Ever since the Brexit vote we have received concerned enquiries from clients as to the impact of Brexit on their personal situation. And of course the answer is, nobody knows yet.
There are already tangible economic consequences within and outside the borders of the UK: the drop in the value of sterling, economists predicting slowed growth, and EU companies such as Opel cutting staff hours in anticipation of reduced sales in the UK. All these are based on uncertainty and judgment rather than political reality.
Personally, we remain calm and optimistic. We do not expect an exodus of our Spanish-resident clients, whether self-imposed anticipating Brexit or imposed by the Spanish authorities when (I still prefer to say if and when- see my comments below) Britain finally does leave the EU. We also do not anticipate any significant reduction of migration of British individuals and businesses to Spain after that point.
Here are my opening thoughts which focus on whether Brexit will actually happen. In my next blog I will examine the doomsday scenario of Brexit becoming a reality and what it could mean for all of us.
Will Brexit actually happen ?
So far, all we have is the result of a referendum which in itself is not legally binding under UK or EU law. Leaving the EU is an essentially political decision, with Article 50 to be invoked by the Prime Minister. And there is currently intense legal debate as to whether this will first need to be approved by an Act of Parliament: think about what that would mean, with a majority of MP´s in favour of remaining in the EU !
PM Theresa May has committed to Brexit but has not given a date for Article 50, and we are getting messages from the politicians, direct and indirect, that this will definitely not happen this year.
I can´t understand why they would want to delay the process. As we all know, uncertainty can have far worse consequences than actual reality, expecially in the markets.
Following the massive support in an online petition supporting a second referendum with a higher required winning threshold (60% based on a 75% turnout), MP´s are legally required to consider this, and the debate has been scheduled for 5th September. The majority of UK politicians are in favour of remaining in the EU. So it remains a possibility that the government may be forced to run a second referendum. The results of the first referendum suggest that 60% would not be achieved, and I there will be many who woke up of the morning of 24th June with a political hangover thinking “what on earth did I do last night ?”. With the gloomy economic forecasts that followed the result, I think that many already regret their choice and would vote differently in a second referendum.
All the time it is important to remember that Brexit is a political decision. Any referendums are not legally binding because the final move, and the invocation of Article 50, must be carried out by the government in power. Governments can fall, or lose elections. If Article 50 is invoked in 2017, and negotiations for Britain´s exit last significantly longer than the minimum prescribed two years, as economic uncertainty and political unrest grows as the negotiations are not going satisfactorily from a UK point of view, we could have the situation where Britain is still in the European Union at the next General Elections, which must take place by mid 2020. Then with a new government and perhaps a new political party in power (Labour is strongly pro-Europe), the cancellation of Brexit would be a very real possibility.