UK jobless up, inflation soaring, expats will regret going home

Expatriates from the UK who complain about high inflation in the UAE and talk of returning to the British Isles should think again. Inflation is just as bad in Britain and job prospects look awful as employers are just beginning huge cut backs in staff numbers, and white collar workers are very much in the firing line.

One survey of the average UK supermarket basket last week put annual inflation at 22 per cent. It is not only in the Emirates that food prices are rocketing higher. This is a global phenomenon linked mainly to energy prices and loose monetary policy in the US, and whatever the cause the impact on your standard of living is only too clear: you can afford to buy less than before.

However what’s more worrying in Britain are the job cuts now emerging and those around the corner. House builders and building material suppliers are leading the way, with plumbing giant Wolseley announcing 5,000 redundancies this week. But talking to my friends this is just the tip of the iceberg, and this is set to be very much a white collar recession.

Unemployment is expected to rise by a million or more as the UK falls into a recession driven by the global financial crisis, local housing market slump and government indebtedness. I spoke to a partner in a law firm which is planning to make 10 per cent of its 800 staff redundant is a couple of weeks time. Another friend was counselling his boss of ten years who had just been laid off at Reuters.

What is more worrying is that this is just the start of a contraction in the UK labour force, which has become bloated by more than a decade of expanding GDP. In such happier circumstances firms are too busy to spend much time on the introspective business of examining the quality of their staff. Today many companies are sat idle and have little more urgent task than deciding on who is to go.

For UK expats who have tired of a life in the sun this is bad news indeed. It is going to become very hard to get a new position in the UK as all these redundancies will flood the job market with qualified staff. You might also ask yourself whether this kind of depressed marketplace is really the right move for the next step on the career ladder. Is not the booming UAE a more attractive proposition?

It is only too easy to accentuate the negative after a few years away from home, and to forget why you left in the first instance. But re-entering a collapsing economy is not likely to do your career prospects any favours, unless you possess immense talent, and even then you might find it better rewarded in an expanding economy.

That the prospects of the UAE are excellent for at least the next five years ought to be obvious to anybody, and they certainly look very bright when viewed from a depressed economy like the UK. For even if oil prices come down a little then oil and gas revenues are likely to continue at elevated levels for years as the supply and demand balance in the world is seriously out of kilter.

Moreover, this money is being spent on a massive expansion of domestic infrastructure in the GCC whose $1.3 trillion in planned project spending actually exceeds China these days. Countries like the Emirates and Qatar are at the epicentre of this economic boom with jobs for expatriates in all sectors, from sophisticated financial services through to building and construction and oil services and even journalists.

This correspondent was made redundant in the mid-90s at the tail-end of the last UK recession and found a job in then booming Dubai to launch the first regional business magazine, Gulf Business as editor. It was a breathe of fresh air after suffering the worst post-war recession in the UK which was as depressing as it was limiting to career prospects.

That is what awaits expats returning from the UAE to Britain this year, and I expect that many who leave will quickly decide to come back. Even the housing recession is starting to put upward pressure on UK rental costs, as those who would have bought are deciding to rent and pushing up rental prices. So the idea that UAE rents are making life here uneconomic is also probably untrue, or at least rents are moving up in the same way in Britain.

Why not save yourself the effort and stay in the thriving UAE or Qatar until times are better in the UK? That could be several years if my experience of the early 1990s is anything to go by, and if you wanted to buy a house in the UK then it might also be worth waiting at least until prices have bottomed. For the moment home sweet home just is not that sweet anymore.