It’s probably an understatement to say that a certain amount of Brexit-fatigue has crept in over the past few weeks and months, with many people not bothering to keep up with it all any longer. However, we really are in for a crucial time over the next week or two, so it’s worth running very quickly over the possibilities, and what they mean for the pound, for property buyers and anyone else with a major transaction coming up overseas.
There are essentially five things that could happen over the next month. Firstly, the UK and EU might come up with a deal before next Tuesday, to be ready for ratification at the European Council meeting on Thursday. If that happens, and the Prime Minister can get it past the House of Commons, we will get a transition period and buyers abroad will have a year or two to establish residency abroad. Despite the bad-tempered rhetoric over the past few days, this is still possible.
The second possibility is that we have deadlock, the PM fighting the requirement under the Benn Act to ask for a three-month extension (at least) in court. The EU27 may offer one anyway, and it might potentially be passed by the House of Commons. No deal is the third possibility, either “accidentally” at 11pm on October 31st, or by a successful challenge to the Benn Act. If that happens there will be no transition period and the UK and its citizens becomes a “third country” to the EU, with similar rights to Americans, Australians etc. Judging by a recent trip to Italy, Americans seem to have no problem traveling there!
If we have an extension it is likely to be followed by one of two votes; either a general election or a referendum. The general election would be the Prime Minister’s choice, and it is quite possible that the Conservatives would win an overall majority, perhaps even with no deal as its main policy. On the other hand, an anti-Brexit party like the SNP or Lib Dems could hold the balance of power, along with Labour. In that circumstance a referendum is more likely. However, then you start getting into the Labour Party’s internal wrangling…
You’ll notice I haven’t mentioned the currency at all. Recent experience suggests that the pound could go either way. It is still at a level against the Euro and US dollar that we’ve become used to over the past three years.
Therefore, for anyone buying abroad in the next year – anywhere in the world – we would suggest you lock in today’s rate via a Forward Contract. Just call us on 020 7898 0541 to run through your options.
