Why Article 50 matters
You may be slighted jaded by now at the thought of Article 50, but believe it or not the story is not over for anyone making a currency transfer in the near future. Indeed in many ways it has barely begun. Here is why.
Triggering Article 50 is the start of the process of negotiating Britain’s exit from the European Union, not the end. Although the EU refused to enter into any negotiations before the triggering of Article 50, it will of course have been making plans and setting its red lines, just as the UK government has.
So while the triggering of Article 50 has been “priced in” as we say, to the value of the pound (that is why the pound has weakened over the past few months) it is the response of the EU that will be crucial in the value of the pound going forward and we are only going to hear that after next Wednesday. If the EU talks tough, the pound could fall significantly in the weeks and months ahead.
These are timetable dates you need to look out for:
Wednesday 29th March: Prime Minister Theresa May triggers Article 50 by writing a letter to President of the European Council, Donald Tusk. After this Mrs May will make a statement to the House of Commons outlining her aims.
Friday 31st March: Donald Tusk has already tweeted that “Within 48 hours of the UK triggering Article 50, I will present the draft #Brexit guidelines to the EU27 Member States”. This will give a clue as to the EU’s line. It will be worth getting your currency organised before this date.
This will give a major clue as to the EU’s line. It will be worth getting your currency organised before this date.
27th April: Earliest possible date for EU27 Summit. At this meeting the 27 members will agree the “guidelines” for negotiation, and pass these to Michel Barnier, the EU’s chief negotiator. This is another major clue – will some countries aim to punish the UK more than others?
Late May/early June: With the new French President in place, the terms of Brexit will be a presented and the serious negotiating will begin.
There are many potential sticking points along the way. An early issue will be the price for the UK leaving – €60 billion has been mentioned – to cover pensions and other financial liabilities of the EU. Only when this is agreed can the vital matters of the rights of EU and British citizens to live in each other’s countries be discussed.
Because the negotiations are so complex, and the time so short, any delay will increase the chance of the UK falling out of the EU without a deal. Hence the pound will rise and fall dramatically in the months ahead as the negotiations progress.
The shape of how a “hard” Brexit could play out have been seen this week, with ominous press reports that both global banks and major airlines are shifting operations out of the United Kingdom.
This could lead to a repeat of the effects of the Brexit vote in June last year, when the value of the pound plummeted, driving up the cost of buying property abroad.
There is absolutely no reason for Article 50, the EU27 response, or even a falling pound, to stop you buying your dream home abroad.
There is a simple way of protecting the value of your currency, however. Indeed there is absolutely no reason for Article 50, the EU27 response, or even a falling pound, to stop you buying your dream home abroad. By taking out a Forward Contract on your currency you can lock in an exchange rate for up to a year. Property buyers who did the same with us just before the referendum avoided huge losses on their overseas home purchase.
To find out how much you can save (and how to save it!), call Smart Currency on 02081084614 or get a free quote here.