WASHINGTON: Britain hasn’t even divorced the European Union yet, and already a new suitor has come calling: the United States.
During a visit this week to the United Kingdom, Vice President Mike Pence brought word from his boss, President Donald Trump: The United States is eager to reach a new trade pact — one that won’t be possible until Britain completes Brexit and moves out of the 28-country EU trading bloc.
“Our message is clear: The minute the UK is out, America is in,” Vice President Mike Pence said in a visit with British Prime Minister Boris Johnson at 10 Downing Street on Thursday.
Not so fast.
Building a new US-UK trading relationship atop the wreckage of Brexit won’t be easy.
British officials are already vowing to resist an agreement that is lopsided in favor of the more powerful United States, creating potential for disputes over matters such as chlorinated chicken and the divisive Scottish dish haggis.
“I know that you guys are pretty tough negotiators,” Johnson told Pence. “So, we’re going to work very hard to make sure that that free trade deal is one that works for all sides.”
As a member of the EU, Britain outsourced its trade policy to the bloc’s bureaucrats in Brussels. Before it can pursue an independent course and reach a brand-new trade pact with Washington, London will have to negotiate a divorce with the EU— or crash out of the bloc without a deal and risk damaging its own economy.
“Until that gets resolved, this is all speculation,” said Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center.
And the terms of the UK-EU split will complicate any deal with the Americans, which will have to be approved by Congress.
No obstacle looms larger than the fate of the border between the independent Republic of Ireland and Northern Ireland, which is part of the United Kingdom.
Currently, people and goods can freely cross the Irish border without encountering immigration or customs checkpoints because both the UK and Ireland belong to the EU, which allows free trade and travel among its members.
The question is: What happens to the Irish border if Britain leaves the EU? If the border stays open, a US-UK trade deal won’t work. That is because an open border would allow goods from the remaining 27 EU countries to slip into Britain via the Republic of Ireland. Those goods could then be exported to the United States under the favorable terms of what is supposed to be an exclusive deal between the UK and the US
But creating a hard border between the two Irelands would risk conjuring up old animosities and undermining the historic Good Friday accord of 1998 that brought peace to an island long torn by violence.
What’s more, House Speaker Nancy Pelosi has repeatedly said there is “no chance” the US Congress will approve a trade pact with Britain if Brexit closes the Irish border.
Still, there are reasons for optimism if the Brexit issues can be resolved. Trump has a friendlier relationship with Johnson than he does with many other leaders. So it’s possible that US-UK trade talks can proceed more smoothly and quickly than American negotiations with, say, China.
Some issues are likely to prove thorny. Britain’s farmers have been shielded from export competition under the EU’s protectionist agricultural policies. The US intends to demand more access to Britain’s agriculture market post-Brexit, according to a list of negotiating objectives the Office of the US Trade Representative published in February. Accepting more competition from American farmers could prove a tough sell in Britain.
And there are other sensitive issues. In June, Trump caused a stir when he said that “everything” — including Britain’s National Health Service — would “be on the table” in US-UK trade talks. The British are fiercely protective of the state-run health system, which delivers free medical care to everyone. Although Trump later walked back the idea, Johnson reiterated this week that “the National Health Service is not on the table.”
Johnson also suggested that America needs to lift its ban on Scottish haggis — a savory pudding cooked in the stomach of a calf or lamb — and made a joking reference to British fears that the US would insist on more lax food safety standards, resulting in an influx of chlorinated chicken from the United States.
“And we’re not too keen on that chlorinated chicken either,” he quipped, taking a poke at his political opponents: “We have a gigantic chlorinated chicken of our own here on the opposition bench.”
“Boris Johnson has to walk a very fine line,” said Amanda Sloat, senior fellow at the Brookings Institution. “On one hand he needs Donald Trump to be able to show that the UK still has close friends and allies ... On the other hand, Donald Trump is extremely unpopular in the UK And Boris Johnson has to make sure that he’s not looking like Trump’s poodle.”
Trade between Britain and its one-time colonial possession is already brisk, moreover, which suggests that the potential for big economic gains in either country might be slim.
Last year, the United Kingdom was America’s fourth-biggest export market. And the United States, which runs chronic trade deficits with most of its major trading partners, reported a trade surplus — $18.6 billion worth — with Britain in 2018.
Even so, a US-UK deal would represent a powerful show of support for Britain after a messy divorce with the EU. “Clearly the British government is using this as a signal that they can do without Europe,” said Robert Lawrence, professor of trade and investment at Harvard University’s Kennedy School.
Trump’s top economic adviser, Larry Kudlow, said the administration wants to get to work on an agreement, but acknowledges it has to get the green light from the United Kingdom first. In the meantime, the US will focus on other agreements in the works, especially the US-Mexico-Canada Agreement that is meant to replace a 25-year-old North American trade pact.
“It’s not a tomorrow question. I mean the most important trade deal is USMCA. That is our top legislative priority,” Kudlow said.
US-UK trade deal won’t be so easy post-Brexit
US-UK trade deal won’t be so easy post-Brexit
- Building a new US-UK trading relationship atop the wreckage of Brexit won’t be easy
- British officials are already vowing to resist an agreement that is lopsided in favor of the more powerful United States
Banking sector in Kuwait, Qatar and UAE to stay stable in 2025: S&P Global
RIYADH: Banks in Kuwait, Qatar, and the UAE are expected to maintain stability in 2025, supported by strong capital buffers, favorable economic conditions, and supportive government policies, according to a new analysis.
In Kuwait, S&P Global forecasts improved asset quality, driven by a stronger economy and lower interest rates.
The banking sector is well-positioned to deal with potential geopolitical stress in the region, with stronger lending growth offsetting the negative impact of lower interest rates on profitability, it added.
S&P Global’s analysis echoes the views shared by Fitch Ratings in November 2024, which stated that the standalone credit profiles of Islamic banks in Kuwait are expected to remain stable in 2025, supported by favorable operating conditions.
“After an estimated 2.3 percent contraction in 2024, we expect Kuwait’s GDP growth will rebound to 3 percent in 2025 as OPEC+ oil production restrictions are gradually eased, and project implementation and reform momentum improves,” said Puneet Tuli, S&P Global Ratings credit analyst.
The report added that accelerated reforms following last year’s political changes could improve the pace of reform and growth prospects for the economy, “which in turn would support higher lending growth for the banking system.”
According to the report, the credit losses in the Kuwaiti banking sector are approaching cyclical lows.
S&P Global added that banks are likely to resort to write-offs to limit the rise in the nonperforming loan ratio, supported by strong provisioning buffers.
The analysis further noted that banks in Kuwait operate with robust capital buffers and typically retain 50 percent or more of their profits, which supports their capitalization.
The US-based agency also highlighted that Kuwaiti banks’ funding structures benefit from a solid core customer deposit base and a net external asset position.
“Deposits from government and public institutions have experienced some volatility in the past, as these entities seek to diversify their deposits among local and foreign banks. However, we believe that government support to systemically important banks will be forthcoming if needed,” said S&P Global.
It added: “Private sector deposits from corporations and households have been stable and dominate Kuwaiti banks’ funding base.”
Qatar’s outlook
In Qatar, S&P Global expects continued strong performance for banks in 2025, driven by strong capitalization and ample liquidity. The rise in liquefied natural gas production, along with its impact on the non-hydrocarbon economy, is expected to support credit growth in the next two to three years.
The report added that local funding sources will play an increasing role in supporting credit growth among Qatari banks, driven by slower public sector deleveraging.
S&P Global also noted that the Qatari government’s strong support for its banking sector is expected to mitigate the risk of external debt outflows in the event of escalating geopolitical risks.
“Geopolitical tensions in the Middle East are high but we currently do not expect a full-scale regional conflict, and we anticipate macroeconomic conditions in Qatar will remain broadly stable,” said S&P Global Ratings credit analyst Juili Pargaonkar.
Forecast for the UAE
In the UAE, S&P Global forecasts improved asset quality metrics and lower credit losses in 2025, driven by a robust domestic economy.
The agency expects banks in the emirates to maintain strong capital buffers, robust funding profiles, and continued government support in 2025, which will underpin their resilience.
The analysis also noted that banks in the UAE have experienced a significant increase in deposits over the past three years, which will help sustain their strong growth momentum in 2025.
“Deposit growth has improved in recent years as private corporations and retail depositors prioritized saving over spending, and higher interest rates provided better yields on deposits,” said S&P Global.
It added: “We expect strong deposit growth to continue through 2025, given the non-oil economy remains supportive, leading to stronger cash flow generation from corporations.”
Saudi domestic tourism driving travel sector growth, Almosafer CEO says
RIYADH: Saudi Arabia’s domestic tourism is fueling a significant expansion in the Kingdom’s travel sector, with domestic bookings now making up over 40 percent of Almosafer’s overall travel market, according to CEO Muzzammil Ahussain.
This growth is underscored by a 45 percent year-on-year increase in domestic flight bookings in 2024, alongside a 39 percent rise in room night bookings, according to Almosafer’s latest travel trend report, released during the third Saudi Tourism Forum held in Riyadh.
The surge is linked to the country’s expanding tourism offerings and enhanced connectivity through low-cost carriers, with family and group travel seeing a particular boost, rising over 70 percent, the report added.
“The country has invested heavily in creating offerings and events to support domestic tourism,” Ahussain told Arab News on the sidelines of the event. “We see continued strength and sustainability in this, so we remain focused on domestic tourism.”
Almosafer, a Saudi travel company and part of Seera Group, is benefiting from this trend as domestic tourism becomes more sustainable. “In the report, over 40 percent of all of our bookings are now domestic,” Ahussain explained. “That doesn’t mean international travel is slowing down; overall travel is growing.”
He said flight prices dropped 7 percent year on year, prompting higher spending in destinations. “People are spending more on hotels, staying longer, and spending on experiences and events,” Ahussain said. “So overall, total spend is increasing.”
Despite the growth, challenges remain. Almosafer CEO said that the limited hotel supply during peak times, such as Riyadh season, leads to higher rates and makes it difficult for travelers to find accommodations.
“We’ve already seen a number of initiatives to improve hotel capacity and rooms across the country,” Ahussain said, adding that such improvements would make domestic tourism more attractive at all levels, from luxury to economy.
The company’s ongoing efforts to enhance partnerships with regional authorities and airlines are also key to this growth, and Almosafer said it collaborates closely with the Saudi Tourism Authority and regional bodies like the Aseer Investment Authority.
“We’ve had a number of signings at the Saudi Tourism Forum with different authorities from around the country to promote and market key destinations,” he added.
Ahussain also highlighted the strong partnerships Almosafer has with low-cost carriers like flynas and flyadeal, as well as its new partnership with Riyadh Air, which is set to launch later in 2025.
Looking ahead, Ahussain is optimistic about the impact of global events, such as Expo 2030 and the 2034 FIFA World Cup, on the Kingdom’s tourism sector. “These projects and events, as we saw with Expo 2020 Dubai, help build a brand for a city or country, and that brand creates awareness,” Ahussain said.
He continued: “When people come, whether domestically or internationally, we are working to build a foundation that supports them throughout their travel — before, during, and after these events.”
Almosafer is also preparing for an initial public offering as part of its long-term strategy, with a target IPO date in 2025 or 2026.
“In November 2023, Seera Group announced that Almosafer would be targeted for an IPO in two to three years,” he said.
“We’re still on track with that plan and working toward it.”
With domestic tourism growing rapidly, Almosafer is enhancing its digital offerings through partnerships aimed at streamlining travel services.
During the forum, Almosafer signed a memorandum of understanding with the Saudi Tourism Authority to integrate digital platforms, enhancing access to travel services.
Ahussain explained that the partnership also aimed to improve Sara Al, the smart guide for Saudi tourism, by adding booking services for flights and accommodations.
Egypt’s inflation drops to 23.4% in December amid falling food prices
- Banking sector shows strong resilience with record capital adequacy
RIYADH: Egypt’s annual inflation rate slowed to 23.4 percent in December 2024, down from 25 percent in November, according to figures from the Central Agency for Public Mobilization and Statistics.
The consumer price index for the country stood at 239.7 points in December, reflecting a deceleration largely driven by a drop in food prices.
Key food categories saw notable price decreases, with vegetables falling by 14 percent, dairy products, cheese, and eggs decreasing by 0.7 percent, fish and seafood dropping by 0.6 percent, and meat and poultry experiencing a slight reduction of 0.1 percent.
However, other sectors showed price increases, putting upward pressure on the overall inflation rate.
For example, telephone and fax services surged by 11 percent, fruit prices rose by 7.5 percent, and medical products, devices, and equipment saw a 5.5 percent increase.
Other notable price hikes included postal services (up 3.6 percent), hotel services (up 3.2 percent), and recreational and cultural services (up 2.8 percent).
Meanwhile, costs for telephone and fax equipment grew by 2.6 percent, while actual housing rentals increased by 1.6 percent. Hospital services saw a rise of 1.4 percent, with furniture, carpets, and floor coverings up by 1.3 percent.
Smaller price increases were recorded in oils and fats, electricity, gas, and fuel materials (up 0.7 percent), transportation services (up 0.5 percent), and basic foodstuffs like grains and bread (up 0.3 percent). Sugar and sugary foods, as well as private transportation costs, also saw slight increases of 0.2 to 0.3 percent.
Banking sector
Egypt’s banking sector continues to demonstrate stability and resilience, playing a vital role in maintaining the country’s economic, financial, and monetary stability, according to the Central Bank of Egypt’s latest Financial Soundness Indicators.
The sector’s capital adequacy ratio reached 19.1 percent by the end of Q3 2024, comfortably surpassing the regulatory minimum of 12.5 percent. This marks a 0.5 percent improvement from the previous period, highlighting the sector’s growing financial health.
In terms of asset quality, nonperforming loans represented just 2.4 percent of total loans, with provisions coverage for these loans standing at a strong 87.4 percent.
Liquidity levels remained robust, with local currency liquidity at 32.1 percent and foreign currency liquidity at 77.7 percent, well above the regulatory requirements of 20 percent and 25 percent, respectively.
The banking sector’s loan-to-deposit ratio was recorded at 61.3 percent by the end of Q3 2024, reflecting conservative lending practices. Meanwhile, profit margins remained impressive, with a return on equity of 32.2 percent for the 2023 fiscal year.
Saudi Arabia’s flynas begins Jeddah-Djibouti flights; flyadeal launches 5 routes
RIYADH: Saudi low-cost airline flynas launched its first direct flight between Jeddah and Djibouti on Jan. 8, further expanding its network in Africa.
According to a press statement, the inaugural celebration was held at King Abdulaziz International Airport and was attended by Djibouti’s Ambassador to the Kingdom Dya-Eddine Said Bamakhrama and representatives from flynas and Jeddah Airport Co.
The inaugural flight was welcomed at the African country by Faisal Al-Qabbani, Saudi Arabia’s ambassador to Djibouti, and Hassan Humad Ibrahim, theDjibouti’s minister of infrastructure and transport.
The expansion is part of the airline’s “We Connect the World to the Kingdom” initiative and supports Saudi Arabia’s National Civil Aviation Strategy, which aims to expand connectivity to 250 international destinations and reach 330 million passengers.
The initiative is also expected to strengthen the Kingdom’s National Tourism Strategy, which aims to attract more than 150 million tourists by the end of this decade.
In the statement, flynas said it will operate three weekly flights from Jeddah to Djibouti.
Flyadeal launches five new routes
In a separate statement, Saudi low-cost airline flyadeal said that it launched five routes from its operating bases of Dammam, Riyadh, and Jeddah, marking the start of a major expansion drive that includes entry to Pakistan next month.
According to the statement, the routes include 14 domestic flights a week from Dammam to Najran, Tabuk, and Yanbu.
The airline said that it launched flights from Riyadh and Jeddah to the Jordanian capital, Amman, with a total of 10 flights a week.
The statement added that preparations are also underway for the start of twice-weekly flights to Pakistan’s financial capital, Karachi, from Riyadh and Jeddah, effective Feb. 2.
“Expanding our domestic and international networks has been the focus of our planning team in recent months to provide leisure and business travelers with more choice, options and more importantly, greater air connectivity,” said Steven Greenway, CEO of flyadeal.
He added: “As more aircraft join flyadeal’s fleet during 2025, we will continue to inject additional capacity into our three bases with new routes and extra frequencies, part of a system wide expansion plan over the next 12 months.”
Launched in 2017, flyadeal currently serves almost 30 year-round and seasonal destinations in Saudi Arabia and selected Middle East, European, and North African cities. The airline operates a fleet of 36 Airbus A320 narrowbody aircraft.
Oil Updates — crude prices steady as winter fuel demands balance US fuel inventories activity
SINGAPORE: Oil prices were little changed on Thursday, with investors weighing firm winter fuel demand expectations against large builds of fuel inventories in the US, the world’s biggest oil user, and macroeconomic concerns.
Brent crude futures fell 6 cents to $76.1 a barrel by 10:27 a.m. Saudi time. US West Texas Intermediate crude futures fell 5 cents to $73.27.
Both benchmarks fell more than 1 percent on Wednesday as a stronger dollar, and the bigger-than-expected rise in US fuel stockpiles weighed on prices.
“The oil market is still grappling with opposite forces — seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further,” said OANDA senior market analyst Kelvin Wong.
JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day year-on-year to 101.4 million bpd, primarily driven by “increased use of heating fuels in the Northern Hemisphere.”
“Global oil demand is expected to remain strong throughout January, fueled by colder-than-normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays,” the analysts said.
The market structure in the Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time the demand is increasing.
The premium of the first-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.
Nevertheless, official Energy Information Administration data showed rising gasoline and distillates stockpiles last week in the US.
The US dollar firmed further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump’s entrance into the White House on Jan. 20.
Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55-$77.95 into February as the market awaits more clarity on Trump’s administration policies and fresh fiscal stimulus measures out of China, said OANDA’s Wong.
