UK: UK economy
Brexit 12 months on – did the warnings become a reality?
Exactly one year ago today the nation went to the polls to cast their vote on the following question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”
The lead up to and following the vote various experts issued warnings about the potential fall-out from Brexit:
“Leaving the EU would be a one-way door to a much more uncertain world”, George Osborne.
“Our economy would be smaller if the UK left the single market leading to difficult choices,” David Cameron.
“A vote to leave the EU would have pretty bad to very, very bad consequences and could lead to a recession,” Christine Lagarde, head of the IMF”
“Out is out if British voters decide to leave the European Union,” European Commission President Jean-Claude Juncker.
On the first anniversary of the EU referendum we have taken a look at 12 key economic and real estate warnings, assessing how close, if at all, they were to becoming a reality.
DIY UK recession: Many analysts predicted that Britain’s decision to leave the EU will leave the country on the brink of a recession. George Osborne (at the time UK Chancellor) issued a pre-referendum warning of a year-long “DIY recession”.
Reality: Despite the shock Brexit vote, activity data for the UK has been better than expected. Two months after the vote, the initial shock to business and consumer confidence almost disappeared. The UK economy grew by 1.8% last year – similar to what Germany posted and ahead of France which grew by 1.1%.
Banking exodus: Brexit-related headlines have centred on London’s financial services industry and Banks moving operations to mainland Europe. Depending on who you talk to, 232,000 UK jobs will be heading to Europe after the UK withdraws from the European Union, or it could be as few as 4,000.
Reality: As further details of the banks’ contingency plans emerge it is clear the initial people moves they are planning are said to be more in the hundreds than the thousands.
Investors look to ‘safer’ markets to deploy cash: Perhaps one of the most repeated slogans of the leave campaign was to ‘take back control’. Did this deter the flow of capital from overseas targeting UK Real Estate and direct it to other markets?
Reality: The depreciation of sterling acted as further incentive for overseas investors to continue to deploy capital in UK Real Estate, in particular Central London. Overseas investors have deployed £9.2bn in the quarters following the EU referendum and in Q1 2017 accounted for 79% of total investment volumes in the capital.
To read the remaining warnings versus reality, download the full report: