy had been battered by the Brexit vote and faced a “dramatic deterioration” in activity. Private sector business activity, as measured by the research group Markit’s Purchasing Managers Index, sank in July to 47.7 points, compared to 52.4 last month.
It was the lowest level since April 2009 following the global financial crisis and sparked predictions from some quarters of a painful recession, last month’s PMI figure is below the boom-or-bust 50 points barrier that signals contraction, Markit said.
Mr Al Sayed, now the founder and chief executive of Sharq Capital Investment, on Thursday spoke at a debate about the Brexit vote at the GCC-British Economic Forum in London, organised by the Arab-British Chamber of Commerce.
“The investor appetite will be more ‘wait and see’,” he told delegates.
“Fundamental issues need to be settled for the investor to make their decision to move … We would still like to know how the tax treatment will be in the future for specific sectors and in general. You will have a currency situation also.”
It is still not clear when Britain will formally leave the European Union – something adding to the uncertainty in the investment climate.
“Personally I don’t think that will happen soon … Maybe we will not see the Brexit until 2019 or 2020,” said Mr Al Sayed.
“This uncertain situation will remain until things become clearer. Then you will see the investment appetite.”
Despite the current climate, Mr Al Sayed said Brexit could bring opportunities, such as “more flexibility” on bilateral trade deals with the GCC.
“With Brexit, that could create opportunity – I’m not saying this is bad. But until we know what is the outcome, then it will be more clear to judge the situation,” he told delegates. “The trade between the UK and the GCC potentially should be increased.”
Abdulrahman Rashed Al Rashed, the managing partner at the Saudi Arabia-based conglomerate Rashed Abdul Rahman Al Rashed & Sons Group, agreed that it was a possibility that Brexit could boost trade with the GCC.
“In the past I think there were limits [that] the UK could have in bilateral relationships because of the fact that the UK is part of the EU, and they are governed by the EU trade policies. But I think now, because of this new situation with the Brexit, that might change,” he told the GCC-British Economic Forum.
“Personally, I think it is not a gloom-and-doom situation,” he added. “I think there’s an opportunity to enhance the relationship between the GCC and the UK.”
Other speakers were less optimistic about the effect of the UK’s historic vote to leave the European Union.
Jan Toporowski, a professor of economics and finance at the School of Oriental and African Studies at the University of London, said the outlook for UK universities was negative because of expected lower admissions and the effect on research.
“I think [Brexit] will affect, in the long run, students coming from the GCC and other parts of the world,” he said. “The outlook from universities is, I would say, universally grim.”
* Additional reporting by Reuters
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