What Brexit means for the ordinary folk
WHEN the sterling dropped to less than 5.5 against the ringgit at some point yesterday, the opportunistic side of human greed surfaced. The immediate response from a colleague was that it was a good time to visit London.
Another even chipped in to say that the property market in London should be attractive, considering that the currency has dropped.
While many may see this as an opportunity, ironically, another side to the story of Britain coming out of the European Union (EU) is that it continues to attract the normal folk.
The very fact that there is interest to visit London spells one thing for sure – the allure of London and England as a place to visit and live will always be there irrespective of the Brexit decision.
For the ordinary folk of Malaysia, beyond Britain leaving the EU, Brexit would mean a cheaper sterling pound against the ringgit.
Immediately, what rankles in the minds of most is the cheaper tuition fees for the children studying there and maybe even better chances of migration to Britain.
Migration of people from across the EU was one of the reasons for the majority of the British people to vote to leave the EU. Public amenities such as health, housing and the public transportation system were being choked. The English people blamed it on the steady stream of folk coming into the country because of its association with the EU.
Wages were also not going up because of cheap labour from Eastern Europe. The folk in rural areas were feeling the strain from the stagnant wages.
Without doubt, the scale of migration surprised many in Britain. The sight of thousands waiting across the English channel to get into England did not go down well with a large section of the British people.
For those campaigning to keep the United Kingdom within the EU, they advocated that the country would benefit from the migration of the young and brilliant talent from the EU. But the benefits have obviously not sunk into the majority of the people in the UK.
For them, the cost was greater than the benefit when it comes to migration of the people from the EU. In reality, there are more people outside the EU who have migrated and settled down in Britain than the EU itself. Only in the last few years has the migration from Asia to Britain slowed down.
It was largely because employers preferred people from Europe because approvals for the necessary documents were easier to obtain.
Going forward, with Britain now leaving the EU, a process that will happen gradually over two years, maybe the window of opportunity to migrate to the UK will open up for those from Asia.
Apart from migration and education, London is especially a famous destination for Malaysians to visit. It is to such an extent that many in the higher-income bracket have houses there.
On the face of it, the common notion put forward by analysts is that property prices will be affected by Britain leaving the EU. This is on the basis that Britain will lose out in terms of trade and access to the EU and become a less attractive destination for multi- nationals to house their business operations.
However, there is also a view that London will continue to remain as a financial centre even when it is out of the EU because it is relatively cheaper compared to other financial centres around the world.
In the latest survey of the costliest cities to do business, Hong Kong came out tops and Singapore was the fourth highest. London was 17th in the ranks of most expensive cities in the world.
In contrast, the cities in Switzerland such as Zurich, Geneva and Bern are more expensive to conduct business compared with London. Zurich is in third spot in the survey, Geneva occupied eighth place and Bern was the 13th most expensive city.
In terms of cost, London is comparatively cheaper than the financial centres in Europe. It also has far more banking linkages than the other cities in Europe.
And best of all, Britain is the mother coun- try of English, the common language spoken in the business world. Hence, London and England will continue to be the country where everyone else from the rest of the world would want to go.
The English culture, laws and democratic values endear the country to most businesses. In fact, some feel that Europe’s culture and heritage values are a product of the British.
Although the tax rates are high in Britain, London and its outskirts are still a place many would want to own a property in.
Another reason is that the laws are in favour of the landlord, which is a reason for some of Malaysia’s largest funds to keep investing in the property sector of that country.
One possible setback from Brexit is that the British economy could be affected, as the EU is the largest trading partner of Britain. However, the fact that Britain will be leaving the EU in two years’ time has also sent a signal that the union itself could be doomed to failure.
Without Britain, the effectiveness and survival of the EU is in doubt.
For ordinary Malaysians, Brexit for now means a cheaper sterling pound.
Stock markets will have to overcome a period of uncertainty due to volatility in the exchange rate. The biggest fear is the contagion effect if there are some financial obligations and it causes a default due to the volatility in the exchange rate.
In the longer term, the market will find stability after this period of uncertainty.
At the moment, Britain is basically walking into an unknown space. Nobody knows where the future will head.
For the ordinary folk, just enjoy the ride with the cheaper exchange rate. As for property owners, they are not likely to lose out in the longer term.
For prospective buyers, they can now afford to wait because uncertainty will create volatility and cheaper asset prices.