Political process stabilisation

With Theresa May as the United Kingdom’s new prime minister, investors were given a little more certainty in regards to the present political situation. As Theresa May has become the second Prime Minister she has taken the daunting challenge of taking charge of one of the most unsteady periods in recent political history. The reaction to the appointment of Ms Theresa was mainly positive among conservative
party members (both Brexit opponents and proponents).

The newly appointed Prime Minister has agreed for the moment to postpone Brexit talks until the UK has “a strong position and a clear goal on how to proceed” The German Councillor Merkel has agreed with this plan to schedule the talks at around December or early January.

It is expected that the Prime Minister’s main tasks will be negotiating the conditions of future relationships with the European Union, mainly the position of the millions of British citizens living in the EU (vice-versa for EU migrants) and the current situation of business. As Britain is one of the biggest trading partners of the EU this will not be an easy and quick task.

Initially, Theresa May supported the British campaign on staying in the EU, and although she highlighted that the new policy will go in accordance with the will of nation, further mitigation of political climate is expected.

According to BBC, Mrs. May has said she will not trigger Article 50 of the Lisbon Treaty, which would formally take Britain out of the EU after up to two years of negotiations, before the end of 2016. The next EU Council meeting is not scheduled to take place until 20 October, which may buy her some breathing space, as she sets up a negotiating team and establishes some “red lines” on issues such as immigration and access to the single market before official exit talks begin.

What we can learn from the fast allocation of Theresa May is that the political process in the UK has clear chances of stabilisation.

In terms of economic environment, the Bank of England maintained Bank Rate at 0.5% to support national currency. The huge decline of property prices has already started, which provides a window of investment opportunities for market players. Figures from Rightmove show the average asking price of a home listed for sale in England and Wales has fallen since mid-June. Post-Brexit, a larger number of new properties are being listed for sale than during the same period last year. The vote triggered a wave of discounts, while the number of cuts to asking prices surged by 163 per cent in the 12 days following the referendum, compared to the 12 days ahead of the vote (according to figures from LondRes, a property research firm). The weakening of the sterling also provides additional benefit for holders of the U.S.
dollar capitals. The situation on property market in the U.K. is unique today, and an able-minded investor can spot this opportunity.

Leave a Reply

Your email address will not be published. Required fields are marked *

Return to news