With the coronavirus continuing to affect the UK economy and the issue of securing a Brexit trade deal persisting, the British Pound is forecast to struggle, with investors’ growing increasingly anxious.

While worries about the coronavirus pandemic overshadowed Brexit temporarily, political concerns return as the government has highlighted its reluctance for a Brexit extension.

Brexit: No extension

With the transition period due to end on 31 December and with only three rounds of trade talks remaining, the UK would need to negotiate a trade deal by December 2020, especially when the government says that an extension would only "prolong the delay and uncertainty" around Brexit.

David Frost, the UK's chief negotiator and Michel Barnier, the European Commission's chief negotiator, after their Wednesday meeting via video conference, agreed on three weeks of talks beginning on 20 April, 11 May and 1 June. In a joint statement, they recognised that their work has helped to "identify all major areas of divergence and convergence", but further negotiations were needed "to make real, tangible progress in the negotiations by June."

But the UK government has clarified that no extension would be asked from the EU, despite recent calls by International Monetary Fund Managing Director Kristalina Georgieva to extend the period for negotiations and not "add to uncertainty" as a result of the coronavirus.

However, the prime minister's official spokesman said: “We will not ask to extend the transition period, and if the EU asks we will say 'no.' Extending the transition would simply prolong the negotiations, prolong business uncertainty and delay the moment of control of our borders. It would also keep us bound by EU legislation at a point when we need legislative and economic flexibility to manage the U.K. response to the coronavirus pandemic.”

David Frost has also similarly clarified the government’s intentions: “Extending would simply prolong negotiations, create even more uncertainty, leave us liable to pay more to the EU in future, and keep us bound by evolving EU laws at a time when we need to control our own affairs. In short, it is not in the UK's interest to extend."

The Prime Minister’s confidence in striking a satisfactory trade deal by the end of the year has been criticised by the opposition, with Liberal Democrat Sir Ed Davey saying that the refusal to extend the transition was "deeply irresponsible."

Concerns have also been voiced by the financial world. Economists and strategists have warned about the risks for the pound and have noted that uncertainty typically has driven investors to sell the pound against every other currency. Analyst at Thomson Reuters Richard Pace noted: “GBP dealers should fear July 1, when it will be too late to extend the Brexit transition past Dec. 31, 2020, and GBP would rightly suffer. The UK government has been vehement about not asking for an extension, and the UK parliament won't be able to force one this time, since Prime Minister Boris Johnson's huge Conservative majority will back his decision."

“Tough Times” for UK economy

It is not only the current uncertainty with Brexit, but also the coronavirus’ effects that will deeply hurt the pound and the economy. Chancellor Rishi Sunak has said that the coronavirus will have "serious implications" for the UK economy, as the Office for Budget Responsibility (OBR) is expecting that the virus will shrink the economy by 35% by June. Sunak said that the government needed to be honest and that the OBR’s figures suggest that the UK is facing “tough times, and there will be more to come.”

While the government is "not just going to stand by" and will try to protect “millions of jobs, businesses, self-employed people, charities, and households," the effects of the lockdown cannot be minimised.

Robert Chote, the chairman of the OBR, said that a three-month lockdown followed by another three months of partial restrictions would see the economy declining sharply, a drop that would be the biggest "in living memory."

The International Monetary Fund has also warned that the virus would cause the UK economy to shrink by 6.5% in 2020, and the global economy to contract by 3%.

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Buying property overseas can be a stressful experience especially after the spread of the coronavirus and European countries’ lockdowns. However, you might not need to postpone your dream of buying a house abroad, as agents, notaries and lawyers have found new ways to respond to the situation.

Viewing a property

While you cannot be present materially to view your dream home, as countries such as Spain and France are on a state of emergency, many agencies continue to serve their clients through virtual tours and other online materials as an article in the Financial Times has pointed out. French agency Leggett Immobilier  state on their website that are open for business but can’t offer property visits. What they do offer, though, for the moment, is “a mix of videos, virtual tours, floor plans and additional photos.” They say that their agents are available to speak with clients through the telephone or video conference, and vendors willing “to do facetime or skype visits with you online.”

Proof of ID

While many viewings might have been postponed due to travel bans, agents and notaries are completing most paperwork online with the use of digital signatures, scanning and emailing documents or customers giving power of attorney (POA) to their lawyers. As the French agency says, their clients can give a “power of attorney” so they “don’t need to be physically present at either exchange or completion” when they purchase a property. While individual notaries might “have different interpretations of what is currently acceptable,” they note that clients’ agents will be able to clarify the current status of any purchase they have made.

According to Leggett, purchases continue with notaries accepting proof of ID by e-sign software such as web portals DocuSign and Yousign, without needing certification by a notary in the UK. The use of video conference and video links can also be used so that the notary can see the clients in real time signing the documents.

It is believed that the use of electronic signature in signing contracts remotely will continue and become more widespread over the coming weeks, especially when clients have already viewed the property and have already agreed on a price prior to the lockdown.

Flexible Dates

If you have already found your home and are in the middle of completing the purchase, then using a flexible completion date can ensure that the sale still progresses smoothly for both parties. Solicitor at My Lawyer in Spain Alex Radford says that they are suggesting a future completion date of at least two months which should be included when signing the documents. “There needs to be a clause inserted that states ‘completion will be by ‘x’ date or earlier by agreement or later if the parties or their legal representatives cannot attend completion due to Covid-19 crisis,’” he says. Radford clarifies that only documents of an urgent nature are signed, while other legal work is postponed, according to the notary’s criteria.

Agreeing on a flexible date is important, as this will guarantee securing your funds and progressing with the purchase. The FT article notes that having a “‘safety-net’ clause that allows buyers to pull out if they cannot secure a mortgage,” or extending target days will protect buyers as well as sellers who fear that their property might be devalued after the coronavirus.

If you are in the process of buying your dream home, there is no reason to panic. Jacqui Reddin, Head of Sales Development at Beaux Villages, says that staying in touch with your agent and remaining informed is the best way to move forward. She clarifies that they “are still actively dealing with ongoing sales and even have new ones since lockdown. The buying process is bound to take a bit longer, but if we all stay connected things will start to flow more smoothly.”

In regards to financial concerns over transferring your money abroad or currency exchange, keeping in touch with your currency specialist such as Universal Partners FX can give you peace of mind and help you navigate the unexpected volatility of currency markets. If you want to schedule ahead and safeguard your funds, talk to one of their foreign exchange experts today.

Sterling has risen against both the euro and the dollar benefitting from a drop in the euro and market risk.

Despite news of Prime Minister Boris Johnson’s being admitted to hospital for coronavirus symptoms, which initially hurt the pound, the British currency is now on the increase as the PM is recovering but also as risk appetite is on the surge.

The increase in risk appetite results from the slowing of the spread of the coronavirus in European countries, something that has impacted on the greenback which on Tuesday fell, while riskier currencies rose.

Boris Johnson’s Recovery

Yesterday, Chancellor Rishi Sunak had said that after two nights in intensive care, Prime Minister Boris Johnson was "improving" and "engaging positively" with medical staff at St Thomas' Hospital in London. The PM was taken to St Thomas' Hospital on Sunday after he tested positive for the virus and was moved to intensive care on Monday.

In the meantime, Sunak will be holding a Cobra meeting on Thursday to review the government’s approach to lockdown measures. Due to the coronavirus lockdown restrictions, the meeting will be held online via a conference call and will be attended by ministers and other top government officials.

Cobra stands for Cabinet Office Briefing Rooms and is usually held during national emergencies. In the past, Cobra meetings were held after 9/11 and 7/7 terror attacks, Lee Rigby's murder, 2001's foot and mouth outbreak and 2018’s Novichok attacks in Salisbury.

Today’s review will look at the need for restrictions, which were announced by Mr Johnson on 23 March. According to Sunak, “the review would happen ‘around’ the three-weeks point, which would be based on evidence that will ‘only be available next week’.” He added: "I think rather than speculate about the future, I think we should focus very seriously on the here and now and the present.”

Weak Euro

Sterling’s rise comes as a result of a weak euro after the Eurozone’s failure to agree on a common approach to the economic impact of the coronavirus. It is understood that a joined fiscal response will effectively stop the collapse of the Eurozone’s economy. This is why, many European nations such as France and Italy have requested a “coronabond” in order to secure funding to help those European countries whose economies have been hit the hardest by the coronavirus epidemic.

 The disagreement among European nations is intricately connected to the idea that a coronabond would mean managing the risk of all Eurozone states and would demand richer states such as Germany, Netherlands and Austria to fund it, an idea that they highly oppose to. It is this lack of agreement on how to support member states affected by the virus that is currently testing the strength of the euro.

As Pound Sterling Live reported, “The ability of global governments and monetary authorities to provide fiscal and monetary assistance to their respective economies at this time will ultimately limit the damage inflicted by the virus outbreak, as well as determine how quickly they recover. For markets, this will become a key differentiator between various currencies, with those underpinned by credible policy initiatives likely to outperform.”

Emergency Funding

To combat the effects of the coronavirus pandemic, today (9 April), the Bank of England has agreed to temporarily lend billions of pounds from its emergency overdraft to support businesses and workers.

The so-called “ways and means facility” will enable the government to access a large amount of funds in a short period of time to support the economy and pay for its stimulus programme, while minimising financial distraction.

In a joint statement, the Treasury and Bank said: "The government will continue to use the markets as its primary source of financing, and its response to Covid-19 will be fully funded by additional borrowing through normal debt management operations."

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