23/06/2016: “This is London speaking, may I have your votes please”
The UK citizens decide to leave the EU! A shocking result, completely unexpected. Cameron resigns after the results of a campaign to win more power and Theresa May, the new Iron Lady after the late Margaret Thatcher, takes over. She is convinced, that Great Britain doesn’t need the UE, will do better on its own, and won´t be tied to the EU immigration regulations.
I acknowledge my admiration for the British. Through the years they have always been able to climb up the ladder first, being able to redirect their country and whether you like it or not, are one of the few countries that are doing well after the last, huge economic crisis. Maybe it´s the weather or the mentality, but the “Brits” are always ahead of us. It´s amazing that a relative small island (with all due respect) has such a huge world power. They do whatever they like, drive on the left side of the road, have kept their own currency despite being part of the EU and London is still the financial center of Europe! Moreover, they have the best scientists, highest rated business schools and the London City is the financial center of Europe.
On the negative side, you´ll find a bad medical system and an old-fashioned industry sector, that need to be updated or re-invented.
What happened since?
Despite the prediction of Mrs. May, after this divorce it will not be so easy to keep all existing trading benefits with the UE. Once you´re out, that´s it, with all consequences. The Sterling dropped almost 15% against the Euro, so all imports became more expensive. Britain´s major import market is Germany, with 14,8% in 2015 and everybody is concerned that new import taxes and fees will increase the day-to-day expenses. Adiós to free circulations of people and goods, welcome to the new border!
Because of the weak Sterling, exporting will be easier, and UK could be more competitive in that sense. Their major export market is USA.
The UK is doing well, the people are still spending, although the first symptoms of uncertainty are appearing and multinationals are packing their bags to move towards other European cities, like Berlin, Madrid, Paris or Barcelona. Despite these messages, the economy increased with 2,7%, in 2016 and unemployment is (still) very low, with 4,7% although the gap between rich and poor is increasing.
Consequences for the Spanish market
According to the “CIA World Factbook, Spain´s major import- and export market is Germany, so they won´t directly be effected by the Brexit.
British tourism in Spain is huge, with more than 15,5 million visitors in 2016, almost 20% of all tourists visiting Spain! If the Sterling is low, it will become more expensive to visit Spain and British tourists could be looking for alternative countries, outside the Euro zone, or it could boost national tourism within the UK. Thank God, the weather is always bad over there and indoor beach parties are not the kind of things you are looking for on a holiday! Apart from that, the political situation in the countries around Europe are not favorable for a relaxing and safe stay.
The Spanish Real estate Market
According to the figures of the Spanish Land Register (Registradores), in 2015 there were 404.000 properties sold in Spain, 19% to foreigners, +/- 78.000 units. Approx. 50% were residents, the other half, purchased as a second/holiday home.
The British took 20,6 %, the French, 8,8%, the German 7,5 and Belgium, 5,5% of the total units sold.
After the BREXIT voting, in 2016 approx. 460.000 houses were sold in Spain. The major areas were, Andalucía (18,4%), Catalunya (16,4%), Comunidad Valenciana (14,8%) and Madrid with 14,7%. 43,1% of all buyers took a mortgage. The average sales price was €172.000.-
With regards to the foreign buyers, we noticed, that the British had dropped 23%, but still represented 15%, the French increased their share to 10%(14% up), Germany with 8%(10% up) and Belgium with 7% (27% up). Similar figures are registered in the first quarter of 2017, with UK and Ireland down and increases from The Netherlands, Belgium and Germany, together with other Northern European countries.
British citizens in Spain
We still don’t know what will happen with the social security and medical rights of British citizens with a property in Spain. Apparently, there are between 280.000-3000.000 “Brits” registered, who decided to spend their “old days under the Spanish sun”. 1/3 part is living at the Costa Blanca. Do they need the contract additional health insurances and will they be able to support the Spanish (Euro) prices with a weak Pound Sterling?
Spanish workers in Britain
And what will happen to more than 200.000 Spanish workers in the UK? Do they have to apply for a work permit, or visa and what will happen to the many international students? If the UK decides to send the immigrants back home, the health care will probably collapse and labor costs will substantially increase the inflation.
We all face a period of uncertainty until the negotiations between UK and the EU have been completed. I sincerely hope, that both Britain and the EU finally look for a reasonable solution, because there is a lot on stake.
Paul van den Hout -Barcelona