As the government reveals its strategy for Brexit negotiations, here are the key points investors should look out for.
For the first time, the UK government reveals its Brexit strategy on February 2nd.
It is published two months before the deadline for triggering Article 50, the formal process that will begin the UK’s withdrawal from the European Union.
Below are the key questions, along with everything UK property and global investors need to know:
What is the Brexit whitepaper?
It’s a summary of the government’s plan for leaving the EU.
It will outline Downing Street’s goals and what it hopes to achieve from official negotiations once they’ve invoked Article 50.
Much of the document expands on the speech Prime Minister Theresa May made last month, in which she declared that the UK will leave the single market but will still maintain a strong, ongoing relationship with Europe.
In short, it highlights the deal the UK government hopes to make with the EU.
Why is it being published?
It follows a ruling by the Supreme Court that meant the government had to update Parliament on its Brexit strategy.
On Wednesday (February 1st), after two days of debate, MPs overwhelmingly voted in favour of the government’s Article 50 bill, allowing Mrs May to proceed with triggering Article 50 before March 30th.
This bill will now be further scrutinised before it becomes law. Hundreds of amendments for the bill have already been tabled from various politicians, and more are likely to come now following the publication of the whitepaper.
What will it mean for the UK property and other investment markets?
Ever since the vote for Brexit, financial and currency markets have seemingly fluctuated wildly with every new announcement and piece of information from the government.
Investors should be prepared for more of the same following the publication of the whitepaper.
Assets with a high correlation to stocks and shares will naturally be more exposed to any volatility the markets will suffer. But it’s also important to remember that UK economic growth has actually risen since last June’s referendum, underlining Britain’s continued economic resilience.
What’s more, UK property investors should be reminded of the fundamentals that underpin the real estate market, namely the severe demand to supply imbalance of British property. This will not change now or in the long term.
What do investors need to do now?
There’s unlikely to be anything announced and revealed with the publishing of this whitepaper that should give investors any cause for serious concern.
But should financial markets and equities fluctuate, it will only further highlight the volatility Brexit and the two-year period of negotiations will have on high correlation assets.
Gold prices are currently surging, both in response to Brexit and the uncertainty of Donald Trump as US President, as many investors have decided to add safe-haven assets to portfolios.
With the pound at a low rate, and with performance and growth unrelated to external political events, UK property is also an asset that will appeal to any investors looking to reduce their exposure.
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