Phoney Brexit

Eric Curran

July 19, 2017

Eric Curran is managing partner of DM Hall Chartered Surveyors, based in the firm’s Glasgow North office

The Brexit negotiations have started, but for all the information emerging from the various camps, a disinterested observer would hardly be aware that one of the most important periods in the long history of the UK is now under way.

The current situation is eerily similar to the Phoney War – for younger readers, the period in World War Two between September 1939 to April 1940, when many Britons daily expected a major calamity, but nothing happened. The Germans called it the sitzkrieg, or “sitting war”.

Tenants expect to move in quickly

As then, people now are fed up with what seems to be a policy of masterly inactivity, particularly on the part of the UK and, now that our exit from Europe is a fait accompli, they want it to be concluded with the utmost dispatch.

Uncertainty is the dragging sea anchor that disincentivises productive and forward-looking economic activity. People cannot plan and there is an understandable temptation to batten down the hatches until the coast is clearer.

UK Exit Secretary David Davis’s team’s insistence that they do not want to provide a running commentary on the talks is in direct conflict with the EU’s Michel Barnier demanding transparency – though, at the moment, that transparency appears to apply only to matters advantageous to his side.

But while the 1939 Phoney War saw little actual action, it gave the UK an invaluable breathing space to build the resources, materiel and strategies to conduct the next five years of global conflict. The same can apply to forward-thinking business during this hiatus.

The property market is directly affected by external events and we may have to become used to a period of flashpoints, or the intermittent emergence of substantial blocks of new and relevant information.

Certainly, surveyors will have to factor in changing circumstances as they emerge. Take migrant workers, for instance. Do we have a duty to include in a report on, say, a soft fruit business, the potential effect of a labour shortage? Of course we do.

Similarly, should investors in, for instance, properties housing financial services companies be alerted to potential impacts of the post-Brexit exodus of some of these services to the continent? Of course they should.

But at the same time, we do not want inaccurate predictions of the Brexit impact on businesses to start a panic, or act as a catalyst for precipitate action. Like everyone else, we need reliable information about the negotiations and some measure of certainty. Surveyors reflect the market; they are not expected to make the market.

And we have to bear in mind that coming changes in the market may turn out to be positive. While the EU negotiations are dealing initially in broad concepts, the Great Repeal Bill – truncated to the Repeal Bill in the recent Queen’s Speech – may have a more direct impact on business and people’s daily lives.

It will repeal the European Communities Act 1972, ending the supremacy of EU law in the UK, and transfer EU law onto the UK statute book. This will allow the UK to review, amend or scrap these laws in future if it so decides.

It would be reasonable to assume that the UK would then proceed to a calm and orderly exit and subsequently adjust domestic legislation to create economic and fiscal conditions which are as favourable as possible to domestic consumers, home buyers and businesses.

However, while we are recognising that the local and national property markets are at the mercy of the wind of change sweeping through Europe, we also have to be aware that supranational events may intervene.

Brexit-related issues could become somewhat academic if the current regime in North Korea continues to prod the US with a stick. The volatility of the current incumbent in the White House is a concern which resonates far beyond Europe’s borders.

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