Brexit may be a topic that everybody has a strong opinion about right now, but with both major parties announcing that Brexit and an exit from the single market will take place if they win the newly announced June general election, it looks like the UK will definitely be leaving the EU and negotiating new trade agreements with other countries. Brexit is a difficult thing to predict the economic outcomes of, until we know exactly what the terms under which we trade internationally and with the remaining EU countries will be, and what the policies around immigration and the fate of those from the EU already living in the UK are going to look like.
The election, and therefore the possibility that the government enacting Brexit will be a different one to the one that triggered Article 50, only adds to the uncertainty and risk, and so it is difficult for financial analysts or business experts to really tell us how life will be in London after we leave the union. However, there are a few things we do have to go on as indicators.
London is currently the financial services hub of Europe, and once it is no longer inside the EU, some major employers may relocate, or move parts of their business to other countries. London will still, of course, be an important city from a global perspective, but in some industries, may lose some of its significance. For people who work in sectors that will be heavily impacted by Brexit, this could mean employment issues, and this may well have a knock on effect on demand for all kinds of other things. A reduction in rental and house prices may be a possible outcome, but this will also depend on other economic factors.
If there are less high and middle income professional jobs that require people to live in London, London may also see a reduction in migration of people from other parts of the UK, as well as in immigration from other countries. London currently has 1.7 million high skilled professionals, and top executives from 95 countries, according to Bloomberg. This is by far higher than anywhere else in the world, with New York City in second place and far behind. Post Brexit London is likely to lose many of the people who give it this status, or at least see a slow down in growth. This could mean less money and business talent arriving in the London economy.
If the pound remains weak on foreign exchange markets and we can no longer import products freely as members of the EU, a lot of the things we buy or which are used in places we go to such as restaurants may increase in price, and this could hike up the cost of living. It is difficult to know what will be affected and how much until Britain has completed negotiations, but imported produce and goods from Europe may well become more expensive, though it is possible too that with new trade agreements imports from countries outside of the EU may actually become cheaper, so we may see more non-EU imports being used or sold.
It is extremely hard to know much about how things will shape themselves after Brexit this early in the process, however we can be certain that employment, movement into London, and the cost of living will all change.
