Blog

BREXIT: “WITHDRAWAL OF THE UK FROM THE EU”

25/05/2016

You gotta love the quote, “withdrawal”; the U.K 
withdraws from Europe. It amazes me that the 
entire campaign, whether you are an “in” or “out” 
campaigner, actually centres on the principle of the 
prospect of the U.K leaving the E.U.

The entertainment factor of Farage and Johnson (and let it be known that I’ve been a fan of both) prancing around, beating the “U.K better out” drum, whilst in the same drum beat assuring us all that they will get a better deal with Europe is quite frankly, different class.

In short, let’s leave this rather morbid party, of which we happen to be a pretty strong player in, only to then, once we are out and quite frankly piss everyone off, knock on their door and ask if we can play again. Best of all they think we will be in a position of strength in doing this - it’s genius!

Yes there are deficiencies in Europe, a great many in fact, but to suggest that we would be better able to change them from outside than from within, is somewhat far-fetched.

This referendum is neither about the U.K. leaving, or staying in the EU, it is in my view, about how it renegotiates its position and that of Europe’s, in the longer term. The U.K. doesn’t get to leave Europe and even if it tried to, it would still take years to implement, anything between 2 -10 years, as indicated by parliamentary committees, BoE and other such bodies - by which point its new terms / framework and structure, not to mention relationship, would still represent a membership with Europe anyway. Mind boggling or what! All we need now is “The Donald” weighing in and pledging his support to Boris toward building a Wall across the channel - financed by Greece, project managed by Spain and constructed by the Italians.

It’s in moments like these where hysteria, panic and lack of clear sensible judgement take centre stage. I actually have no issue in accepting that Farage, Johnson and Co are (in part) right in their assessments and their criticisms of Europe, but their solutions are insular, exclusive, nationalistic and protectionist, not to mention hugely lacking any plan or vision - all traits which have, in the past, resulted in disastrous consequences. Solutions are rarely in the form of black or white, but rather varying shades of grey.

Some (including myself) may have been slightly irritated at the weighing in of POTUS. Airforce 1, Marine 1, the motorcade, tea at Pall Mall and meeting Prince George can be somewhat of a statement and an overwhelming force, care of the leader of the free world. Don’t you just love that special relationship? However, what is interesting about the American perspective and one which I do think worthy of mention, is their firm belief, that it’s actually the U.K, in Europe, that gets to drive the agenda and play a key role in the renegotiation of what I think we all accept is a failing Europe. 

Interestingly however, the impact of a Brexit, uncertain as it may be, will hardly render the U.K defunct and although the prospect of being placed at “the back of the queue” so to speak is a real threat, the reality is that the U.K economy survives, renegotiates, moves on and in years to come will look back at the whole episode like a bad hangover after a night in, watching Eurovision…..yes that bad, but it will be over.

SO WHERE DOES THAT LEAVE US (GIBRALTAR THAT IS)?

“Up sh@t creek”, “OMG”, “please make it stop” and “I want my mummy”, come to mind. There is no question that a Brexit would indeed leave Gibraltar in a state of limbo; the uncertainty of our position alone would impact our entire social and economic fabric, any prospect of new business, investment, forward planning, development, infrastructure, more bank holidays, GMF (Christ not GMF) etc. etc………. it would all simply be shelved.

Not great so far is it ! Any positive outcomes at all, you might ask? Well, boring as it might sound, it really is a question of better the devil you know, keep the status quo and lets not tamper with something that works.

For my sins, (a great many I might add) I had the fortune of entering the eloquent, classy world of real estate, put another way; you have had the misfortune of having had to put up with yours truly, representing, advising, guiding and generally mixing it up with all things property in Gibraltar over the past 20 years. So, late as it is in this piece, if you don’t know me, it might be a good time to turn the page. Cut loose whilst you still can…

I bring this up of course because 9 out of 10 questions in any given day from client and applicants over the past 4 months have invariably been centred around -”what’s the market doing? - flattering that they actually think I might actually have a clue! In all seriousness though, we expected this year would see the market plateau somewhat, not necessarily because of Brexit, but we had already been suggesting, toward the tail end of last year, that things may settle post what has seen 4 years of growth representing approximately 10% growth pa. We have also just come out of 24 successful months of high volume, off-plan property sales. Don’t panic, no, it’s not a bubble, the market is in fact (IMO) underpinned by owner occupiers and sold investors, but Brexit clearly does not help and let’s face it, anyone looking to buy who can afford to wait, will.

By way of market update and in light of Brexit, we are pleased with the fact that the first half of the year has gone well and certainly met with our expectations. The market is by no means dead, but it’s fair to say that it’s settled and may indeed adjust in certain sectors. We think adjustments are good by the way; they tend to protect us from steep sexy highs and awfully steep lows (I’m talking about graphic trends of course) and allow for hype and unsustainable expectations, sometimes driven by careless agents, to wither away. To summarise and place that positive spin, the market is actually once again dictated by sensible applicants, many of whom are indeed buying, and some of whom are able to hold. The soft impact over recent months has therefore not been solely driven by Brexit, but rather, a number of factors as mentioned above and quite frankly, I have welcomed that almost sobering effect after the off-plan season(s).

Most of the articles you will be reading with respect to Brexit will inevitably be negative and terrifying to a point – it is after all, a Big Issue for Little Gibraltar. But I would rather end my contribution on a high. Over recent months I have discussed the referendum with almost all my applicants and clients, particularly those from the U.K, and the overwhelming majority take the view that tight as the polls may be, the U.K will stay in and that Europe or more to the point Angela, will simply not allow an exit - for it really would be a grave decision, not just for the U.K, but for the very fabric of Europe and its own survival. Where’s the high, I hear you ask – well, if we do indeed remain (AS I BELIEVE WE WILL), my view and that of many I work with, is that Gibraltar would enjoy a further period of resounding success economically and thereby affecting our property market significantly for the better. There is already a great deal to be excited about, we have an economy growing and able to move with the times, a financial services community steered by some prettysharp players, the prospect of major growth from the Eastside development and various other investment led projects – We are A highly regulated, English speaking, low tax, safe environment, IN Europe! Sounds great doesn’t it!