It has been highly debated what a possible Brexit vote on Thursday could mean for the UK housing market. Especially the London housing market, which is largely fuelled by the demand of overseas buyers, are under threat of trembling greatly if the UK chooses to leave the European Union. In the past months it has been recorded that asking prices in London’s most exclusive areas have been slashed by considerable amounts. Property portal Propcision stated in May that “a prime Central London property in Belgrave listed for £42.5 million has had 14pct reduced from its asking price since coming on the market. This represents a whopping £6 million being wiped-out from its original valuation.” The report further stated that Westminster, Kensington and Chelsea being the areas most affected with properties loosing as much as 22% on their initial asking price. A Brexit vote on Thursday may see an extension of this trend to more areas and lower valued properties as uncertainty in the markets, fear of an economic downturn and loss of interest of international buyers may drive down demand. Especially with Chinese investors, who have shown great interest in the London housing market in recent years and helped to support the constant price rise, may in the future refocus their attention away from the London housing market. Chinese property portal Juwai.com stated this week that a Brexit would be unlikely to lead to changes in Chinese demand for London properties. CEO Charles Pittar told CNBC on Tuesday that Chinese interest in the London housing market was based on lifestyle factors that were unlikely to change after a Brexit vote. According to him a large amount of Chinese property demand is fuelled by parents looking to buy properties for their children as they go to study in London. High quality education is therefore a main factor driving overseas property demand in the UK’s capital. However, Pittar’s focus on education as prime reason for property demand may turn out to be an issue in the long term due to the effect a Brexit vote could have on the UK’s higher education system. As Stephen Hawking stated recently, one of the biggest Brexit concerns is the loss of EU university funding which could mean a downturn in the quality and quantity of research undertaken at UK universities and see the UK higher education system losing its’ status as one of the best in the world. At the same time China and other Asian countries have over the past years greatly improved the quality of their higher education and multiple Chinese universities are now counted under the best in the world. These ongoing developments could see interest of Chinese students to enrol in UK universities decrease and therefore lower the necessity of Chinese to buy property in London. Further concern comes from the overall slowdown of the Chinese economy which raises cause for concern of the general dip in interest of Chinese to invest in overseas property. As to demand from other overseas destinations, it can be argued that a great amount of demand from overseas buyers is driven by London’s role as financial hot spot. London and Frankfurt as far represent Europe’s main financial capitals with London so far being considered the number one financial capital in the world. However, the uncertainty in the markets and unfavourable changes to the Pound post Brexit could lead to a push towards Frankfurt in the long term, making it the more attractive location for investors in Europe.

British Prime Minister David Cameron recently described the upcoming referendum on European Union (EU) membership as “bigger than the general election.” For the first time ever, Mr. Cameron’s Vote Remain campaign appears to be losing ground in the referendum debate, with the likes of Boris Johnson and Michael Gove on the offensive with their pro-Brexit agenda. Mr. Cameron and the pro-EU camp are “very” concerned about the upcoming referendum, which is set to take place June 23. While most analysts still contend that Britain is likely to remain part of the EU after this month’s vote, the chances of Brexit appear higher than ever. So, what happens if the majority of Britons vote Leave on June 23? How will the divorce take place? As you could imagine, walking out of the EU wouldn’t happen overnight. According to Article 50 of the EU Treaty, which states that “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements,” it would take at least two years for Britain to fully withdraw from the EU. Policymakers gave the process a two-year timeline to ensure the exiting country has enough time to negotiate new trade deals before the formal break occurs. The two-year period stipulated under the EU Treaty may be extended but only through unanimous consent. Mr. Cameron has made it abundantly clear that the clock would start ticking right away, saying that the “British people would rightly expect [it] to start straight away.” However, pro-Brexit justice secretary Michael Gove says “no responsible government” would move so hastily, indicating that more time would be needed to ensure Britain’s healthy break from the EU. According to analysts, the more likely scenario is that Britain’s EU membership would be put on hold indefinitely while the Conservatives first decide who should replace David Cameron as prime minister. While Mr. Cameron has stated he would not resign if Britain quits the EU, very few people believe he would last as head of the Tory majority government for much longer. According to Mr. Gove, Britain’s full withdrawal from the EU could take the duration of parliament, given that the break-up would be a process of “evolution, not revolution.” “The British people will simply have given their instruction to the government to make arrangements for us to leave the EU,” Mr. Gove said. “It will be in Britain’s hands how we manage it and how long it takes.” Under Mr. Gove’s plan, Britain would retain its EU membership rights while it carried out new negotiations with the rest of Europe, including formalizing new trade deals. However, analysts warn that this process could be very rocky, given the strong pro-EU majority in Britain’s House of Commons. In the event that Article 50 is invoked, the EU and Britain would likely begin working on a new trade deal straight away. Britain would still be required to obey EU laws throughout the so-called “divorce period.” In order for the deal to be finalized, however, it must be approved by 16 or Member States, according to the EU’s Qualified Majority Voting rule. There may be a pro-EU majority in the British House of Commons, but on the street the picture appears much different. A recent poll carried out for The Independent showed a massive swing toward Brexit, with 55% of voters intending to vote for Britain to leave the EU next week. That’s a four-point increase over the previous poll, which was conducted in April. The Financial Times poll of polls also shows a late swing in favour of Brexit, with 46% of voters likely to vote Leave on June 23. Various other polls, including those conducted by YouGov, ICM and BMG Research also show growing momentum for the Brexit camp. The economic and financial backlash of a Brexit vote are subject to great debate. The British government maintains that the short-term impact of a British exit from the EU would be massive, including reducing gross domestic product by up to 6% by 2018. That’s equivalent to the impact of the 2008 financial crisis. Several other bodies have warned of grave consequences for the UK economy should the British people vote to leave the EU. The Institute for Fiscal Studies (IFS), a highly respected think-tank based in London, warned last month that Brexit could cost British finances between £20 billion and £40 billion in 2019-2020, more than offsetting the government’s planned surplus. The UK would also face reduced foreign direct investment and higher costs of trade, which could reduce GDP by up to 3.5% by 2020. By Nikolas Xenofontos, CEO at easymarkets.com

 22/06/2016

Should the United Kingdom decide to leave the European Union in this Thursday’s referendum many skilled professionals may leave the UK in flight of the uncertain economic future and in search of better job opportunities. As Stephen Hawkins has announced in his statement about Brexit, the UK stands to lose important research funding if it chooses to exit the EU. Therefore, it will likely experience a decrease in scientific research and innovative progress, going hand in hand with the reduced inflow of EU and international university students and the loss of employment opportunities for high skilled professionals. However, an interesting question to ask then is: ‘Where will those skilled professionals go?’. The growing economies of Asia present viable choices for many skilled labourers to make a comfortable living. Especially China and India, countries which until quite recently were considered to face the issues of Brain Drain as high-skilled workers were leaving these countries to work in Western developed nations, have in the past years started to reverse this process. As their economies become more prosperous, technological progress opens up plenty of opportunities for employment of the highly-skilled. Many professionals who formerly chose to leave their home behind are deciding to return and this process is likely to be sped up should Britain face economic hardship following a Brexit. As the UK currently has one of the largest group of Chinese living abroad in Europe, with nearly half a million people, and Indians present the UK’s largest foreign born minority population since 2015 with 1.5 million, an increasing outflow of skilled-professionals from these backgrounds will be perceptible and likely painful. Equally, British born professionals may decide to immigrate to these and other Asian nations such as Singapore, which are lacking high-skilled workers to further their economic and technological progress. Earlier this year it was published that the four Asian nations of South Korea, Japan, Singapore and Hong Kong are continuing to outperform other countries in national education system rankings, while China has continuously shown the greatest improvements in their higher education rating. These facts may draw academic professionals and university students to resettle to Asian countries. Lastly, there are the usual destinations for skilled workers, which are likely to see increasing requests from the UK, should emigration increase due to a Brexit vote. The most popular destinations for UK emigrants are Australia and the US, but Germany, France, Canada and the Scandinavian countries could also be feasible choices as more professionals decide to leave the country.

Read more about why skilled professionals may leave the UK post EU Referendum

To get more information on the upcoming referendum and its’ possible effects read our features on:

Supporters line-up for ‘Remain’ and ‘Leave’

Schedule for the vote count night

Markets beyond the EU referendum

Gain investment insight with guides on:

3 stocks to buy if UK decides to remain

3 stocks to buy if UK decides to leave

It is consistently argued that Britain contributes more to the EU budget then it receives. Yet a large factor of income the UK receives from the EU is research funding. Of the two major routes by which the EU directly funds research into the UK, Britain is most successful in attracting Framework Programme funding aimed particularly at excellence such as higher education taking in as much as 71% of total funds. The current Framework Programme is called Horizon 2020 which is managed by the European Commission’s Directorate-General for Research and Innovation. Horizon 2020 has a budget of $74.8 billion for the period 2014-2020. In 2015 the UK received £967 million in research grants findings from the EU. Over the past decade EU funding to the UK as a whole is £8.04 billion. A report produced by The Royal Society noted that the UK was the second largest recipient of the programme behind Germany who gained a total of £8.34 billion EU funded research seeks to work collaboratively bringing together expertise from different sectors and countries to share knowledge and expand networks. Universities UK argued that there are 125,000 EU students at British Universities generating more than £2.2bn for the economy creating over 20,000 jobs. They claim that the research provided by the EU is worth £1bn a year meaning a Brexit vote would substantially hinder this. Leading leave campaigners have argued that a Brexit vote would not reduce the number of EU students from applying to British Universities. Yet they claim that if the numbers were to decrease, the increase in international fees could help fund gaps in the education sector. 13 UK universities are ranked among the top 25 European Universities with Oxford, Cambridge, Imperial College and UCL securing the top 4 spots. The EU accounted for one-fifth of all public funding to research bodies used by Cambridge and Oxford Universities and it is heavily feared that a breakaway from the EU would damage funding made into Science. A Brexit survey revealed that a total of 83% of British scientists oppose Brexit with the Royal Society calling the move a disaster for British Science as the possible risk of increase in international rates and the lack of free movement within the EU will mean it would stop young scientists from migrating freely within Europe. British Laboratories and research projects rely on a quarter of public research funds. The fear is that a Brexit vote would mean that British research risks being pulled out of the field.

Read more on where UK professionals may go if Britain loses research funding and innovative edge

 

For more information on the upcoming EU Referendum read our features on:

Supporters line-up for ‘Remain’ and ‘Leave’

Schedule for the vote count night

Gain some investment insight with guides on:

3 stocks to buy if the UK decides to remain

3 stocks to buy if the UK decides to leave

Such is the focus of mainstream media of late, you will be forgiven for thinking that the economy or markets do not have a future beyond the 23^rd June. This, of course, isn’t the case. As the UK has voted to leave the EU, we will hear of nothing else for the foreseeable future. However, before too long the market will divert its focus to number of pressing matters that have been quietly stewing in the background in the last 3 months. US Rates Real concern will emanate from the US and whether the Federal reserve are going to hike rates at a time when the market is not completely prepared for a tightening, causing another stock market rout. One would hope they have learnt their lesson from Decembers hike but you would be foolish to put it past Yellen and her fellow central bankers. An event that would justify the continued hold of rates is the upcoming US general election in November which promises as much debate, mudslinging and name calling as the EU referendum campaigns. Raising rates before November will put investors on the edge of their seats and could cause sharp shocks in the market. However, as the Federal Reserve have said on numerous occasions, data supports such a move, you should be prepared for further tightening of monetary policy in the US. European Economy It is likely the market’s attention will turn quickly back to the Eurozone which, in the midst of unprecedented stimulus from the ECB, is still teasing investors who are betting on a continued economic recovery in the bloc. Unemployment in the region has fallen over the past year to 10.2% as manufacturing activity remains in expansion territory and wages grow at a steady pace. You could argue that much of this improvement is the consequence of the ECB’s package and if it were to be removed, it could lead to a quick unwinding of asset price appreciation due to the lack of policy action from European governments. The improvement in the European economy may well be a superficial product of the printing presses but the sheer quantity of assets and extended period of the program will undoubtedly provide the resources necessary to keep the Eurozone economy relatively buoyant for the coming 12 months at least. Beyond this point, the governments of the Eurozone will be under pressure to enact reforms and take the reins from Mario Draghi and take the lead driving economic growth. Chinese Growth China is developing into something of an enigma for investors who are battling to draw any conclusions from the mixed economic indicators coming from the world’s second largest economy. On one hand, the rate of growth is slowing and on the other hand, the economy is in a phase of recalibration. This difference in interpretation will be the subject of much analysis throughout the second half of the year. For years the world relied on China’s demand for natural resources to prop up global activity and as this demand slows and China becomes a more consumer orientated economy, the markets is fretting over which narrative they should believe; the ‘hard landing’ doomsday scenario or the maturity of China into a ‘developed economy’. Common thinking on China will be driven a number of indicators with special emphasis being put on manufacturing data, commodity demand and house prices. Any persistent deterioration in these readings will likely lead to market volatility experienced last year.