When confronted with the problem of what Dubai will do as its oil revenues run out, its former Ruler Sheikh Rashid bin Saeed al-Maktoum gave one of his most famous statements: “My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.”

Sheikh Rashid spotted the problem early on, and his foreboding comment is one that Dubai has worked hard to disprove. Over the past two decades Sheikh Rashid’s successors have managed to develop trade, transport, tourism, retail and financial services to such a degree that oil’s contribution to Dubai’s GDP in 2015 is negligible.

Being insulated from the fluctuations of the oil market is a blessing in 2015. After oil prices plunged by more than 50 per cent during the second half of 2014, Brent crude prices have remained in the $45-$65 range this year, forcing most governments in the region to run budget deficits this year.

The impact of the shift from surplus to deficit is already being felt. For the oil exporters, governments are issuing bonds to cover general spending on salaries and subsidies, and for future infrastructure schemes they have started to court the private sector to bridge the funding gap, and for existing projects there are moves to rationalise designs are limit expenditure.

On their own, each of these responses to the new normal of lower oil prices is not a major change to the economy, but taken together the impact will be far reaching.

Ultimately it will sound the death knell for the largesse that has dominated the GCC over the past decade, and in its place usher in a period of more considered public spending.

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