One of the problems with news articles is that it is easy to write something and then not be held responsible for it as the story develops. I will try to change that with this article.

I wrote an article recently on how the consequences of Brexit were overblown and how the idea of an EU 2.0 might make sense. The idea of EU 2.0 evolving the current framework against Germany’s wishes to match today’s economic realities could be triggered by Italy.

Recent reports show that France is also jumping into the fray but on Italy’s side, basically over the issue of bank regulation. With Britain on the way out and Italy and now France unhappy with Germany’s overly conservative stance, we may see the more constructive evolution of the EU to version 2.0 rather than the complete meltdown that the current path is heading for, a national equivalent of Lord of the Flies.

There was a conference a month ago on Dubai being the global centre for the Islamic economy. I wrote about some the challenges that Dubai would face, especially with respect to Saudi Arabia’s more natural role as the global centre for Islamic finance. Last week, Saudi Arabia held a similar conference with the World Bank’s support, although with more humility, focusing on the Saudi market in particular but looking at the wider market in general. Saudi is moving and given its size I am not sure that anyone can be fast enough to beat it.

I also recently spoke about the UAE lagging as a financial centre. Subsequently I had the honour of hearing Richard Teng, the chief executive of the Financial Services Regulatory Authority at the ADGM, talk about the goals of the Abu Dhabi Global Markets. I was heartened to hear a vision backed by concrete plans that has the ADGM focusing not only on providing a regulatory environment but a full financial services ecosystem including links into other markets that managed issues such as regulatory passporting and tax issues.

One of the important points that I see here is that with what is happening with the EU and the inward pivot of America, this creates tremendous opportunities for building bilateral relationships between smaller financial centres in the gaps that will appear.

In particular, I do not see the large financial centres such as London disappearing, but instead I see the growth of a network of specialised centres around the world – ADGM, Singapore, Kuala Lumpur, etc – linking with the Londons of this world to create a more effective system with specialised local knowledge concentrated in the right place. This system will have the added benefit of circumventing the systemic risk of institutions too big to fail.

In terms of the local economy, the main backbone is always the banks. The banks reported profit slowdowns of between 10 and 20 per cent after several quarters of being mostly flat if not growing. The market response seemed to be that this loss rate will remain the same for this year and next.

Why? The banks told us last year that they were fine, yet now they have slowed down. If you go from flat to minus 20 per cent in terms of growth in a single year, then I promise you that the next year is not guaranteed to be a slowdown of minus 20 per cent. It is much more likely to be a minus 60 per cent slowdown. You see, slowdowns accelerate – they don’t stay flat. It is the gravitational pull of a bad business model that is no longer supported.

Some areas of the UAE long-term plan that I proposed that I have not seen any further news on but would love for that to change include the freeing up of the markets by first abolishing and/or severely taxing monopolies and oligopolies, especially with respect to agency agreements. We can’t keep looking to government as the sole saviour of our economy, the businessmen made fabulously wealthy by having the ability to effectively levy a private tax using their monopolies need to do their part.

Closely related is the review and retraining of various regulators and agencies that seem not to understand that their fiduciary duty is to the consumers.

Finally, what are we going to do about exports? I made a clear case that we need to improve our net non-oil export deficit if we are ever going to be able to build not only an economy that is sustainable but to also have growth that is sustainable.

This article was originally published in The National.