By Subash Shangary (Managing Director, Berkeley Private Wealth, High Net Worth Wealth Management)
The referendum on Thursday, 23rd June is your chance to decide if we should remain in or leave the European Union. Both choices would have implications on your finances.
There has been alot of scaremongering by Brexit debaters on both sides. Speaking to clients it is clear that they are united in the fear of uncertainty. The questions that need to be asked depends on your needs as an individual or business owner. If you are the latter, how will it affect your business? If your customers are spread around Europe, will a Brexit mean loss of clientele? What about manufacturers? How will your exporting needs be affected?
In regards to factual information, we have seen a record number of jobs created as a part of Europe. Investments in the UK is booming. The EU provides easy access to a third of the world’s market by value and gives us preferential market access to over 50 countries outside of the EU with the fastest growing economies in the world. The ability to easily export without the need for extensive paperwork. The freedom of people rule also offers the opportunity to work, study or live across Europe whenever we like. The UK economy is currently out performing all of our European neighbours, we’re strong, our economy is continuously growing. If we leave the EU we would need to renegotiate international trading terms globally, which would not happen over night, in reality this would take at least a decade. That is 10 years of uncertainty, which in turn would have a drastic effect on our economy.
On the other side of the coin, according to the office of national statistics, net migration in the UK rose to 333,000. But to be fair, when an economy is strong, people are naturally attracted to it. Strong job prospects, investment potential and security will always attract people. In the 1940’s a large influx of immigrants from the Caribbean came to the UK due to desperate labourer shortages after the 1st world war. In the 1960’s Kenyan Asians and other Asians. In 1998, following the fall of the Iron Curtain, a large influx of Eastern Europeans came to the UK. Mass migration to the UK has been around for over 70 years.
When analysing Europe from a financial perspective, the biggest negative is their currency, the euro is a notoriously unstable currency, as long as we are not expected to change to euros, we have the best of both worlds. Playing devils advocate we could also argue that if we didn’t allow countries with weaker economies to drag us down, we would be more prosperous. The NHS is on the brink of collapsing due to the additional influx of migrants which is not going to slow down anytime soon. Waiting times are increasing substantially, putting a lot of strain on doctors causing them to go on strikes.
In essence there are pro’s and con’s on both sides, the question is which areas have the biggest implications in your life. Metaphorically speaking, is it better to live with the devil you know or the devil you don’t?