Over the last few weeks the real estate market in the UK has struggled to maintain any momentum ahead of the European Union referendum. Just a few days ago the result seemed to be in the balance but markets have taken pleasure from President Obama’s speech on the Brexit issue suggesting that the UK should remain within Europe.
While there are furious arguments ongoing at the moment as to why the president of the USA felt the need to get involved in UK politics it has certainly helped the remain campaign.
While nothing is definite as we approach polling day the pound has bounced against the dollar from recent lows. A suggestion that the chances of the UK leaving the European Union now stands at around 20% has put some investors at ease. We are unlikely to see any major recovery in the UK property market until the actual result is known but many investors will be breathing a sigh of relief.
However, do not underestimate the power of the Brexit campaign because there are some very powerful individuals and companies behind this movement. They will not sit back and let anybody pressurise the UK electorate and are likely to return with more damning indictments on the way the European Union is run.
Investor confidence has certainly been hit over the last few weeks with the Brexit campaign gathering great momentum just prior to the speech by Obama. Whether this is a short-term setback remains to be seen but the suggestion that the UK will be “at the back of the queue” in relation to trade agreements with the US, in the event of leaving the European Union, has certainly made many businesses think again.
The fact is that money talks and, even in a best case scenario, if the UK was to leave the European Union there would be a number of years of uncertainty. As with the recent Scottish referendum, there is no doubt that the UK could survive outside of the European Union but how would this impact the economy and how long would it take to create trade agreements with individual countries rather than the block European Union deals.
The benefits of Europe
While much has been made of the phenomenal amount of funding the UK and other partners pay into the European Union pot each and every year, there are benefits. London is one of the main players in the financial markets and has a property sector which is the envy of many. There were serious concerns that financial institutions that have made London what it is today would up sticks and move elsewhere in the event of a Brexit. This would impact a whole host of investment sectors, money markets and leave the door open for one of the U.K.’s EU challengers to jump in.
There will no doubt be more volatile swings in voting polls as we approach deadline day but many believe the words of President Obama will resonate for many weeks to come.