British businesses are seeking a safe haven in the UAE as the uncertainty over Brexit continues, according to Scott Cairns, managing director of Creation Business Consultants.
Britain formally left the European Union in January but remains bound by most of its rules until the end of the year under the terms of its Brexit divorce. Despite continued negotiations, the future remains unclear, with a no-deal agreement very-much on the cards.
And Cairns revealed companies are already eyeing up alternative countries from which to operate, with the UAE proving popular.
He told Arabian Business: “We’re certainly seeing a lot of activity from Brexit. That’s not re-domiciling, that’s just people setting up companies here because they’re worried about how the UK is going to fare after their public bailing out of every company over Covid and how they’re going to fare in the future with Brexit. So we’ve had a lot of people setting up companies to get away from that too.
“We’ve had probably more than a dozen in the last couple of months, specifically mentioning that reason. They’re doing well in that region, but they can see massive tax hikes on the horizon and they’re saying they can run their business from just about anywhere in the world, so they may as well have better weather and zero tax.”
While around 1.5 million British nationals visited the UAE in 2019, according to government data.
Cairns said: “Brits are obviously quite popular here insofar as the holiday-makers and the like, but once they get a taste of the local life, all the guys who are looking at relocating, we’ve had one or two that have literally never been here before, but still their mates have been here and they’ve said they’ll do it, which I think is a pretty bold move.
“But the other guys are ones who would be holidaying here three or four times a year and know what it’s like, they know what they’re getting and they’re happy to take the chance.”
The current 11-month transition phase was intended to allow the EU and UK time to agree their future trading relationship after nearly five decades of economic and political integration.
However, nine scheduled rounds of negotiations ended last Friday with both parties saying significant obstacles to an agreement remain, prompting UK Prime Minister Boris Johnson and EU President Ursula von der Leyen's intervention.
The two leaders, who last held Brexit talks in June, asked their negotiators to "work intensively in order to try to bridge those gaps".
But fears are growing of travel and trade chaos if progress is not made and a so-called no-deal Brexit ensues.
“People are actually uprooting their lives, moving over here and just getting on with it,” said Cairns.
Overall, Cairns revealed that Creation Business Consultants has fielded questions from 45 re-domiciliations in the last four months, as companies across the world look to re-home in the UAE, compared to just three enquiries over the same period in 2019.
He said interest has been particularly strong from holding companies based in the British Virgin Islands and trading companies in Hong Kong.
“From the Hong Kong perspective, the companies we’ve been dealing with are all western owned and they are all increasingly concerned about the political environment and the stability of the region,” he said.
“The guys with companies there are getting increasingly concerned that maybe the regulatory system won’t favour the independent operation in the future, so they’re looking for another jurisdiction where they can be a little bit more comfortable, where they’ll have longevity and security in the future,” he added.
Dubai’s economy may contract “sharply” by around 11 percent in 2020, as its large exposure to tourism and aviation place it in a position more vulnerable to the effects of Covid-19, S&P Global Ratings said late September. It’s expected to take until 2023 for gross domestic product to recover to 2019 levels.
However, Cairns remains confident in the city, the country and future prospects.
He said: “It seems to be that there’s still that bullish attitude from business owners, especially in the SME sector where they’re looking to take advantage of a time where some people are sitting and putting some projects on hold and a lot of them seem to think, if you put things on hold, you’re not going to hold the same position, you’re actually going to fall behind everyone else who’s advancing with new projects.”
Negotiations between the EU and Britain on their post-Brexit relationship resume in London on Wednesday in the hope of reaching an agreement by the end of October, European sources said.
The talks are due to last until Friday when a meeting is scheduled between chief negotiators Michel Barnier and David Frost.