Life is Not So Bad after Brexit, Qatar will Invest 5bn in UK Over the Next Five Years

Last week,  UK and Qatar held two days investment summit in Birmingham followed by Theresa May speech. May was brief and outlined some important points as the fact that they have signed a memorandum of understanding that will benefit 600 UK companies and will boost the employment process. From the Qatari side, this primary agreement will support their 2030 national vision in developing the infrastructure in different sides. Targeted verticals will be in education, science & research, tourism, culture, energy, financial services, development of small businesses and defense.

Dr. Liam Fox,  UK international trade secretary of state said in his speech that Britain will double its Export to support the trade with Qatar to a total amount of £4.5 billion. This will be an additional £2.25 billion in support for UK companies that export to Qatar, and for Qatari buyers in both the public and private sectors.

The Pound is Benefiting From the Agreement

As the UK government spared no effort to depreciate the currency since June 2016, The UK minister was smart enough to mention a very important point in his speech about the currency role in this beam of transactions. Dr. Fox added that “UK Export Finance support will now be available in Qatari Riyal“. That smart move will soar Investors’ Confidence Indicator without waking the Pound from its deep sleep. It is important to mention that the Investors’ Confidence Indicator tumbled to -42 after the BREXIT referendum in June 2016.

Qatar Has Continuous Endeavors to Invest in UK

The Qatari prime minister sheikh Abdullah Bin Nasser expected that long term cooperation would worth 5 billion pound; Moreover, during the summit the Qatari investors expressed their unperturbed confidence in the British economy.

The intended projects will include qualifying the Qatari stadiums for the football world cup 2022; however; no announcements on the military foreseeable cooperation. Qatari finance minister said during his meeting with Bloomberg that his country is discussing with other gulf countries over the possibility of bilateral free trade agreement between the gulf countries and the UK.

The most important side in that agreement is in the oil field since Qatar is the biggest liquid gas exporter. Dr. Fox said that shell investments alone worth $21 billion in Qatar, making Qatar the largest investor in this field. Qatar supplies UK with 90% of its natural gas, delivered to dock owned by Qatar in Kent.

The Kent Dock is not the only property owned by Qatar in the UK. Although Theresa May stated that Qatar is one the most reliable investors in the UK by 35 billion GBP, most of the investments in the iconic buildings in east London. Qatar has investments exceed buying some real states close to the Hyde park or Harrods, shared and some other hotels.

Qatari royal family bought the Olympic village in London that worth 556 billion pounds, Chelsea military barracks and the US embassy building. Despite the precedents properties, Qatar investment authority [as SEC in the USA] bought a big portion in London Stock Exchange by 20% in 2009 to be decreased to 6% currently. It is important to mention that Dubai Stock Exchange now considered the largest shareholder in LSE by 20%.

Qatar is an Economic Titan

It is very important in this paper to spotlight the Qatari economic situation. Qatar was ranked as the 18^th worldwide by the world economic forum due to the big achievements in the financial markets and the big market size. The most significant fundamental indicator of the Qatari economy is the GDP per capita which is $74000 compared to $41000 for the UK and $51000 for the USA. Qatar GDP achieved 3.7% in the first quarter this year and 1.7% for the second quarter, while the UK achieved only 0.5% for the first quarter 2017 and 0.7% for the second quarter 2017. Unemployment rate in Qatar is the lowest unemployment rate in the world and maybe in history by only 0.2% within a population of 2.5 million, and it used to be 2.3% during the world financial crisis in January 2009.

Qatari Riyal has a great stability, since it is one of the petrodollar currencies which are dominated by USD. Qatar main stock index (QE) stops at 10 000 points, where the price was doubled between 2013 (about 7000 points) and 2014 (14000) after a fire selling occurred to stabilize at 10 000. According to a comparison made by Bloomberg, Qatar has achieved better than all of the emerging markets in the last three years.

Final Projection on the UK-Qatar Summit

The UK-Qatar summit ends just one day before PM May triggers article 50. It was clear that the summit was mostly for saving face and sending a message by proofing that the investments are still flowing after  BREXIT.

However, very few people can believe that the 5 billion pounds investment will enhance British economy. Especially that the EU is demanding UK to pay them 60 billion Euros as settlements and to reach a soft BREXIT. So it is all about the BREXIT, and the story did not end yet, we are going to see a lot until March 29^th, 2019.