What does Brexit mean for the UK

The UK has voted to leave the EU and the implications of this decision are yet to become clear. The process of negotiating the exit, could take up to two years, if not more.
01-July-16
What does Brexit mean for the UK

On June 23, the UK voted to leave the EU and the implications of this decision are yet to become clear. Those in power must begin the process of negotiating the exit, which could take two years , if not more. But you can expect markets and companies to react much quicker to this decision. So what does the UK look like post-Brexit in the short term?

In the immediate aftermath, the pound fell against the euro and the dollar. While it’s seeing a resurgence and currently stands at $1.3342 and €1.2075, it’s still well down from its closing price on June 23.

Already, companies are considering moving offices and headquarters outside of the UK. Vodafone and Goldman Sachs are just two of those that have stated that they could move jobs outside UK in the aftermath of Brexit. Vodafone employs 13,000 people in the UK and has its group headquarters in London. However, it said that the free movement of movement, capital and goods, were "integral to the operation of any pan-European business."

The Institute of Directors revealed that its members believe that the exit from the EU will be bad for business. Head of media relations, Edwin Morgan, said that while there is a lot of nervousness, its members are “very resilient.”

Prime Minister David Cameron has attempted to reassure onlookers, saying that it’s clear that it won’t be plain sailing, but added that “we should take confidence from the fact that Britain is ready to confront what the future holds for us from a position of strength."

This in turn could hit the housing market. In the run up to the vote, there was a slowdown in the rate that house prices were growing as a result of the uncertainty over what was to come. Director at analyst Hometrack, Richard Donnell, has predicted a slowing price growth and a fall in housing turnover as people wait to see the fallout of the decision.

It is generally predicted that housing prices won’t see a decrease at the very least, as it is the supply that drives it. Grainne Gilmore, of estate agent Knight Frank told This is Money that uncertainty could dampen the supply of houses for sale, which would then keep prices stable.

She said, “In the short to medium term, the fundamental demand and supply dynamics are unlikely to change with a continued undersupply of homes across the country underpinning pricing in some of the most desirable areas.”

It’s likely that there will be some uncertainty for a while yet. Many companies are likely to wait and see what happens before making any sort of commitment. And this approach is likely to be taken by the general public too.

Head of residential research for Savills, Lucien Cook, sums it up best by saying that it’s impossible to predict what will happen until the wider economic effects of Brexit materialise. It looks like we have to wait and see.

Source: Bottletop Media 01/07/2016

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