It’s two weeks since the Brexit Referendum and it’s fair to say that its consequences are already being felt.
At a broad economic level, sterling has hit a 31 year low and economists have revised down the economic outlook for the UK and the Eurozone. The UK has been downgraded by Standards & Poor to AA and share prices in the UK dropped sharply and across Europe significantly. The current outlook for UK financial stability is challenging as outlined in the latest Financial Stability Report of the Bank of England.
And on a business level, property funds have started halting trading in the UK and easyJet and Foxtons are among the first to announce profit warnings. I hear that Japanese banks in the UK will follow large US investment banks should they decide to re-locate and I find it hard to believe an organisation like the EBA will stay in London. Brexit’s also hitting universities as researchers are fearing they’ll be side-lined, as EU funding is often long term and frequently granted to teams across territories.
Putting broad economic issues to one side, the effects are being felt at a more micro level with clients cancelling meetings at short notice due to BREXIT commitments and spending plans being reviewed, frozen or cut. Estate agents are seeing offers withdrawn and approved mortgages are not being utilised. I’m hearing about resignations from people with non UK-passports and people who were ready to move to the UK are now preferring to see what will happen. Expats paid in Sterling need to put in more money to settle their obligations, in the US, the Eurozone and pretty much everywhere else.
It’s fair to say that some are seeing an upside. Frankfurt, Dublin, Amsterdam and Paris hope to get a piece of the collateral damage of Brexit to London. France is rolling out the red carpet for bankers whilst Berlin is aiming to replace London as the leading Fintech centre in Europe. In Frankfurt, commercial and residential property prices seem to be reacting positively to the BREXIT news.
It’s early days for Brexit and I don’t know how its immediate effects are going to change in the weeks and months ahead. The cold, post-Brexit winds may abate but, at the moment, things feel really chilly.