Abu Dhabi, UAETuesday 25 June 2019

As Middle Eastern economies diversify, the strength of the UK's relationship with the UAE remains constant

The Lord Mayor of London, on a week's tour of the UAE, describes a reciprocal relationship of skills and knowledge transfer and investment

Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation, at the inauguration ceremony of the UAE-UK Friendship Society in London last year / Courtesy MOFAAIC
Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation, at the inauguration ceremony of the UAE-UK Friendship Society in London last year / Courtesy MOFAAIC

The backdrop to my visit to the UAE and Kuwait this week, as Lord Mayor of London, might seem to be one of uncertainty. The UK’s departure from the European Union is a profound constitutional change and will pose challenges for both London and the UK’s financial sector. Meanwhile, there are wider questions around the future of world trade, notably between US and China, while many Middle Eastern economies are making rapid moves towards diversification to reduce the impact of fluctuating oil prices.

But as significant as these factors are, some things – such as London and the UK’s inherent strengths in global finance, our ability to innovate and our willingness to collaborate with Gulf nations such as the UAE – are without question.

Firstly, the City of London will remain a global financial hub after Brexit.

We are the world’s largest currency-trading centre – the largest offshore centre for renminbi internationalisation and a world leader in the issuing of masala bonds outside of India – and the second-largest centre for asset management.

London provides access to the deepest pool of internationally oriented capital in the world and accounts for 70 per cent of the secondary market turnover in international bonds. It is, and will always be, a welcoming place, with a diverse, highly educated international workforce, governed by strong respect for the rule of law.

As always, we’re ahead of the curve in growth areas for the sector. We have more than half of Europe’s fintech companies valued at more than $1 billion. International start-ups in this sector, from Africa to the Baltics, see London as the global crossroads that provides the very best in finance, creative and tech. It is, therefore, the ideal place for them to scale up their businesses.

Secondly, the UK and UAE have a bright future together, and London will remain the axis for that.

The UAE is the UK’s 12th-largest trading partner and the largest civil export partner in the region. The UK also works closely with the UAE as it continues to diversify its economy and investments through its sovereign wealth fund sector. The UK remains a highly attractive and reliable location for investment from the UAE, and together we have already reaped many mutual benefits. Emirati investment in the tens of billions of dollars has funded urban regeneration and infrastructure projects across the UK, including the London Gateway, the London Array and large parts of Manchester. All of this has created a reciprocal flow of knowledge and skills to the UAE.

London’s financial expertise has a great deal to offer the UAE – fintech, insurance, legal services, wealth management and much more. Our two countries share strong, skilled workforces, world-class infrastructure, an openness to ideas, creative energy, excellent educational institutions and geographical time zones that allows us to work easily with markets to the East and West.

Finally – and crucially – London and the UAE, with their unique networks in the Middle East, South Asia and increasingly, Africa – remain integral parts of the global financial system. We share an interest in strengthening free trade and global financial regulation, as well as working towards convergence and coherence. While some others might be using this moment to look inwards, we must remain committed to these principles and continue to build a bright future.

As our countries begin new journeys in 2019, there are fast-growing opportunities to collaborate.

In finance, London has positioned itself to become the hub for sharia-compliant finance outside the Islamic world. Today, the UK boasts five licensed Islamic banks and more than 20 conventional banks offering Islamic financial products, while the London Stock Exchange has over 65 sukuk Islamic bonds listed for a total amount of nearly $50 billion.

Investors in the UAE will be similarly interested in the work that the UK is doing as a global leader in regulating green finance, providing transparency and clear principles to the sector. London has already underwritten and issued $80bn of green bonds, and a new Green Finance Institute – to be launched by the City of London Corporation and UK government later this year – will allow us to do even more, acting as a unique one-stop shop designed to help find innovative solutions to this global problem.

So my message to our partners in the UAE and the wider Gulf is one of optimism and ambition for 2019. While Brexit and economic diversification provide food for thought, they also offer significant opportunities, especially with emerging areas of financial services now ripe for closer collaboration.

The UK and the UAE already have a deep and vibrant relationship. The time is right for our two countries to be bold and realise the full potential of what we can offer each other.

Peter Estlin is the Lord Mayor of London, serving as a global ambassador for the UK-based financial and professional services industry for a one-year term. He is a senior adviser to Barclays bank and a former chief financial officer to Salomon Brothers Asia and Citigroup’s Investment and Corporate Banking divisions in New York and London

Updated: January 12, 2019 04:44 PM

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