Carney’s warning – no Brexit deal may lead to 25% fall in value of the pound
Nearly a month ago, in an article entitled ‘Waiting for Brexit before you buy? Well, don’t!’, we pointed out that there is no point in delaying an overseas property purchase until the Brexit process has been completed because the ensuing uncertainty is likely to continue for a very long time and property prices in most countries are bound to increase in the mean time. You will find the article in the Archives of ‘Featured News’.
Now, however, there is an even more pressing reason to avoid any further delay in buying your overseas holiday home, permanent residence or investment. For it looks increasingly likely that the UK Parliament will vote against adopting the Brexit deal negotiated by Prime Minister Theresa May on 11th December. What nobody knows, including Mrs May, we assume, is what will happen then, given that the UK is due to leave the EU on 29th March 2019.
The most senior EU officials and the German Chancellor have stated emphatically that the deal that has been approved by all the other EU nations is and will remain the only deal on offer. Quite why, therefore, so many UK Members of Parliament keep talking about various other possible deals once this one is defeated is a mystery to your scribe – and to millions of other people, we suspect.
Assuming that Mrs May’s deal is defeated and assuming that the EU officials then repeat that no other deal will be considered, we are left staring at the increasingly likely probability that the UK leaves the EU next March with no deal at all, a situation that most people, including the very Members of Parliament who now seem determined to make that happen, regard as seriously damaging, if not catastrophic, for the UK.
Mark Carney, the Governor of the Bank of England, has issued all kinds of warnings about what is likely to happen to the UK economy if there is no deal in place by 29th March. Given that he is well known to be against Brexit in any form, many people dismiss his arguments as an element of the so-called ‘Project Fear’, designed to persuade the UK population to reverse its democratic decision to leave the UK. Mr. Carney is careful to use the word ‘scenarios’ rather than ‘forecasts’ and it is probably reasonable to assume that he means ‘worst case scenarios’.
Certainly, the warning that the value of the British pound could fall by as much as 25% against that of the US dollar does sound like a worst case, but what if it was to happen? Although Carney’s scenario did not mention the euro, it is inconceivable that a fall in value of that magnitude against the dollar would not trigger a fall of a similar disastrous amount against the euro and, in all probability, most other leading currencies as well.
Suddenly, your dreams and aspirations, along with your carefully calculated budget, are likely to be torn to shreds – and this coming probably not long after you had become adjusted to the overnight fall of up to 20% against the leading currencies following the Referendum in June 2016.
So, what’s to be done? Well, it’s simple and obvious, isn’t it? Stop prevaricating and get on with it! Of course, ‘no deal’ may not happen or, if it does, the pound may hold most of its value anyway, but why take the risk? If you are serious about owning a home or investment property outside the UK, there may never be a better or more sensible time to do so than right now!