Andrew Cahn, Chief Executive Officer (CEO) of UK Trade and Investment (UKTI), has explored ways to deepen and further promote economic and commercial relations between the United Kingdom and Cyprus, during his short visit to the island.
During his stay in Cyprus last week, Cahn launched the Cyprus – UK Business Association, met government officials and business leaders and attended a workshop in Limassol, on the south coast, on exploring ways to increase business links between Cyprus and the UK in the financial and legal services sector.
Cahn, who is the head of the organisation for promoting British exports abroad and attracting foreign direct investments to Britain, said in an interview with the Cyprus News Agency (CNA) that giving further impetus to commercial links between Cyprus and the UK was one of his objectives in visiting Cyprus.
UKTI’s key priorities are currently the promotion of British exports in financial services, the creative industries, life sciences, ICT, energy, advance engineering and sustainable technologies.
Cahn in his interview with CNA also referred to the global financial crisis pointing out that “it is a very turbulent period in financial history,” stating though that in such conditions there is a flight to safety and quality and the UK economy reflects safety and quality, therefore he expressed the belief it will prove to be a very effective partner to Cyprus.
Asked about the objectives of his visit, Cahn said, these are several and different.
“First, we have a big event to launch the Cyprus – UK Business Association,” he said pointing out that if the aim is prosperity and deepening of commercial links it is important to have an organisation of business people to promotes this.
“The links between Cyprus and the UK are of course close. But I think the Cyprus – UK Business Association will do better,” Cahn stressed.
Second, “I wanted to understand the Cyprus business climate,” he said, adding that UKTI is there to promote British exports and to encourage investments in the United Kingdom and Cyprus is important for both of those goals.
Elaborating on existing commercial links between Cyprus and Britain, UKTI CEO said that Britain is the largest recipient of Cypriot exports. “Our tourists make up more than half of all tourists coming here, a major contribution to your economy. And I wanted to find out by myself how we could deepen those commercial relations.”
Furthermore, Cahn pointed out that relations between the two countries are close because of history and because of the large number of Cypriots living in Britain and the significant number of Britons living or having their second home in Cyprus.
Beyond traditional links, Cahn expressed the opinion that these relations can expand in other fields, such as in water management, waste water management and desalination.
“I believe that Britain has much expertise to contribute to Cyprus’ development,” for example in areas such as waste water management and desalination, retail trade and in the field of financial services even in turbulent times, he said, adding there is also a lot to be done in the area of developing tourism and real estate.
Financial crisis
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Asked whether the global financial crisis has affected T&I and what might be the short or long-term fallout of this crisis on trade and investments, Cahn underlined “We are living through a very turbulent period of financial history and it is too early to say what the long term impact will be.”
The CEO of UKTI made special reference to the British PM’s plan to tackle the crisis, saying, “British Government led by Gordon Brown has created the framework for how governments can get through this crisis and move to a more stable situation. The plan he announced has now been in outline adopted by European Union leaders and I think the US is also moving down that road to. What this means is that we now have a blueprint of how to go forward, how to create a degree of stability in the financial markets, how to recapitalise the banks, so that confidence is restored in the relationships between the banks. Then we can move on from there to deal with what is clearly a downturn in the global economy.”
Asked about how these developments can affect the UK – Cyprus business relations, Cahn stressed: “There is no point in hiding from the fact that the economic conditions are tough, and the financial markets are turbulent. But in those conditions what happens is that there is a flight to safety and quality and the UK economy and the city of London reflect safety and quality.”
Therefore, he said, the UK will prove to be a very effective partner to Cyprus, pointing out that in such conditions long-term relationships and relationships of trust are of the outmost importance.
“In difficult times, you want to trade with people you have confidence in and you have a long-term relationship with, and our two countries have a long-term commercial relationship.”
It is also a time “when high quality commercial relationships will come to the fore and that is what we have between our countries.”
Replying to a question on the possible impact of the crisis in real estate sector in Britain and Cyprus, Cahn said the financial crisis has started with the decline in real estate asset value. “That was the trigger point and it is quite clear that housing bubbles in a number of countries have been pricked and that house prices decline, in the US, in Britain, in some continental countries. That is a fact in any healthy market, prices go up and they go down. Housing markets depend on supply and demand. My own belief is that the UK housing market will decline in value but it will not decline too far because the demand continues. In the long run it will continue to be demanded from Britain for second homes and some first homes here in Cyprus. What the short implications are is difficult to say.”
Invited to comment on the reaction that followed the UK decision to act in the rescue of the banks and comments that this was tantamount to nationalisation of the banking system, Cahn rejected suggestions that this was the case.
“I know that there has been a lot of comment that what Gordon Brown proposed was nationalisation of the banks. I do not think this is a sensible label to put upon it,” he said adding “The British government, and for that matter the US government, has no intention of owning banks or even a share in a bank for any longer than is needed. Once the banks’ capital position has been stabilised, confidence has returned to the banking sector the intention is to sell the stakes, let us hope with a profit for the taxpayer.”
Stock exchange relations
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Commenting on the prospects of cooperation between the Cyprus Stock Exchange (CSE) and the London stock market, having in mind that a number of Cypriot companies have sought listing on Alternative Investment Market (AIM), Cahn said the AIM welcomes listings of Cyprus companies.
“There have been a number of listings and it will be good to see more. Clearly, the present market circumstances are quite challenging for raising capital on a stock market but that will be a temporary phenomenon and when conditions return to normal, I hope there will be significantly more listings. It is fair to say that the AIM is the market of choice for listings by Cypriot companies,” he said.
Finally, he stressed the London Stock Exchange and particularly the Alternative Investment Market (AIM) will continue to be a source of capital for local companies.”
