LONDON: Richard Bunce says he felt sick when voters decided to take Britain out of the European Union in June, forcing him into an emergency review of his firm’s expansion plans.
But six months on, orders are strong and a new growth plan is in place, according to Bunce, managing director of Mec Com Ltd., which sells devices to protect against power surges to clients such as Siemens and Alstom.
Far from the “profound and immediate economic shock” predicted by Britain’s Finance Ministry in the event of a vote for Brexit, the economy has, so far, barely slowed.
Bunce expects tougher times. But like many other executives trying to push their Brexit worries to one side, he invested — nearly half a million pounds on a new laser-cutting machine over the summer.
Now he plans to spend another £750,000 ($932,000) on robotic metal-working equipment at Mec Com’s plant near Stafford, a town 135 miles (217 km) northwest of London, after landing a big contract with a British food processing firm.
“We believe that the opportunities we have got will, one way or another, find a way around Brexit,” Bunce said.
To be sure, what Brexit means is far from clear. Britain is due to begin its two-year divorce process with the EU early next year. Agreeing its new relationship could take a lot longer.
Bunce is taking precautions in case his firm ends up facing tariffs on its exports to the EU. He recently traveled to Romania to discuss the possibility of expanding his company’s existing unit there in the event of a “hard” Brexit.
“If that happens then we would need to find a way to switch very quickly, but as things stand we are planning for more UK business,” he said.
Investment planned
Many other companies seem to be taking a similar approach, including technology giants Facebook and Google, which have announced plans to create jobs in Britain in recent weeks.
According to official data, businesses increased investment in the three months after the referendum.
Manufacturing body EEF says the sector is its most upbeat in a year and a half, helped by an export-boosting fall in the pound since the vote, and investment and hiring plans are up.
In construction, office building has slowed but some companies plan to ramp up home-building next year. A survey by IHS Markit showed growth in the construction sector hit an eight-month high in November.
Economists are now raising their predictions for British economic growth next year, after many of them initially warned June’s vote would quickly cause a recession.
The Bank of England in November made its biggest ever growth upgrade, saying the economy would grow by 1.4 percent in 2017, up from a forecast of 0.8 percent it made three months earlier.
Some investors think that even this looks too cautious.
Percival Stanion, head of multi-asset funds at investment firm Pictet, predicted growth of nearly 2 percent in 2017.
“The expectations of a collapse in the UK were massively over-pessimistic,” Stanion said, blaming the pro-EU views of many economists for skewing their forecasts.
Long-term uncertainty
For now the BoE — which is helping the economy with its massive stimulus program — is waiting to see who is right: The pessimistic investors who have pushed down the value of the pound by 13 percent since June or the country’s consumers who have carried on spending.
Gertjan Vlieghe, one of the BoE’s interest-rate setters, said he believed Britain was set for a “slow-motion” slowdown.
But the drag could be softer if there is progress toward a good Brexit deal for Britain, which would push up the value of sterling and ease the inflation hit, he said last month.
Sterling’s rise over the past month could also soften the rise of inflation. Looking further ahead, the impact of Brexit is harder to quantify without no clarity on what it might mean for exports, investment and migration in coming decades.
“You can easily see what the negatives are but they are in the medium term rather than the immediate one or two-year timeframe,” Stanion said.
For now, companies are trying to get on with day-to-day operations as best they can.
British investors absorb Brexit shock
British investors absorb Brexit shock
Tadawul maintains upward momentum, closes at 12,113
RIYADH: Saudi Arabia’s Tadawul All Share Index extended its upward trajectory for the second consecutive day on Tuesday, rising by 8.60 points, or 0.07 percent, to close at 12,113.29.
The benchmark index recorded a total trading turnover of SR7.71 billion ($2.05 billion), with 124 stocks advancing, while 110 saw declines.
In contrast, the Kingdom’s parallel market, Nomu, dropped 54.97 points, ending the session at 30,809.12. The MSCI Tadawul Index also gained ground, rising by 3.48 points to reach 1,514.39.
The standout performer of the day was Almoosa Health Co., which made its debut on the main market. The stock surged by an impressive 14.96 percent, closing at SR146. Other notable gainers included Al Mawarid Manpower Co. and Saudi Reinsurance Co., whose share prices climbed by 10 percent and 9.23 percent, closing at SR125.40 and SR63.90, respectively.
On the flip side, Al-Baha Investment and Development Co. saw its share price fall by 4.44 percent, ending the day at SR0.43.
On the announcements front, Filling and Packing Materials Manufacturing Co. announced it had signed a Shariah-compliant credit facility agreement worth SR50 million with Al Rajhi Bank to finance its working capital.
According to a statement on Tadawul, the 12-month credit facility is backed by a promissory note covering its entire value. FIPCO clarified that there are no related parties involved in the agreement. The company’s stock inched up by 0.44 percent, closing at SR45.70.
Meanwhile, LIVA Insurance Co. revealed it had received a Baa2 insurance financial strength rating with a stable outlook from Moody’s. The rating reflects the company’s strong capital adequacy, solid asset quality, and conservative investment strategy, alongside moderate reserve risk.
LIVA emphasized that the rating underscores Moody’s confidence in the company’s enhanced underwriting discipline and its ability to maintain profitability and growth within the Saudi market. A Baa2 rating is considered medium-grade, indicating a company’s acceptable ability to meet short-term debt obligations. LIVA’s stock gained 0.57 percent, closing at SR17.60.
Saudi Arabia eases domestic worker quotas for HR firms
RIYADH: Human resources firms in Saudi Arabia have welcomed the reform of a rule that required 30 percent of all employees to be domestic workers.
The change to the law, announced by the Ministry of Human Resources and Social Development, means that only firms with 3,000 workers or fewer now have to meet that threshold.
Those with a workforce ranging from 3,001 to 10,000 workers will instead be obligated to maintain a reduced quota of 20 percent, with that level dropping to 10 percent for companies with staffing levels between 10,001 to 15,000.
Firms with more than 15,000 workers are fully exempt from any domestic worker quota.
This policy shift is expected to balance supply and demand in the support workers sector, improving its legislative environment.
It comes at a time when Saudi Arabia’s human resources management market is experiencing rapid growth, and prior to this decision market research firm Horizon Grand View Research projected the sector would expand by a compound annual growth rate of 11.1 percent from 2024 to 2030.
Companies affected by the changes issued statements on Tadawul welcoming the new rules, with Mawarid Manpower Co. stating that “this decision will have an impact on the company’s business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce.”
Similarly, Saudi Manpower Solutions Co., also known a SMASCO, highlighted that “this decision aims to achieve a balance between supply and demand, thereby improving the legislative environment for the support (domestic) workers sector.”
Maharah Human Resources Co., which employs over 15,000 domestic workers, said that “it is not required currently to comply with any percentage for the household workers out of the total workforce.”
The company highlighted the cost-saving benefits of the new system, noting that “it is expected that this decision will have an impact on the company’s long-term business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce and reduce recruitment costs for household resources to ensure compliance with previous percentages.”
Additionally, the firm stated that the amendment “gives the company the ability to increase the workforce in the corporate sector to meet the growing demand without any constraints limiting that.”
The reform reflects Saudi Arabia’s broader efforts to modernize labor laws and streamline operations across key sectors.
Saudi Arabia sees 45% annual growth in domestic flight bookings: report
RIYADH: Saudi Arabia recorded a 45 percent annual growth in domestic flight bookings in 2024, fueled by the Kingdom’s expanding tourism offerings and increased connectivity through low-cost carriers.
According to Almosafer’s latest travel trend report, domestic room night bookings also saw 39 percent yearly growth. Additionally, combined domestic flight and hotel reservations contributed over 40 percent to the overall travel market, an 11 percent yearly increase.
The growth in domestic travel is largely driven by a broader range of destinations, accommodation options, and experiences that continue to attract leisure visitors to explore their home country. Family and group travel have been key contributors to this upward trend, with bookings in these segments surging by over 70 percent.
Commenting on the trends, Muzzammil Ahussain, CEO of Almosafer, said: “These travel trends align seamlessly with the government’s vision to enhance in-destination value and increase domestic tourism as part of Vision 2030.”
Cities such as Makkah, Riyadh, and Jeddah, as well as Al Khobar and Madinah, remain key attractions.
However, emerging destinations like Abha, Al Jubail, and Jazan, as well as Tabuk and Hail, are gaining momentum due to their distinct offerings, including mountain views, beaches, landscapes, and desert experiences.
“The growth of domestic tourism and the rise of family and group trips, with a focus on unique accommodation experiences and rich in-destination activities, showcase the success of the national agenda of building a thriving leisure tourism sector that contributes significantly to the economy,” Ahussain added.
Almosafer’s report highlights a notable shift in traveler preferences for accommodations. While luxury remains prominent, with 36 percent of room nights booked in five-star properties, budget-friendly stays in three-star or lower hotels now represent 35 percent of total bookings — a segment that has grown 100 percent for families and groups.
Alternative accommodations such as vacation rentals and hotel apartments have also gained traction, with family bookings rising 90 percent and group reservations increasing 60 percent, reflecting growing demand for flexible and affordable lodging options.
Low-cost airlines have also played a crucial role in the domestic travel boom. Increased capacity, expanded connectivity, and additional routes have made budget carriers more accessible to cost-conscious travelers.
While flight bookings grew by 45 percent, the average order value decreased by 7 percent, demonstrating how expanded options are enabling travelers to secure more cost-effective deals.
In-destination activities have become a cornerstone of travel value, with visitors increasingly opting for guided tours, adventure sports, and cultural experiences.
Booking behavior also evolved in 2024, with mobile platforms dominating the market. App bookings grew by 67 percent and accounted for 76 percent of total bookings, while web reservations contributed 17 percent, reflecting 7 percent growth.
Retail bookings, though representing a smaller 7 percent share, remain relevant for complex and higher-value itineraries as travelers seek in-person assistance for personalized planning.
Flexible payment options have further transformed the travel market. Buy now, pay later plans have gained popularity, while Apple Pay accounted for 44 percent of all domestic bookings processed in 2024, reflecting the growing adoption of digital payment methods.
Qatar’s non-oil business growth steady in December; Lebanon’s PMI at 8-month high
- Qatar’s labor market was a key driver of the country’s overall progress in business conditions
- S&P Global added that activity levels across Lebanon’s private sector economy fell in December
RIYADH: The growth of non-oil business activities in Qatar was steady in December, with the country’s purchasing managers’ index remaining stable at 52.9, unchanged from November, an economy tracker showed.
The latest report released by Qatar Financial Center and compiled by S&P Global said that the headline PMI figure for the fourth quarter of 2024 stood at 52.9, up from 52.0 in the previous three months and above the long-run survey average of 52.3 since April 2017.
According to the PMI survey, Qatar’s labor market was a key driver of the country’s overall progress in business conditions in December, with employment and wage increases reaching some of the highest levels on record.
The strong growth in non-energy business activities aligns with the broader economic diversification efforts across Gulf Cooperation Council nations, which continue to reduce reliance on oil revenues.
Earlier this month, S&P Global revealed that Saudi Arabia’s December PMI hit 58.4, driven by a sharp increase in new orders. The Kingdom’s PMI has remained above the neutral 50 mark since September 2020, indicating substantial expansion in the non-oil private sector.
In the UAE and Qatar, the PMI for December stood at 55.4 and 54.1, respectively.
“The headline PMI was unchanged at 52.9 in December, remaining above the long-run trend level of 52.3 and indicating a solid improvement in business conditions in the non-energy sector,” said Yousuf Mohamed Al-Jaida, CEO of QFC Authority.
According to the report, employment and wages have risen more quickly in Qatar’s non-energy business sector than at any other time in survey history, which reflects efforts to raise output, improve services, win new business, and address outstanding workloads.
Even though wage pressures remained strong in December, overall input price inflation eased further from October’s four-year high.
The survey added that Qatari firms continued to hold an optimistic outlook for the next 12 months in December, albeit slightly easing from November.
According to the analysis, Qatar’s Financial Services Future Activity Index rose from 62.1 in November to 68.3 in December, well above the long-run series trend of 63.6.
“The outlook for 2025 is strongly positive, continuing to support a booming labor market. New business growth generated a renewed rise in outstanding work during December, and companies continued to build inventories in expectation of sales growth in the coming months,” added Al-Jaida.
Business confidence in Lebanon rises
In a separate report released by BLOMINVEST Bank, compiled by S&P Global, the PMI of Lebanon hit an eight-month high in December, reaching 48.8, up from 48.1 in November.
The survey revealed that companies recorded their most optimistic assessment of the 12-month outlook in December as the Israel-Hezbollah ceasefire buoyed sentiment.
S&P Global added that activity levels across Lebanon’s private sector economy fell in December, although the pace of decline cooled to the softest seen since March.
“The BLOM Lebanon PMI for December 2024 improved for the second month in a row from the 44-month low in October (45.0) to record 48.8, as slower declines in new orders and new export orders resulted in a softer output contraction,” said Helmi Mrad, research analyst at BLOMINVEST Bank.
He added: “It is interesting to note that the surveyed companies were optimistic regarding the 12-month outlook, with the Future Output Index recording an all-time high of 61.8. This optimism is due to the ceasefire agreement between Hezbollah and Israel.”
According to the survey, the decline in new export business also cooled sharply in December, with the contraction being the slowest in 10 months. This trend also signaled a marked easing of the contraction in international client demand for Lebanese products.
Up to 50% of deep tech startups in Saudi Arabia focus on AI, IoT — report
RIYADH: Up to 50 percent of deep tech startups built in Saudi Arabia are working on artificial intelligence and the Internet of Things, a new report revealed.
Released by the Ministry of Communications and Information Technology, in partnership with King Abdullah University of Science and Technology and in collaboration with Hello Tomorrow consultancy firm, the document indicated that there are over 43 high-growth startups driving innovation in the Kingdom, collectively securing more than $987 million in funding.
This aligns with the National Strategy for Data and AI goals to position Saudi Arabia among the top 10 countries in the open data index and among the top 20 countries in peer-reviewed Data and AI publications by 2030.
It also meets with the strategy’s objective of securing SR30 billion ($7.9 billion) cumulative foreign direct investment and SR45 billion local investment in data and AI in the Kingdom by 2030.
“The deep tech startups that have originated in Saudi Arabia are currently in their early stages of development, but the ecosystem is already attracting mature international companies,” the report said.
On the $987 million secured funding in 2022, the report said this was primarily fueled by a rapidly expanding funding ecosystem, which was ranked in the Middle East and North Africa’s top three for funding and deals.
The report further disclosed that 104 active startup investors registered in the Kingdom in 2023, a 41 percent increase from 2018.
“This expansion is highly dependent on public funds, as the government is committed to nurturing tech startups and scaleups,” the reports said.
It added that the number of researchers in Saudi Arabia has risen by 75 percent since 2015, thereby cementing the nation’s commitment to advancing research and development.
“The country is expanding its research infrastructure to accommodate 140,000 researchers by 2030, marking a sevenfold increase from the current 20,000 researchers in the country,” the report said.
The report tackles the current state and future opportunities of the deep tech ecosystem in the Kingdom as well as key initiatives supporting the goals and objectives of Saudi Vision 2030.
It also seeks to shed light on the prospects and potential in this vital sector which is recognized as a cornerstone for advancing the digital economy and sustainable development as a whole.
