The country has voted and to the surprise of ‘nearly’ everybody (including the bookies), we woke up to the news that Britain had chosen to leave the EU by a slim majority of 52% - 48%. Since then, the initial jitters have given way to back-stabbing and turmoil within the two main political parties, who both seem intent on implosion.
The lack of hard facts, pre & post referendum, has led to great uncertainty. Somewhat surprisingly, investment markets have reacted positively, with the FTSE 100 climbing nearly 10% from the immediate low.
Currency markets saw the most dramatic moves, with sterling falling over 11% against the dollar to a 31 year low ($1.32), 8% against the euro & an alarming 15% against the Japanese yen. Gold rose 5% as investors looked for a safe haven. Some savvy folk purchased their holiday euro’s early, just in case.
Mark Carney, Governor of the Bank of England, suggested Brexit would see interest rates rise. However, his latest statement alluded to a reduction this summer. Those in the know think there is little prospect of an interest rate rise in the UK for several years to come. Indeed, we could see rates drop to zero, but unlikely to go into negative territory. On the mortgage front, in anticipation I can report headline rates have already fallen, presenting some very attractive short-term deals and tempting longer-term fixed rates. Modest property price falls are forecast, with prime London market hit harder, as it relies more heavily on foreign investors. However, If borrowing remains cheap and accessible, there should be no reason for panic.
In the short-term we will continue to see high market volatility. However, the longer term view is basically neutral. An independent report commissioned by Woodford Investment Management LLP outlined that Britain's long term economic future would not be as negatively impacted as some others had lead us to believe.
Britain still trades 53% of UK imports and 44% of exports with the EU, and this will doubtless continue in the years ahead, although we should expect less favourable terms. The EU will fight hard to ensure the remaining EU countries ‘remain’, as ‘exit’ contagion would be catastrophic short-term. One way to demonstrate this will be to show a hard, uncompromising attitude towards the UK, an option I’m sure they will exercise. These issues will be addressed in the “Article 50” discussions that will take place over the coming months.
It is important not to panic, markets of all types will find their equilibrium. If you are in the process of buying/selling a property, or worried how Brexit might affect you, then you are welcome to call us for some advice and reassurance.
Call on 01608 651608 or contact us via our enquiry form and one of the team will be happy to discuss your concerns and requirements.