As the dust begins to settle on what has been difficult week for the UK government, many are now talking about a second referendum regarding UK membership of the European Union. Slowly the headlines are changing, focus is shifting, and it looks inevitable that a second referendum is on the cards. This prompts the novel question, rather than focusing on what the UK may lose as a consequence of Brexit, would the UK be better off inside the European Union?
We live in a world of trade organisations, where one country would find it difficult to compete on its own. While many point towards the UK Commonwealth as easy pickings for future trade organisations, it may not be quite so easy. These are countries which have connection with the UK but have gone about their own business for decades. Many also have direct arrangements with the European Union or are in the process of negotiating such deals. So, from an economic stability point of view it does look as though the UK would certainly benefit from continued membership.
It is fair to say that property prices are directly related to national and international economic stability. To say that the European Union has been “stable” of late would be stretching the truth but the power behind the European Union is far greater than that of the UK on its own. During the 2008 worldwide economic downturn we saw a concerted effort across the European Union which to a certain extent blunted the long-term impact of the downturn. That said, the European Union is only just now looking to end quantitative easing and many countries are still struggling with huge debt mountains.
However, the dreaded “freedom of movement” did draw many people towards the UK and prompted significant support for the property market going forward. While suggestions that immigration would simply fall off the edge of a cliff if Brexit is enacted are incorrect although there would certainly be a drop-off in European immigration. This would to a certain extent impact demand for property in the UK although new build numbers are more than 100,000 behind demand so there is still a strong backbone.
U.K.’s unique position
At this moment in time the UK is unique amongst leading European Union partners due to the fact the country never adopted the euro. The European Supreme Court this week ruled that the UK could cancel Brexit without the authority of the European Union and without any change in previous membership terms. How this would turn out in practice is debatable because the UK has made many enemies over the last two years.
That said, you could argue that the UK might have the best of both worlds, access to the cumulative power and influence of the European Union in terms of trade and worldwide reputation, while not being tied to the euro. Over the last two years we have also seen a significant fall in sterling exchange rates which should in theory make the UK property market extremely attractive to overseas investors. The fact this has yet to occur in significant strength is simply down to the confusion and concern surrounding Brexit. If Brexit were cancelled, would this open the floodgates?
There is no doubt that focus is beginning to switch away from a Brexit deal towards a second referendum. All major political parties are concerned about effectively “going against the will of the people” and unwilling to commit themselves to this particular change of direction. The chances are the UK would vote to remain in the European Union in the event of a second referendum simply because many now see it as the “easy option”. Whether the rumbles of discontent will continue into the future remains to be seen but it would be historic to see Parliament effectively dismissing the will of the people.
Continued membership of the European Union with all its difficulties and advantages would seem to be the sensible option in the short term but would Brexit release long-term trade and economic benefits to the UK?