Over the last few months there has been significant attention on the UK economy and the sterling exchange rate. Even though it has taken more than three years, there are signs that the UK economy is running out of steam in the short term. There are also signs that the UK currency could move markedly lower before it recovers. However, property investors should put all of this aside at the moment and focus on the one real nemesis for investment markets, political uncertainty!
Confidence breeds confidence
Confidence is a very important factor when it comes to any type of investment, whether buying a car, house or a plot of land. We know that confidence breeds confidence and momentum can very quickly change a dire situation into one which is more encouraging. However, at this moment in time the UK political scene is in chaos and that is being kind!
Political shenanigans
The bottom line is that Parliament has had more than three years to enact the will of the people from the EU referendum in 2016. Yes, Theresa May made mistakes but the fact is that Parliament did not help her in any way shape or form. Parliament seems to know what it doesn’t want but when it comes to the question of what it does want, there is no consensus whatsoever. So, where are we today?
On one hand we have the ridiculous scenario where the government of the day is calling for an election while the opposition are refusing to vote in favour. As a consequence of the Fixed Term Act there needs to be a two thirds majority in the Houses of Parliament to authorise a snap election. While the Conservative party are crying foul over Jeremy Corbyn’s reluctance to “help” the fact is that an election today would probably give Boris Johnson the best chance of being re-elected. So, while all parties cry foul they are all putting their party ahead of the nation.
International investors
It is inevitable that the political shenanigans will end at some point and a relative degree of calm will return. However, many international investors are keen to take advantage of the falling pound yet concerned about the political uncertainty. In reality, those who look at the longer picture are more likely to “pick up some bargains” as the UK reaches what must be the bottom of the trough of the ongoing political infighting?
A quick look at the international media shows that the UK is now a laughing stock overseas. Quite how potential trading partners of the future, assuming the UK does leave the EU, will view this infighting is a matter for debate. However, what we do know is that any trade negotiations will see the UK in a much weaker position than it would have been if it had left the EU at the time of the referendum.
Summary
Confidence breeds confidence in investment markets and this is in very short supply in the UK at the moment. Surely political parties can put aside their tribal warfare for the good of the country? Could they not at least attempt to enact the will of the people from the largest democratic vote in UK living history?