Since the Brexit vote last June Gibraltar has performed remarkably well given the uncertainty. Indeed it looks as though some people now see Gibraltar as something of a “safe haven” with investors, executives and high net worth individuals apparently relocating to the country. Many believe that this trend is gaining traction because of the relatively small size of the country and its ability to move fairly quickly and adapt to challenging situations.
However, while Gibraltar property prices have surprised many in the way they have performed since last June there may well be trouble ahead.
Spain blackmails UK over Gibraltar
The UK government did not see this one coming! Spain has been backed by the European Union suggesting that a Brexit deal could not be forced upon Gibraltar without the agreement of Spain. In effect Spain is trying to place the sovereignty of Gibraltar on the dealing table as the UK looks at a single market trade agreement with the European Union. This is an issue which has been ongoing for many years now with Gibraltar experiencing illegal border blockades by Spanish authorities – with the European Union often turning a blind eye.
The UK government has been extremely quick and direct with its response, the sovereignty of Gibraltar is not up for discussion and will not be a part of Brexit negotiations. Gibraltar will, like the rest of the UK, exit the European Union once a deal has been agreed.
Republic of Ireland and Northern Ireland
There are similar problems emerging in Ireland with growing calls for the reunification of the country and a political situation which is, putting it politely, a mess. So far this has not really impacted Northern Ireland property prices but there is no doubt that the UK government is coming under intense pressure. There is talk of reverting back to home rule after the recent Irish elections where no party was able to gain a majority. This would be a last-ditch move by the UK government but one which is a real possibility.
Quite how this would impact Northern Ireland property prices in the short, medium and longer term remains to be seen but the UK government is coming under pressure from all angles.
Is this the end of the Union?
The UK property market has performed admirably for many years now with London seen as one of the prime property markets around the world. There is pressure from the SNP for an independent Scotland, Spain wants to use Gibraltar as a bargaining chip in Brexit talks and the Republic of Ireland is pushing strongly for reunification. The UK government will be stretched to the limit over the next two years as Brexit talks continue but so far no ground has been given. Indeed Theresa May has already said that a bad trade deal for the UK would be worse than no deal and she would rather walk away and revert back to WTO terms.
It would be wrong to suggest this is the end of the UK Union but it would also be wrong to suggest it is not coming under pressure from all sides. The UK government will need to be incredibly nimble to avoid a potential breakup of the Union and the impact this would have on UK property markets.