EP takes major share of SR 39.2 bn deals in Q3

Updated 28 November 2012
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EP takes major share of SR 39.2 bn deals in Q3

The value of Saudi awarded contracts during the Q3, 2012 declined compared to the previous two quarters of 2012. The SR 39.2 billion in awarded contracts during Q3 reversed a familiar trend seen in previous years as the value of awarded contracts generally rise during the third and fourth quarters. The decrease was mainly attributed to the reduction of mega-projects being awarded. Conversely, there was a significant increase in the number of smaller contracts that focused on strengthening the Kingdom's infrastructure capabilities, the National Commercial Bank said in its report yesterday.
Within the roads sector alone, approximately SR 9 billion worth contracts were awarded whereas an anchor sector such as petrochemicals had SR 6.6 billion in awarded contracts. The healthcare sector also contributed significantly, accounting for SR5.2 billion, the report said.
The momentum of the value of awarded contracts appeared to have tapered off during the third quarter of 2012. Approximately SR 166 billion worth of contracts have been awarded through the first three quarters of 2012. In comparison, approximately SR 179 billion worth of contracts were awarded during the same time period in 2011. The 7 percent drop in 2012 was largely due to substantially lower value of awarded contracts during Q3, 2012 compared to Q3, 2011. The SR 39.2 billion in awarded contracts during Q3, 2012 paled in comparison to the SR 95.1 billion that was awarded during Q3, 2011, representing a 59 percent reduction.
The Construction Contracts Index (CCI) dropped in three consecutive months from 317.16 points in July down to 306.52 and 277.29 points during August and September, respectively. The noticeable drop in awarded mega-project contracts during the third quarter was the main factor in the reduction of the CCI as it was unable to sustain the growth that was exhibited during Q2, 2012. The CCI recorded a 12 percent drop at the end of the third quarter of 2012 compared to the same period in 2011, when it reached 316.44 points.
The majority of the value of awarded contracts took place in the Eastern Province, which accounted for 36 percent of the total awarded contracts. Several significant contracts in the petrochemical and oil & gas sectors boosted the Eastern Province's share. The Riyadh region's 15 percent share was largely the result of large contracts in the healthcare and roads sectors.


The Makkah region accounted for 12 percent of the total value of awarded contracts, with particular focus on the roads, power and education sectors. The awarded contracts in the roads sector comprised a significant share of the awarded contracts across all the provinces in the Kingdom, the NCB report said.
The value of awarded contracts in July totaled about SR15.2 billion, led by the petrochemical and roads sectors. Those two sectors accounted for 52 percent of the total awarded contracts for the month.
The value of awarded contracts dipped in August, reaching SR 12.8 billion. About SR 2.5 billion worth of contracts were awarded in the roads sector. The petrochemical sector has two contracts worth SR 1.9 billion.
The value of awarded contracts decreased to SR 11.2 billion in September. The roads sector tallied the highest value of awarded contracts with SR3.2 billion, while the healthcare sector came in second with three contracts worth SR2.5 billion.
The healthcare sector had a sizable contract that was awarded by the Ministry of Health to a joint-venture between Latifa Trading Contracting and Al-Habtoor Leighton in the amount of SR 1.2 billion.
Although the value of awarded contracts slipped slightly during the third quarter, those sectors that were targeted by the Saudi government as an integral focus for its capital expenditures thrived. The roads, education, healthcare and urban development sectors represented a significant portion of the awarded contracts, while anchor sectors deferred.


2 years on, Brexit vote has taken a toll on UK economy

Updated 23 June 2018
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2 years on, Brexit vote has taken a toll on UK economy

  • Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals
  • The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum

LONDON: While it’s still unclear what Brexit will look like when it happens next year, the decision to leave has already had a clear effect on the economy: households are poorer, companies are more cautious about investing, and the property market has cooled.
In the two years since the vote to leave the European Union, Britain has gone from being a pace-setter among the world’s big economies to falling into the slow lane. And the uncertainty over what relations with the EU will be when Brexit becomes official on March 29, 2019 could make matters worse.
Prime Minister Theresa May’s Conservative government remains split on what those relations should be. There are those who favor a “hard Brexit,” a clean break that takes Britain out of the bloc’s free trade union but also gives it more freedom to strike new trade deals around the world. Others want to keep Britain as close as possible to the EU, Britain’s biggest trading partner, which could mean it has to obey more of the bloc’s rules.
Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals.
“Thousands of skilled, well-paid jobs are now on the line because of the shambolic mess the government have created over the Brexit negotiations,” said Darren Jones, the lawmaker for the community where Airbus has its plant.
Before the referendum of June 2016, the British economy had been one of the fastest-growing industrial economies for years. Now, it’s barely growing. In the first quarter of this year it expanded by just 0.1 percent from the previous three-month period, its slowest rate in about five years.
For most people, the first and most noticeable impact was the drop in the pound. The currency slid 15 percent after the vote in June 2016 to a post-1985 low of $1.21. That boosted prices by making imports and energy more expensive for consumers and companies — the rate of inflation hit a high of 3 percent late last year.
The weaker pound helped some companies: exporters and multinationals that do not sell mainly in the UK But it hurt consumer spending and businesses that depend on their shopping. The retail industry was hit hard, with high-profile companies like Toys R Us and Maplin going bust, and supermarket chain Marks and Spencer planning deep cuts.
While prices rose, wages lagged, even though unemployment is at its lowest since 1975, at 4.2 percent.
“After Brexit, prices definitely went up,” said Nagesh Balusu, manager of the Salt Whisky Bar and Dining Room in London. “We struggled a bit earlier this year, so now we’ve increased the prices.” The bar is next to Hyde Park, a popular destination for foreign visitors. “The tourists have a good exchange rate. They know they can spend a little bit more than they usually do. But the locals are coming a little less. They are starting to think about how much they spend.”
The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum.
The real estate market, meanwhile, has cooled considerably, with the number of property sales in London near a historic low last year, according to estate agent Foxtons.
While some foreign prospective buyers were attracted by the drop in the pound, others seem to have been scared off by uncertainty over what Brexit might mean for their investment.
House prices are stagnating after years of gains, also due to expectations that the Bank of England will keep gradually increasing interest rates.
Nic Budden, Foxton’s CEO, predicts that the real estate market will remain challenging this year, while Samuel Tombs, analyst at Pantheon Economics, predicts that house prices will flatline for the next 6 months.
Against the backdrop of uncertainty, businesses have become more reluctant to invest in big projects. Because Brexit could lead to tariffs on EU imports of British goods, companies are hesitant to spend big on British plants and office space before they know what the new rules will be.
Benoit Rochet, the deputy chief of the port of Calais, the French town across the Channel from Britain, complained to a parliamentary committee this month that “we know there is Brexit but we don’t know exactly what Brexit means.”
“You are not alone,” responded the Conservative chair of the committee, Nicky Morgan.