If you’re a business owner, would you like to know which country your business is licensed to conduct business in?
If you conduct business in multiple countries, would you like to know the rules of engagement for continuing to do so?
If you set up your head office in a global financial center hoping and expecting it would act as a gateway to conducting business across an entire continent, would you like to know if that was a good investment?
If you live in the United Kingdom and you own a business, you are dealing with all of these questions. In fact you’ve had this uncertainty hanging over your head since June 23, 2016. The day when the Brexit vote took place.
The deadline for the UK to complete its exit negotiations from the European Union is at the end of March. On Tuesday of this week the British Parliament voted against the last and final negotiation between the UK and the European Union on the terms of its exit.
So we really have no idea what Brexit actually means. We don’t know what it means for U citizens who currently reside in the United Kingdom. We don’t know what it means for British nationals who reside in continental Europe. We don’t know what it means for goods and services that are crossing the English channel. Further complicating matters is the fact that Ireland has chosen to remain within the European Union. There is no hard customs border between the Republic of Ireland and Northern Ireland. This means that for the time being the Republic of Ireland represents a giant back door into the United Kingdom.
Many North American companies had set up their European headquarters in London or other cities in the United Kingdom. This has facilitated communications with English as a common language, and has provided companies with a highly educated and skilled talent pool.
Here’s the problem that I see with the entire Brexit fiasco. The vote to exit the European Union one by a very narrow margin. It was less than 1%. In the day that followed the actual vote, it was disclosed that the pro Brexit movement had falsified projections and mislead the public on the benefits of departing the economic union with Europe.
After having experienced the steep and dramatic economic fallout over the past three years, it is not at all clear whether the UK population remains in favor of leaving Europe. If a second referendum were held today, I believe a vote to leave Europe would be defeated.
So here again we have a political stalemate. The UK is still scheduled to leave the European Union with Ireland remaining. The terms of the exit are unclear. Prime minister may survived a non-confidence vote. But both exit agreements negotiated with European Union were resoundingly defeated by the British Parliament.
EU officials have said that the current negotiations represent the best and final offer from Europe.
London lost 93,000 in population in 2016, and 106,000 in population in 2017. In fact over the past 14 years, London has lost approximately 1M in population. I mean think about that. It’s a huge number. The only other city that I can think of that has experienced a similar loss of population is Detroit. We know what that has done for Detroit. It’s been an absolute disaster.
Since the Brexit vote, real estate prices in central London have dropped an average of 10%. Remember, that’s an average. Many properties have been converted from owner occupied to rentals. The last time I was in London, most of the old homes in central London had been converted into guest houses or hotels.
One thing I can say for sure is that London has not attracted new investment in nearly 3 years. In fact, there has been a marked period of disinvestment. At some point it will represent an opportunity for new investment.