In this weeks instalment, we will consider the impact that the EU referendum might have on foreign investment in the UK and our much loved Pound Sterling.
Many multi-national companies choose to base their operations (or a significant part of them) in the UK. This can be for a number of reasons, but for many the prospect of a listing on the UK stock market, access to the finance markets of London and the perception of having a base in one of the major ‘global’ cities will all have an influence.
There is some evidence that the EU Referendum is already having an impact here, with many foreign companies holding off on further investment into the UK until after the result of the referendum. This suggests that these companies may not be so keen to invest in a UK that is not a member of the EU.
While trade and capital treaties would no doubt be re-negotiated over time, one of the few areas where most commentators seem to agree is that if the UK did decide to leave the EU, there would most likely be a fall in investment in the UK, in the short term at least.
There will also undoubtedly be an impact on sterling as a currency, and we have already started to see this with sterling losing value when compared to some other global currencies in the run up to the referendum. While this is good news for businesses who export goods and services (as it makes our goods cheaper to buy overseas), in general terms, this would be seen as a negative by most people whose only interaction with the currency markets is to fund their summer holiday.
Finally, some have suggested that the property market in London could be adversely impacted by the UK leaving the EU with some foreign buyers pulling out or delaying purchases. However, it is more than likely that this would have the greatest impact on the very top end of the London market.