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Soft or hard Brexit?

As an expat myself, I have been keeping a close eye on the news relating to the British people’s decision to seek an exit from the EU. Our newspapers are filled to the brim, day in and day out, with commentary from the Brexiteers and Remainers. Everyone seems to have an opinion as to what will take place, how it will look and what actions you need to take. But the basic facts at this moment in time are that we don’t know – it is all speculation.

I recently joined a colleague of mine and attended a talk by lawyers of PLMJ – one of Portugal’s leading legal firms – at the invitation of the Portuguese Chamber of Commerce in the UK. The firm has clearly spent some time internally looking at some key areas, attempting to identify what would happen in the event that Article 50 is invoked. Some great detail was provided on subjects like visa/residency, health and trade.

All extremely useful and enlightening – but I was still left with a feeling of ‘who knows’ …

We don’t, at this stage, know whether this will be a soft or hard Brexit; whether the UK’s deal with the EU will look like Norway or some other special deal. All I know is that none of this would have taken place if the EU had listened to the issues and sought some consensus on the subject of immigration. A great deal of this being evident in the sentiment of far-right groups – who seem to be gaining ground – in other Europeans countries. Even Merkel herself seemed to finally realise her stance on immigration could impact her remaining in power at the next German General Election.

Furthermore, we now know the decision of the High Court in the UK insisting that Brexit must be discussed and agreed in Parliament. This is a huge blow to the PM, who has quickly reacted to appeal the decision and inform all those around her that “the will of the people will be followed”.

The FTSE reacted as expected moving south as did the pound moving north. This will now push us into a period of uncertainty in the markets – so expect volatility.

Mrs May will know that her Parliament is more pro EU than anti – so this is not the outcome she was looking for. This could well push us into an early General Election. This will be interesting as it will test the recent statements of the ex-PM Tony Blair.

Mr Blair recently provided an interview where he called for a second referendum and suggesting that the Remainers should take to the streets and be heard; he also felt that the general opinion of the British public had changed and that a Brexit was no longer what was wanted.

Looking at the public opinion on social media, I feel that the events of the last few days will only serve to further divide the country.

Expats in Portugal
In the event of a Brexit, it may well be the case that we need to seek a visa or jump through a few more hoops to get residency – but do we really think that Portugal will make it difficult for the British expat to remain and/or move here? Personally, I don’t think so.

The one area of concern I do have is on the subject of pension transfers. If the UK were to leave the EU and move away from EU legislation, what will they do with pension legislation? Could they remove the ability for those with UK-based pensions to transfer them into the EU through recognised overseas pension schemes? I think this is a possibility, especially taking into consideration the poor position most defined benefit pension schemes find themselves in.

Pension transfer calculations at this moment seem high versus the guaranteed pension benefits on offer; this coupled with low interest rates and a falling Lifetime Allowance add up to a perfect time to review any UK-based pensions – a mere 2% increase in interest rates could have an alarming impact on a transfer value. Advice in this area though is essential.

So whatever the politicians decide to do, I think the feeling of ‘don’t know’ will remain with me for the foreseeable future and post the High Court ruling – the timeline has only further lengthened.

By Robert Mancera

Robert Mancera is Director and GM at Blacktower Financial Management (International) Ltd with offices in Quinta do Lago T: 289 355 685 and Cascais
T: 214 648 220 |
[email protected]
Blacktower Financial Management (International) Ltd is licensed by the Gibraltar Financial Services Commission. Licence Number 00805B. Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority.