UK organisations in the GCC unfazed by ‘Brexit’
Author: Criselda Diala-McBride | Date: 27 Jul 2016
British talent will be tempted to stay longer in the region, predict industry sources
Optimism reigns among British organisations operating in the Middle East, despite the result of the recent in-out referendum regarding the United Kingdom’s membership of the European Union (EU).
The so-called Brexit vote is viewed as “very much an opportunity” by UK firms in the region, according to Jonathan Macpherson, deputy chairman and COO at the British Business Group Dubai & Northern Emirates. While the initial reaction to the EU referendum saw the pound hitting a 31-year low against the US dollar and equities worldwide losing more than US$2 trillion, he says, stock markets have now settled and are back to usual trading patterns.
“Sterling remains weaker against the US dollar and most economists predict this will be the norm for the short- to medium-term, depending on the UK government and Bank of England policies in the coming months,” says Macpherson. “For British businesses in the UAE – and the wider Gulf region – [this] is good news in the short-term. The weaker pound is benefiting British businesses that report and repatriate revenues back to the UK.”
A weaker pound also bodes well for local organisations buying British goods and services. “This depends on whether procurement departments have already hedged prices. If not, then again, the price of British quality goods and services will be relatively cheaper than they were a couple of months ago due to the value of the dirham to the pound,” he says.
Although Macpherson does not want to speculate on whether Brexit would lead to a drop-off or an increase in GCC-based UK companies’ hiring intentions in the short- to long- term, he believes that demand for British professionals may grow. “What we can say is that UAE-based companies may be more inclined to look to the UK for talent, knowledge and expertise due to the current dirham-to-pound exchange rate.
John Martin St. Valery, founding partner at Links Group, a British-owned and managed professional services firm based in Dubai, agrees.
“We don’t anticipate any change in the hiring rate at Links Group, but we may see British expatriate employees extending the amount of time they intend to stay in the UAE. As a company, we stand to benefit from this longer-term employment,” he says.
St. Valery adds that existing British employees are reaping the benefits of a lower sterling-to-greenback conversion rate, allowing them to remit funds back home or pay their mortgages.
“Should sterling remain low, this may encourage more Britons to seek employment abroad, which could broaden the talent pool,” he says.
He is also bullish on the Links Group’s own business prospects. Currently, around 45 per cent of the company’s client base originates from the UK. “Since trade flow between the [UAE and the UK] is unlikely to be affected, it will be business as usual for us and we may also see a spike in UK organisations looking to internationalise to the Middle East.”
For now, the general sentiment among members of the British Business Group remains upbeat. “The short- to medium-term economic outlook for the region, while not predicted to be stellar in growth terms, is positive and the short-term uncertainty over the economic and political future of the UK should not dissuade businesses from looking to expand into this market,” says Macpherson.