The pound has been experiencing its ups and downs but was knocked down on Thursday morning due to a statement by the DUP. After it had reached four and five-month highs against both the dollar and the euro in a week that was filled with expectation for a deal, Thursday morning’s setback wiped away most of yesterday’s gains. However, if a deal is announced, it is expected to rise again.

Brexit deal and the pound

Talking to BBC Radio 5 Live's Wake Up To Money, Neil McDonnell, chief executive, ISME, representing over 10,000 small and medium sized Irish business, said that positive news in regard to the deal will be good news for the pound, and for the Irish economy too. He said: "For business people, what you don’t want is an enormously complex or administration heavy transaction. One of the industries that have been most badly affected by Brexit has been the mushroom sector because of the decline in sterling. ‘Good news’ out these latest talks might help sterling bounce. Any appreciation in sterling would make things considerably better for people on this side of the border."

Talking on the same show, James Bevan, chief investment officer at CCLA Investment Management, added: "[There's] a general expectation that Mr Johnson will secure a deal with the EU so the currency markets have been relatively strong…. Let me be very clear, the pound is undervalued if there is a deal.” But it could hit parity with the dollar in the absence of no deal.

DUP concerns

The DUP’s statement from Arlene Foster and Nigel Dodds said that “as things stand, we could not support what is being suggested on customs and consent issues and there is a lack of clarity on VAT. We will continue to work with the Government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom.”

The statement clarifies that the DUP is unable to accept the deal as it stands but remains open to discussions. This could mean that the ball is now in the EU’s court and that Michel Barnier would need to compromise on the customs arrangements, consent and the issue of VAT.

What could happen now?

It is possible that the Prime Minister Boris Johnson proceeds to offer more concessions, but this is unclear and could possibly destroy the possibility of a deal.

But, it could also lead to the EU compromising. This is also a complex possibility as the issue of borders is a significant obstacle, and the EU is concerned with protecting the single market from the movement of rogue goods. Without border checks this is not a viable alternative.

A third possibility would be a change from the DUP itself. They have already stated: “We will continue to work with the government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom”. So, there may be changes.

Pound and headlines

Volatility will continue as headlines will affect the price of the pound, with further changes through the course of the day. With ongoing negotiations between the EU and UK, and the EU summit commencing on Thursday, markets will be vigilant awaiting confirmation that the two sides have reached an agreement.

According to Quek Ser Leang, a currency market analyst quoted on Pound Sterling, "While the current rally is overbought, it is too early to expect a sustained pull-back. There is still room for further GBP strength but the pace of any advance is likely to be slower.”

Analyst Kim Mundy, with Commonwealth Bank of Australia, also agrees that a deal could boost the pound: "The EU’s leader’s Summit begins today. Market participants are waiting for confirmation (or otherwise) that the EU and the UK have reached a new Withdrawal Agreement. News of an EU‑UK deal today could see GBP/USD hit a fresh five‑month high above 1.3000."

Transferring funds abroad?

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With the EU asking for more concessions from the UK, the pound fell against both the dollar and the euro. Despite optimism that Britain and the European Union will be able to come to an agreement and strike a Brexit deal this week, the pound was hurt by the realisation that there’s still a long way to go.

On Monday, the PM's official spokesman told journalists that "Talks remain constructive, but there is a lot of work still to do." Similar were also the comments by Ireland's Tanaiste (deputy prime minister) Simon Coveney: "A deal is possible, and it's possible this month," Mr Coveney said. "It may even be possible this week. But we're not there yet."

Last week, Sterling rose higher on the possibility of the UK and EU finding common ground. However, the outlook is now more measured and expectations on Brexit negotiations are constrained, something that has helped to pull Sterling back down. With EU leaders fearing that Johnson will not manage to pass Brexit in Parliament, uncertainty will remain.

Getting Brexit done

In the meantime, in Brussels, both sides are trying to reach a Brexit deal before Thursday's summit of European leaders, despite the "big gaps" as senior EU official Michel Barnier called the existing differences between the UK government and EU. 

On Thursday (17 October), the two-day summit of EU leaders will begin in Brussels and is the last meeting scheduled before the Brexit deadline. On Saturday (19 October), there will be a special sitting of Parliament. In case there’s no Brexit deal approved by MPs and no agreement about the UK leaving with no-deal, Saturday will also be the day that the PM will have to ask the EU for a delay to Brexit under the Benn Act.

Both sides are willing to agree a deal before the EU summit on Thursday and Friday, and, hopefully, that will enable the government to introduce a withdrawal agreement bill to be voted in a special Parliamentary session next Saturday. However, many remain pessimistic, including EU officials, with one senior figure describing the possibility of reaching a deal at the summit "ambitious." According to Tony Connelly, Europe Editor for Irish state broadcaster RTÉ, "Following two days of intensive talks the two sides are still far apart on customs. The EU side continues to have grave concerns about the UK proposals to keep NI in the UK customs territory, with Theresa May's old Customs Partnership idea being recycled and adapted for NI.”

Before the European Council summit starting on Thursday, markets will be waiting to see the developments before commenting on the pound’s future. Markets remain hopeful as long as there are ongoing talks. However, both sides would need to come to an agreement on the issue of the Irish backstop, ideally avoiding a hard border with Ireland. 

According to The Times, EU negotiators have requested more concessions from the UK, with the EU’s Chief Brexit negotiator Michel Barnier, describing Britain’s proposals unacceptable. Barnier told David Frost, Britain’s chief negotiator, that “Mr Johnson would have to give further ground on a customs agreement for Northern Ireland,” if a deal were to be struck.

Boris Johnson needs more backing for Brexit deal

In order to pass a new Brexit deal through parliament Boris Johnson will need support from both Eurosceptics and pro-deal Labour MPs. He will need to win over all the 28 Tory “Spartans”, as well as get help from the DUP or Labour backbenchers.

In a loyal address after the Queens speech on Monday, Lee Rowley, a Conservative MP expressed his position on Brexit and how it was necessary to get it done: “If there is light at the end of the tunnel later this week, and heaven knows I hope there will be, we have a fundamental responsibility in this place to try and resolve this most vexed of problems and allow our despairing country to move on. For the health of our democracy and to restore faith in this most venerable of institutions, in my view we simply must get Brexit done.”

Eurosceptic Steve Baker, was positive of a deal as he said, “Boris has had a dramatic shift towards a free trade agreement that would leave us a self-governing nation … So now really, the devil is in the detail … I am really looking forward to being able to vote for a tolerable deal but, until we get the text, I cannot tell you what we are going to do.”

Others expect to see more in order to vote for a deal, including reassurances on Northern Ireland, workers’ rights and environmental protections.

Whether a deal is possible, it will be obvious within the next few days. The government will have to table a motion by Wednesday if it wants MPs to debate an agreement on the Saturday sitting. If the UK agrees to make concessions to the EU, there is the risk of the deal not passing through the House of Commons with the DUP and Brexit hardliners not supporting it.  

It is within this context, that foreign exchange analysts are not hopeful that a deal could easily pass in the House, something that will lead to another Brexit extension and a snap General Election.

Markets are now cautious as they await proof that the new Brexit deal can pass Parliament before bidding Sterling to rise higher.

Transferring funds?

Are you worried about currency volatility when moving your money? Foreign exchange specialists, Universal Partners FX  can help you transfer your funds overseas fast, safely and cheap. Get in touch with them today to find out how much they can save you on your international money transfers.

With the Brexit deadline looming, many Brits are relocating or buying their property abroad, making such European countries as Spain, Germany and France their home. In Germany, the standard is usually renting, but when Germans are making their dream of owning “my own four walls” (die eigenen vier Wände) a reality, then they expect to buy a property to live in for life. This is not unlike many of the Brits deciding to buy a property in Germany. German property has generally been a stable, reliable investment for local and overseas investors.

Brexit and the German property market

It’s not just Brits wanting to escape to Germany, but also international investors who are considering investing due to Brexit and the ensuing financial uncertainties. Buying property in Germany may be a great option, especially when the German economy is healthy and the property market is strong, with prices rising steadily. While Brexit might have deflated London’s real estate bubble, very low interest rates are pushing prices in Germany’s Munich and Frankfurt property markets. With prices rising steadily for years, there is greater risk of them falling unexpectedly.

Low interest rates

In Germany, low interest rates have helped increase real estate valuations. The European Central Bank’s loose monetary policy and low interest rates have benefitted owners of financial assets who have borrowed at very low costs to buy property or stocks in search for better returns.

According to a new report by analysts at Swiss bank UBS, Munich is at the greatest risk of a real estate bubble, while Frankfurt has seen prices rise by double-digit percentages. Frankfurt used to be "very cheap compared to London and other cities,” told CNN Business, one of the report's authors, Matthias Holzhey. While building activity in Frankfurt rose significantly in 2017, the rise in population led to an 80% increase in real price growth over the past decade, the report showed.

Germany as “safe haven”

Germany is a great European alternative to London’s traditional appeal, with Frankfurt and Berlin being particularly high in demand. Germany has a reputation as a “safe haven” making it attractive to buyers, with an increasing number of international investors from Asia, the Middle East and the United States.

In general, across Germany, rents and property prices are robust, but whether this is sustainable in the long run, remains to be seen. According to data released in 2018 by the Bundesbank properties in towns and cities could be overpriced by as much as 15-30%. As it was reported by the Bundesbank’s experts, there have been continuing price exaggerations in urban areas: “While price dynamics, from a macroeconomic perspective, were largely consistent with developments in the supply and demand-side variables, housing prices in towns and cities were still well above the level that appears justified by the longer-term economic and demographic determinants.” The economists estimated “upward price deviations for towns and cities at between 15% and 30%.”

However, buying a property in some places in Germany is affordable and should not deter Brits from making their decision to move there. Expatica noted that data from the German consumer organisation Stiftung Warentest in 2017 showed “that buyers in Magdeburg and Cottbus could buy a 130 square meter family home for €200,000, but that for the same money they’d get a small two-room apartment in Cologne or Dusseldorf, and only a dorm in Munich.”

Based on data from the third quarter of 2017, a house in Munich could be as high as €5,839 (apartment), €4,233 (family home), whereas in Cologne and Hanover €2,671-€2,257 (apartment), €2,240-€2,007 (family home), respectively.

Buying a property: costs

After doing your research in various property portals such as immobilienscout24 or immobilo, take your time to decide which property is most suitable for you and your family. When buying a home in Germany, you will be expected to pay 10% of the purchase price to cover the property transfer tax (3.5–6.5%); notary’s fees (1.2–1.5%); registration fees (0.8–1.2%); and estate agent’s fees (1.5–3%, plus 19% VAT).

One of the very important decisions you will also have to make is to choose an expert firm in foreign exchange who will help you with making regular transfers and protecting your funds from currency volatility. Universal Partners FX is a great option for anyone buying property abroad, as they are experts in helping expats like yourself move their hard-earned money abroad. Get in touch with their dedicated currency specialists and find out how much they can save you on your international money transfers.

UK manufacturing PMI beat expectations increasing to 48.3 in September and pushing the pound higher. However, the pound’s lift might be short lived as the data also indicated that signs of a recession are highly likely. Most importantly, UK factories are cutting jobs at the fastest pace in six years, despite companies stockpiling.

Brexit and ongoing economic uncertainty, the weak European economy and the trade war between the US and China are some of the key factors impacting on the UK manufacturing sector.

Manufacturing data in detail

The IHS Markit/CIPS UK Manufacturing and Purchasing Managers’ Index (PMI) showed that the UK manufacturing sector continued its downturn, albeit not as bad as the previous month. Stocks of purchases and input buying volumes rose as companies resumed their preparations for the latest Brexit deadline on 31 October. However, levels of output, new orders, new export business and employment fell further, compared to the previous month.

With companies experiencing a reduction in new orders, output was cut back, while the investment goods sector performed the weakest due to lower output and new business. Brexit affected capital expenditure as clients were reluctant to commit due to political uncertainties.

In September, the consumer goods sector rose, but both consumer goods and production sectors’ outlook was negative, with new work intakes decreasing.

Brexit uncertainty

Brexit uncertainty as well as clients redirecting supply chains away from the UK impacted on new export business. This along with the general decrease in manufacturing affected the labour market as companies reported redundancies and job losses across the consumer, intermediate and investment goods industries and at SMEs and bigger producers.

Brexit was also the motivation behind manufacturers’ increased purchasing and stockpiling. In this sense, optimism remained low as continued Brexit insecurities made any forecasting impossible.

Rob Dobson, Director at IHS Markit, confirmed that the “UK manufacturing downturn continued in September, adding to signs that the sector may be sliding into recession.” He also added that: “Some manufacturers noted increased inventory building activity in preparation for the forthcoming exit date, but the impact of such Brexit-related stock building was dwarfed by weakening demand for other customers, due in part to clients routing supply chains away from the UK.” For Dobson, “The shroud of uncertainty also weighed on manufacturers' confidence, which remained at one of its lowest ebbs in the survey history. These headwinds all ensure that manufacturing will likely remain a drag on UK economic growth during the months ahead.”

Duncan  Brock,  Group  Director  at  the  Chartered  Institute  of  Procurement & Supply, noted that “Businesses were less hopeful about the strength of the marketplace in generating manufacturing growth in the coming months as new orders continued to fall away, and business optimism remained at lower than average levels in all three sub-sectors.”  As a result, “European clients became more resigned and made concrete plans to move away from UK suppliers and business closer to home seemed more reliable. This exhausting set of conditions meant companies shed jobs at a rate not seen since 2013 as redundancy packages were prepared and new staffing plans abandoned.”

What’s to come

On Wednesday, Boris Johnson is expected to submit his proposals to an alternative to the Irish backstop, with political and financial analysts turning their attention back to Brexit. While impossible, any positive response from the EU might lift the pound a little bit higher.

If you are importing from, or exporting to, the European Union, political uncertainty greatly impacts on currency movements and significantly affects your cross-border currency transfers. Get in touch with a currency specialist such as Universal Partners FX and find out how they can help you. UPFX is the best option for foreign exchange services, helping companies make regular payments while hedging their business from the risks of currency volatility. With Brexit looming and the manufacturing sector slowing down, protecting your funds with the help of a currency specialist is the best way to safeguard your business and funds.

Buying property in France is a big commitment, considering the complexities of Brexit and living abroad. Despite, however, that the UK is leaving the EU, Brits continue to buy homes in France for permanent residence or for visiting during their holidays. For the Brits who already own a house in France, the same rules will apply, but after Brexit, different property regulations might apply for non-EU members.

What to do in the meantime?

If you are moving to France or already living there, you should register as a resident and also for healthcare. Make sure that your passport is valid for travelling.

Residency

Currently, you can still apply for a European carte de séjour at your local prefecture, as préfectures will continue to accept applications and issue EU cartes de séjour to UK nationals. After Brexit, however, and despite having your European carte de séjour, you will need to get a different residence permit depending on your situation. For example, you could be a UK national waiting for French nationality or a UK national married to, or in a civil partnership with, a French national.

In the case of a no deal Brexit, and after the new system is launched, UK nationals who have lived in France for at least five years and have a permanent carte de séjour will be able to exchange it for the new card easily.

Buying property in France

Rural France is of course much cheaper than Paris or popular areas such as Lyon or Bordeaux. Dordogne, Languedoc-Roussillon, Toulouse, Provence-Alpes-Côte d'Azur and Brittany are some of the areas particularly popular among British expats. In the Dordogne, Nouvelle-Aquitaine, for example, an average property price is €111,000. However, when you are interested in cheaper properties, you should look at more rural areas such as Nièvre, Burgundy-Franche-Comté. There, the average property price is €85,400, whereas in Indre, Centre-Val de Loire, an average property price is €80,000. In Creuse, Nouvelle-Aquitaine, one of the cheapest departments in France for property an average property can cost around €66,000 and in Cantal, Auvergne-Rhône-Alpes, you can get a property for €86,500.

What to consider before purchasing

Before buying your dream home abroad, you should consider a few things. First, you will need to think about who is buying (wife/husband) and what happens in the case of the owner dying. Then is the important issue of financing your move and buying the property, which can also mean borrowing funds or selling your property back in the UK.

It is significant that you take your time before signing any binding contract, so you understand the terms and conditions, the property itself and your rights. Find out as much as you can about the property, its surrounding area and any pending development plans that might alter the landscape, your property’s views or its future price.

For building a property, or for any renovations, make sure you have a planning permission or immediately consult an official from the relevant department. Your architect or engineer should be able to direct you accordingly. French land is classified according to the kind of planning zone within which it falls, and it can range from NC (non-constructible), through NA and NB on to UB and other urban classifications. This means that its classification will determine the amount of floor space which you will be allowed to build on that land.

Currency matters

Other very important considerations are transferring funds to buy your property and choosing a reliable foreign exchange specialist for doing so. Currently, anyone buying property abroad will find that the pound to euro exchange rates continue to be unpredictable.  Risks of a notable decline in the pound due to fears of a no deal Brexit continue. On Wednesday, this was mostly felt after Prime Minister Boris Johnson told MPs that he won’t be asking for an extension to Brexit if Parliament does not pass a Brexit deal on 19 October.

With the currency market continuing to be volatile, the best option is to get help from an expert currency broker such as Universal Partners FX.

UPFX can assist you with your international currency transfers, making the process easy, fast and cost-effective. Whether you will need to make multiple transfers or a large currency transfer, a volatile and unpredictable market can significantly affect the value of your funds, especially when exchanging it into foreign currencies. Get in touch with them today to find out how they can help you.

Trade Secretary Liz Truss said that countries outside the EU want Britain to “get on with” Brexit in order to begin striking free trade deals. This of course does not mean that Britain is in a desperate situation, as a Bloomberg article argues. In fact, London remains the epicentre of the financial world and Brexit just cannot simply erase London's “trading allure,” according to foreign-exchange market data.

Liz Truss on Tour

During her tour of Australia, New Zealand and Japan, Liz Truss said that senior figures she met in these countries expressed their desire to reach agreements with the UK very "quickly.” She said: "They just want us to get on with it. And what they care about is deepening our relationships with them. And also they want Britain to be at the table at the World Trade Organisation making the case for free trade."  

In the process of drawing a post-Brexit trade agreement with Japan, Truss argued that Brexit would be a positive thing, attracting new businesses to Britain and she called such businesses to express their views on what the deal should contain. Truss clarified that countries such as Japan, Australia, New Zealand and the US were considered "like-minded" countries with which the UK can begin striking its trade deals after Brexit. She said: that these are “all countries who are like minded, they're democracies, they believe in free enterprise and free trade, and we want to work with them to promote those ideas across the world." This is important for Britain in order to reach bilateral trade agreements in areas such as financial services, artificial intelligence and technology.

In regards to foreign leaders’ "massive enthusiasm" to strike trade deals with the UK, Truss said: "In Australia, from the Prime Minister downwards, everybody in the government is very, very keen to move forward with the deal with the UK, and restore some of those historic ties, which may have been diminished while we were part of the EU. The way I see it is that Australia and New Zealand are old friends ... with which we've got new opportunities." She continued: "There is a real enthusiasm for getting on with it. I heard that today from ministers in Japan. They want the deal done as quickly as possible. And I heard it in New Zealand and Australia as well." 

Delivering Brexit

She noted that ministers needed to resurrect the public’s lost trust in delivering Brexit on time despite previous delays. Truss warned that voting alongside Jeremy Corbyn was "hugely problematic" and that Tory MPs needed to be "backing the prime minister to the hilt."

Truss urged that now is the time that "we need to be looking forward and looking at the opportunities of Brexit. I think there's too much navel gazing going on at the moment about what's happened in the past. The whole point of Brexit is taking control over any rules and regulations, being able to strike free trade deal for the first time in 45 years. There's a huge world out there, which is incredibly enthusiastic about that potential and possibility. And that's what we will move on to."  

She underlined that, "We simply need to deliver Brexit. And the Prime Minister is being very clear. He won't be seeking extension, we are going to leave the European on the 31st of October. And that takes the wind out the Brexit Party sails."  

London remains the “epicentre” of the financial world

For Truss, getting on with Brexit cannot be disastrous, and this is also supported by a recent article by Bloomberg columnist John Authers. According to Authers, Brexit cannot diminish London’s appeal as a global financial centre. As he writes, “The foreign exchange market remains by far the world’s largest and deepest. It is where the world’s financial imbalances are resolved. And London’s grip on that market remains stronger than ever. Amazingly, given that London’s access to the EU’s financial markets will be weakened under virtually any version of Brexit, its hold over foreign exchange trading has only tightened in the three years since the referendum.”

While many banks and investors might have arranged to move part of their operations to Paris or Frankfurt, the truth is that they have not yet done so. Authers points out to the latest findings of the Bank of International Settlements’ triennial survey of the foreign exchange and interest rate derivatives markets, published last week, and which shows the market shares of the U.K and the U.S., of all foreign exchange trading.

As the survey shows, London hasn’t lost its appeal, and this is due to certain advantages. It is, in fact, that London’s natural trading day “overlaps at least a little with the main markets in Asia and the U.S.,” as well as the use of the English language, and mainly the “huge pool of FX-knowledgeable talent,” that continue to give it an advantage. As Authers admits, against his own beliefs, is that the survey surprisingly proves that the Brexit vote has not yet caused “irreparable damage to the City of London.”

Importers and Exporters: Universal Partners FX 

While there are positive voices around us about Brexit, volatility and a weaker pound might continue to affect foreign exchange and transferring money abroad. If you are an importer or exporter making regular payments, the best option for you is Universal Partners FX. UPFX’s specialists in foreign exchange will help you take advantage of expert knowledge and strategic financial planning and will provide valuable guidance to protect your business from the risks of a volatile currency market. Get in touch with them today and find out how much they can save you on your international money transfers.

Life after Brexit might seem uncertain, but for many Brits the decision to buy property in Spain is a certain fact. While there might be certain changes in terms of British citizens’ rights with perhaps more documentation and bureaucratic controls, the promise of a sunnier climate and a richer lifestyle is definitely a key factor when moving to Spain.

UK nationals living in the European Union

As the government notes, continuing to live and work in the EU after Brexit would be influenced by each country’s rules and regulations. If you are a resident in Spain, you should register as one, as well as register for healthcare. You should also check if your passport is still valid for travelling and exchange your UK driving licence for a Spanish one.

Buying property in Spain

Buying property can be a very hard decision and a very complicated process. But if you have done your research and sought out the right people to offer support and guidance, you will easily navigate all the complexities and be prepared for any unexpected changes. For one, getting legal advice from an independent lawyer who had good knowledge of Spanish land law (urbanismo), will help you when dealing with developers or estate agents. In this respect, you will be protected from fraud and you will safeguard your interests and finances. While you might be very excited buying or building your own home abroad, being careful with the individual agents and lawyers, and always looking after your own interests is very wise in order to avoid disappointment.

The same goes with the Spanish notary public who will offer legal advice, prepare the contract and issue the public deeds. You might prefer to work with a British estate agent but ensure that they are reliable and registered with the Law Society in the UK. If you are looking for a lawyer or translator the government’s website has qualified professionals on their website.

If you need more assistance with the language and communication, especially when signing a contract, you will need to get an independent translator by checking the Spanish Ministry for Foreign Affairs website.

Things to do before transferring money to purchase the property

Before you buy the property, make sure you check the land registry extract (nota simple), so you know that the sellers are the same with the registered owner(s) of the property and land. It will be wise to check that there are no debts or charges, including a mortgage or any legal proceedings against the particular property. Documents such as the planning permissions and the property itself should have all licences and permissions.

In any case, having the property surveyed by a chartered surveyor would be the best route when you want to have everything in order without worrying. When you purchase the property you will pay tax, so you should know the cadastral value of the property and how much purchase tax will be due.

Check important documents:

First, make sure that the previous owner paid the owner’s annual property tax (IBI), by seeing the receipt. The town hall should provide a certificate proving that there are no unpaid rates from previous years.

You will need to get the cadastral certificate (with boundaries and size of your plot) that must correspond to the Land Registry records. You will need a habitation certificate to connect the electricity and water companies, as well as a receipt to prove all utility bills have been paid. You might also need a certificate signed by the President of the Community of Property Owners stating that there are no outstanding debts.

From 1 June 2013, all homes for sale or to let in Spain need an energy efficiency certificate, so ensure that the seller has this certificate. Once you get all documents, you should register the property in your name with the Land Registry.

Transferring funds

When you have all the papers in order, you would start thinking about transferring your funds from a UK bank account to a Spanish account to pay for the property. Transferring large amounts of money can be stressful, so getting in touch with a reliable foreign exchange specialist such as Universal Partners FX will protect your funds and save you time and money. UPFX have many years of experience in the currency market and can provide the best tailored solution for your money. Get in touch with them today and find out how they can help you make the most of your money.

With Britain’s future trade relationships in question, and a no-deal Brexit looming on the horizon, the government has been preparing for post-Brexit agreements in an attempt to minimise the effects of Brexit.

New Zealand and Britain trade deal

On Monday, Britain’s Trade Minister Liz Truss said that striking a trade deal with New Zealand would be a priority, as officials are working to create continuity and support their non-EU trading partners. Truss, is on a three-nation tour, which includes New Zealand, Australia and Japan, a trip that hopes to pave the way for trade negotiations after Brexit. Ahead of her trip, Truss said: “We’re going to be leaving the European Union on October 31 with or without a deal and as part of that agenda, striking trade deals much more broadly than we have been doing is going to be vitally important. Striking a free trade deal with New Zealand is a very important priority for the UK. It’s one of the first trade deals we expect to strike.”

Official data shows that trade between New Zealand and Britain is at about NZ$6 billion (£3.1 billion), with New Zealand being Britain’s 43rd largest trading partner in 2017.

New Zealand’s Trade and Export Growth Minister David Parker said that he wanted to find a way that will retain the existing advantages of New Zealand traders despite Brexit. Parker said that among the subjects discussed, were finding ways to cooperate such as Britain’s potential accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

Businesses preparing for Brexit

If the UK leaves the EU without a withdrawal agreement, it will be treated as a non-EU country. For this reason, it is significant that businesses in the EU prepare for this eventuality, if they have not already done so. Businesses that sell to, buy from, or move through the UK, goods, supplies or services will be affected.

Customs duties and restrictions

Without a transitional period, the UK will revert to the WTO rules. This will mean “declarations will have to be lodged and customs authorities may require guarantees for potential or existing customs debts; Customs duties will apply to goods entering the EU from the United Kingdom, without preferences. Prohibitions or restrictions may also apply to some goods entering the EU from the United Kingdom, which means that import or export licences might be required.”  No longer valid will be UK import and export licences, UK authorisations for customs simplifications or procedures and Authorised Economic Operator (AEO) authorisations. There will be VAT charges for imports of goods entering the EU from the UK, while exports to the UK will be exempt from VAT. Additionally many rules regarding declaration and payment of VAT will change.

It won’t be easy to move goods to the UK, as that it will require an export declaration. Movement of excise goods from the United Kingdom to the EU will have to go through customs before a movement under Excise Movement and Control System(EMCS) can commence.

UK businesses

UK businesses then that export, import or move goods and services through the UK will need to prepare by completing relevant documents so that the transition to post-Brexit Britain is as smooth as possible.

If you are an importer or exporter and are concerned about the weakening pound as well as unpredictable political developments regarding Brexit, get in touch with Universal Partners FX. UPFX can assist you with the complexities of cross-border payments and regular transfers, as well as hedge your funds against volatile currency market movements. Give them a call today to find out how they can help you save on your international currency transfers.

No-deal Brexit might loom on the horizon, but this has not deterred many Brits from buying or considering to buy property abroad.

When it comes to Brexit, the latest release of a government document outlining “reasonable worst case scenarios” in the case of a no-deal Brexit on 31 October, has left many shocked. While the government resisted the publication of the so-called Operation Yellowhammer document, the six-page document which is dated 2 August and was leaked to the Sunday Times last month, warns of a three-month disruption at Dover and other channel crossings, public disorder and shortages of fresh food.

Buying in France

While the political landscape in Britain is chaotic, with the prospect of a no-deal Brexit looking more threatening day by day, many Brits are considering moving to France.

As the British parliament is trying to stop a no-deal Brexit, many European countries, including France, Spain and Germany are preparing for Brexit.

The French government and customs authorities will test a period before Brexit to judge the preparedness of companies in the case a no-deal Brexit. According to Gerald Darmanin, the French minister in charge of overseeing the customs agency, French companies which conduct their business in Britain will have to present their plans online, make their declarations to customs officers and open up their shipments to inspectors.

He explained that countries doing business with Britain should be prepared to deal with the country as if it was “South Africa.” He also explained that, “For a month, we are going to act as if there is Brexit for a large number of companies. We’re going to put in place a sort of general rehearsal, so that we are ready at the end of October.”

With more than 4 million trucks going through the northern port of Calais every year, businesses have been used to frictionless trade without having to deal with customs controls and borders. For this reason, many fear that a no-deal Brexit would cause chaos at the borders creating uncontrolled traffic. In this respect, customs officers' numbers will increase by 700, while the customs agency is practicing all through September to prepare.

Residency rights for Brits

According to The Local, France will launch a new online platform in October so that Brits can apply for their carte de séjour residency permits. The French Prime Minister Edouard Philippe, stated: "The Ministry of the Interior will launch an online registration platform for British nationals living in France in October." The website will be in English and Brits will be able to complete their application online, scan in all relevant supporting documents and then receive a receipt for their application, with only one in-person appointment for fingerprints. This appointment can be done at préfectures, sous-préfectures or local mairies. Some prefectures have closed applications as they don’t know yet what will happen with Brexit, while others are processing applications within weeks. The online application system can be used by Brits already living in France on the day of Brexit.

The French government and the British embassy have advised British residents in France, living there for more than five years, to apply for cartes de séjour residency permits.

After Brexit, all British people will apply for residency rights, in the same way that third-country nationals do. While a no-deal Brexit will allow for a one-year grace period, applications should be sent within six months of Brexit day. On the other hand, if there is a deal in place, there might be a transition period until December 2020. For those who already have a carte de séjour permanent they will be able to exchange it after Brexit. More information is regularly updated on the French government’s website.

Kalba Meadows from the British in Europe citizens’ rights’ group said: "We were given to understand last year that there would be a centralised application platform, and this was confirmed in the table produced by the European Commission in June, so while it's not 'new news' for us it's good that a timeline will now been put into place so that the process can begin as soon as possible. It's going to be a mammoth task processing applications from up to 200k Brits in France. As ever, the devil is in the detail though - and we understand that although applications will be made on a central online platform they will still be processed by individual préfectures, many of which will struggle to meet the demand without extra resources.”

For the French government a no-deal Brexit is the most likely scenario, with officials expecting an economic slowdown.

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The release of the UK's GDP with a better-than-expected 0.3% growth in July, has raised chances of the UK avoiding a recession and boosted the pound. Data from the Office for National Statistics showed that all sectors of the economy grew in the month – the first of the third quarter, with manufacturing also expanding by 0.3%, and the industrial sector growing by 0.1% during the month. However, the last three months the GDP has remained flat, as Brexit uncertainty has impacted on investment.

This is why, despite Brexit recession fears having eased, the economy remains under pressure. For example, the services sector growth might be an indication that businesses are stockpiling in preparation for Brexit as its outcome continues to be unknown. Plus, as many economists indicate, it is unclear for how long growth will continue.

KPMG report  

As accountancy firm KPMG forecasted, there is a possibility of Britain falling into a recession in 2020 if it leaves the EU without a deal. According to the firm, a no-deal Brexit will negatively affect the UK’s trade and business confidence and lead to the economy shrinking by 1.5% in 2020. The accountancy giant is not the first to warn of the negative effects of Brexit on the economy, as experts have already underlined the grim economic outlook for Britain.

Forecasts by the Bank of England and the Office for Budget Responsibility, have also highlighted the negative economic consequences of a no-deal Brexit and, consequently, of losing access to the EU single market and customs union.

The possible recession will cause a rise in unemployment, a decline in consumer spending and an estimated 6 percent slide in house prices, the KPMG report added.

Yael Selfin, the  KPMG’s chief economist noted that in the case of a recession resulting from a no-deal Brexit, the decline in the pound’s exchange rate will “push up inflation to above the Bank of England’s 2 per cent target, potentially forcing the central bank to lower its key interest rate to near zero.”  With the central bank’s key rate currently standing at 0.75 per cent, interest rate cuts will possibly be no higher than 1 percentage point.

The report also said: “[The new government’s] resolve to leave the EU by 31 October has become increasingly clear . . . and the proximity of the date make the outlook for the next two years rather bipolar.” KPMG added that the pound’s 10 percent expected decline in value, will hurt even exporters as issues over borders will eliminate any positive effect the weaker currency might have. Selfin said: “The most damaging impacts could come from potential shortages of imported foodstuffs as well as medicines in the immediate term, negatively impacting households’ sentiment.”

Selfin could not be clearer when discussing the damaging effects of a no-deal on the economy: “With the Brexit debate poised on a knife-edge, the UK economy is now at a crossroads. It is difficult to think of another time when the UK has been on the verge of two economic out-turns that are so different, but the impact of a no-deal Brexit should not be underestimated. Despite headwinds such as the slowing global economy and limited domestic capacity, the UK economy now has the potential to strengthen over the next 12 months. But a no-deal Brexit could put paid to this upside, triggering the UK’s first recession for a decade.”

Government and Bank of England will be unable to stop a recession

Indeed, the outlook looks grim as the economy contracted by 0.2 percent between April and June, with investment and growth being limited. 

On Monday (9 September), the Resolution Foundation thinktank in its assessment of the UK’s readiness to respond to the next recession, said that the government and the Bank of England were unprepared and that this was a significant risk that policy makers should take seriously. As the think tank noted: “The UK’s macroeconomic policy framework has not kept pace with significant changes to our economic environment and is therefore at risk of leaving the country underprepared for the next recession. That is not a risk policymakers should take lightly.”

 In its key findings, the think tank stressed that the country was facing the biggest risk of recession since 2007, that those of lower incomes would be the most exposed to the recession and that monetary policy will be unable to provide “anything like the level of support it has previously in recessions, reflecting what appears to be a secular decline in the level of interest rates around the world.”

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