Sunday, December 11, 2016

UK poised for slow growth; Saudi Arabia looks to post-oil era; Happiness hinges on health and friends, not money

1 UK poised for slow growth (BBC) "The business as usual" approach taken by many firms following the Brexit vote has helped boost UK growth this year, but it won't last, the British Chambers of Commerce has warned. The business body expects 2.1% GDP growth this year, up from the 1.8% it forecast just three months ago.

But uncertainty over the UK's EU relationship and higher inflation will "dampen medium term growth," it said. It expects UK GDP to grow 1.1% next year, and 1.4% in 2018. A separate report on business conditions from accountancy and services group BDO found business output rose for the first time in November after 17 months of decline.

BCC director general Dr Adam Marshall said firms' "business as usual" approach since the EU referendum had helped keep conditions buoyant so far, but it expected the fall in the value of sterling to start to have a greater impact. The pound has fallen around 15% against the dollar and 10% against the euro since the EU referendum.

The BCC expects this to push up inflation, and hit consumer spending as wage growth is eroded by higher prices, as well as business investment.

2 Saudi Arabia looks to post-oil era (Gulf News) Saudi Arabia’s Vision 2030 unveiled in April plans to get rid of a business culture tranquillised by oil wealth and stifled by bureaucracy and replace it with a competitive economy driven by private enterprise. The shock therapy to embrace a Saudi 
version of western-style capitalism risks coming too late, but on paper it’s tantamount to a revolution.

The modernisation is Saudi Arabia’s boldest since the creation of the kingdom in 1932. When Deputy Crown Prince Mohammad Bin Salman, King Salman Bin Abdul Aziz’s powerful 31-year-old son, announced his plan to address the plunge in oil revenue, he acknowledged it was “ambitious,” though he said it was achievable and “there are no excuses for us to stand still or move backwards.”

Based on a week of interviews with businesspeople and consultants in Jeddah, one message was clear: things will be done differently from now on. Companies can no longer depend on government tenders for the bulk of their business. Out are reliance on foreign workers, cushy jobs and state largesse; in are metrics and making the numbers add up.

Critics of the blueprint to transform the world’s largest oil exporter say it still lacks specifics on how to achieve the targets. For example, it includes bringing more women into the workforce, without addressing the constraints on them such as being banned from driving. And while the government is reducing spending to deflate a ballooning budget deficit, non-oil industries, the main engine of job creation, slipped briefly into recession.

The Saudi goal is to increase the contribution of small and medium-sized businesses to 35 per cent of the economy from 20 per cent and help bring the jobless rate down to 7 per cent from almost 12 per cent.

It will require weaning companies off more efficient foreign labour and training up locals who ordinarily would seek jobs with the state. The government has already raised the cost of visas and residency permits for non-Saudis, who make up about a third of the 32 million population, making it more expensive to hire them.

Some business owners are holding workshops for staff, others are seeking advice from outside consultants. Many are focusing on revamping or starting HR departments. KPIs — key performance indicators — have become the new buzzword.

3 Happiness hinges on health and friends, not money (Phillip Inman in The Guardian) Most human misery can be blamed on failed relationships and physical and mental illness rather than money problems and poverty, according to a landmark study by a team of researchers at the London School of Economics (LSE).

Eliminating depression and anxiety would reduce misery by 20% compared to just 5% if policymakers focused on eliminating poverty, the report found. Lord Richard Layard, who led the report, said on average people have become no happier in the last 50 years, despite average incomes more than doubling.

The economist said the study, called Origins of Happiness, showed that measuring people’s satisfaction with their lives should be a priority for every government. The researchers analysed data from four countries including the US and Germany.

Extra spending on reducing mental illness would be self-financing, the researchers added, because it would be recovered by the government through higher employment and increased tax receipts together with a reduction in NHS costs from fewer GP visits and hospital A&E admissions. “Tackling depression and anxiety would be four times as effective as tackling poverty. It would also pay for itself,” he said.

The report supports the arguments put forward by Layard over several decades that social and psychological factors are more important to the wellbeing of individuals than income levels. “Having a partner is as good for you as being made unemployed is bad for you,” he said.

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