After the traumatic four-month lead-in to the Referendum, with the government’s apparatus assaulting the populace with everything they had to ‘frighten the living daylights’ out of them and resulting in an unexpected Brexit result, is it any wonder that everyone is reeling from these ‘shock and awe’ tactics? It is of limited solace that Osborne has been sacked now, for this.
Had the run-up period before the Referendum been, say, 28 days (as with General Elections) a lot of this anxiety and nervousness could have been avoided but, nevertheless, we are where we are.
Even before the Brexit result has settled down, we have Jean-Claude Juncker denigrating Britain and warning us that we will ‘pay a hefty price’ for the temerity of using our democratic right to protect our own sovereignty which, hitherto, we have fought wars to preserve.
Germany is in an invidious position – whilst they don’t want to reward us for leaving the ‘EU family’, they also don’t want to harm their economy by doing anything to affect their second largest export market for their goods, i.e. the UK. Even the German automobile trade unions have warned their government and the car manufacturers that they do not want tariffs on cars sold to us.
Interestingly enough, whilst M. Hollande of France enjoys an unprecedented low popularity in the Polls, both he and his Prime Minister, M. Valls, are now busy ‘courting and seducing’ wealthy entrepreneurs from the UK to their shores, by giving tax breaks. This is in sharp contrast to his inauguration year where they created a stampede of wealth creators who left France as a direct result of his tax proposals at the time and who, subsequently, set up home in Kensington (amongst other parts of London) in order to send their kids to the Lycée.
One lives in hope that Prime Minister May and her new Chancellor, Philip Hammond, can put aside their liberal political views on a ‘One Nation Party’ and reverse the exodus of our Non-Dom wealth creators, who are leaving the UK in droves and may be looking for another, more welcoming fiscal environment to live, invest their money and create jobs for the host country. We can thank Osborne for this legacy.
The Budget Deficit was proving much more stubborn than Osborne anticipated or admitted, even before the Referendum result was known. This was undoubtedly exacerbated by the constant fiscal attacks by him, on the Residential Property Market over the last 18 months with those ludicrous Stamp Duty hikes and buy-to-let changes and now Mr. Hammond will have his work cut-out to meet the fiscal budgetary objectives, which, undoubtedly, will be loosened as we head towards 2020.
This caused such a massive slow-down before the Referendum, and exacerbated by the result, such that house builders are in a parlous state with their shares plummeting, whilst they hold a glut of unsold properties on their developed sites, particularly in London.
How are they ever likely to develop more land under these conditions, in order for the future government to meet its quota of newly built properties, which its Manifesto has long promised?
Probably the only constructive initiative that Osborne has mooted, before he was sacked, was for the UK to have a 15% Corporation Tax which, if implemented, will make us one of the lowest Corporate Tax charging environments in the world. This is in sharp contrast to the draconian 35% rate on the Continent of Europe and in the USA. I wonder if the12% corporate tax rate in Ireland is anything to do with it being the fastest growing economy in Europe which, incidentally, the Eurocrats hugely resent?
If this materialised, the UK would become ‘Treasure Island’ to multi-national companies seduced, at the same time, by the cheaper currency. A win-win I would say. Mr. Hammond are you listening?
There has been a noticeable increase in the numbers of international buyers of UK property, who will not only benefit from lower prices of 30% (from the peak in 2014), but with a 15% windfall at the same time from the lower Pound. This is a ‘double whammy’ for them.
It is interesting to note that the Governor of the Bank of England has kept interest rates on hold, which is a clear sign that they don’t have enough data to justify dropping it, but also that the panic following the Referendum result has subsided and that the Pound recovered its composure from the gyrations of the past few weeks.
Contrary to popular belief, I think there will be a small amount of inflation due to the lower Pound, but this will be offset by mooted consumer demand and steady oil prices – there is still plenty of capacity in the system and a bit of inflation, anyway, may not be a bad thing when, not a year ago, we were worried about deflation.
Although there will be an understandable seasonal summer-lull in activity in the Property Market, there are more deals than you would expect at this time which have been put on hold for months now, and I think the second week of September will be a telling time and where, I believe, many more residential property transactions will take place which will benefit from the new post-Brexit environment and lower prices.
With yields on bonds, cash, gilts etc., being so low, and certainly represent negative real returns for the consumer, is it any wonder that investment in residential property is still seen as the best place to put your money?
With UK property prices on the floor, surely a greater buying opportunity is difficult to imagine?