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Posted by: dezrezsysadmin - Thursday, November 3rd, 2016
Following the UK’s referendum, which resulted in a vote to leave the European Union, many people questioned whether the right outcome had been reached. After the decision had been announced, three million people called for a second vote, however to date no such referendum has been made.
In the aftermath of the referendum, there was an initial period of uncertainty. It was thought that the economy might have been immediately affected, but although the FTSE 100 fell sharply in the first few minutes of trading after the vote, this had almost completely recovered by the close of trading on the first day.
The housing market has also been affected. The ‘leave’ vote presented a brand new challenge to valuers. But the housing market does now appear to be calming. In June, the Royal Institution of Chartered Surveyors (RICS) predicted a sharp fall in sales, as their members were more concerned about the property market than they had been at any point since the 1990s. However, in September, the RICS stated that property sales have now stabilised with their members predicting that house prices will increase by 3.3% a year on average over the next five years.
The main difference in recent months, is the decline in the number of buy-to-let investors, but this may not be solely due to the Brexit vote. New stamp duty rules which were introduced in April, for those buying second homes, are likely to have had a big impact on this, as property investment comes with higher upfront expenses in the form of higher stamp duty rates.
In political terms, the next stage, before triggering Article 50 of the Treaty on European Union, is for the British Government to start the negotiation process with the rest of the 27 EU members, however many EU leaders are anxious to proceed and believe that the Brexit process should start immediately. Many argue that the new Prime Minister, Theresa May, as well as facing a tough challenge on deciding the UK’s future in the EU, should try and delay giving notice as much as possible, as once section 50 is triggered, a two year count down will begin.
During this two year period a withdrawal agreement must be completed or an extension on the negotiations can be granted by way of a unanimous vote of the EU members. If neither a decision nor an extension is made then the UK will return to a relationship with the EU governed by the WTO (the World Trade Organisation) which could result in a potential range of harmful new barriers, leaving the UK in a position of weakness.
Bearing this in mind, once Article 50 has been invoked, the UKs leverage with the EU in the negotiation process will be increasingly reduced.
Four of the EU countries have already expressed feelings that the UK should not receive any generous deals. Germany, France, Sweden and Finland believe that no favour should be given to the UK during the negotiations of a post Brexit trade deal.
The likelihood of Britain now getting the Brexit settlement desired by the government is getting increasingly distant. A survey has shown that the number of people in France and Germany willing to give Britain a free trade deal with the EU despite not having free movement of person has remained completely un-deviated.