British Prime Minister Keir Starmer recently met with German Chancellor Olaf Scholz and European business leaders in a bid to reset UK-EU relations post-BREXIT. The two sides have agreed to work on an ambitious cooperation treaty that’ll primarily cover defence, trade, investment, and more.
Here’s what you need to know.
A new reset in UK-EU relations
Starmer's visit to Berlin, part of a broader European tour, looks to move Britain beyond the fractious EU relations of previous years. While the Prime Minister has made it clear that this reset doesn't mean reversing Brexit or re-entering the EU's single market, it does promise a closer relationship on several fronts.
Although they’re still ironing out the finer details, the cooperation agreement could potentially have far-reaching implications for the UK economy and expat investors. Here, we take a look at how it could affect your finances.
On the economy
The overall UK economy could see a boost from improved trade relations and increased cooperation. A closer relationship with the EU might lead to reduced trade friction and may stimulate economic growth. The Bank of England interest rate remains high at 5.25%, with possible rate cuts in the future.
Economic growth following the treaty could have knock-on effects across various financial sectors.
In the bond markets, we might see increased stability in government bonds. Improved economic prospects could lead to higher gilt yields, benefiting investors but potentially increasing borrowing costs for the government. EU bonds might also become more attractive to UK investors as barriers to cross-border investment are reduced.
The property market could see interesting developments. Increased economic certainty might boost confidence in the UK housing market, potentially driving up prices. For those interested in property loan notes or real estate investing, this could present new opportunities, particularly if the treaty leads to harmonised regulations that make cross-border property investment easier.
Fixed-interest ETFs might see increased inflows if the economic outlook improves and interest rates stabilise. However, the FTSE 100, with its high proportion of multinational companies, might face headwinds if sterling strengthens against other currencies.
On Pensions and retirement planning
Pension schemes could benefit from a more stable economic environment. Improved UK-EU relations might lead to better performance of UK and European assets, potentially boosting pension fund returns. Retirement investments with exposure to both UK and EU markets might see reduced volatility.
New fixed-interest investment opportunities for expat investors
The BoE interest rate decisions could be influenced, particularly if the new treaty leads to increased economic stability. A more cooperative relationship might lead to streamlined processes for cross-border investments. A more predictable interest rate environment can provide better fixed-interest products for expats looking to invest in the UK or Europe.
How we can help
Don't let changing economic tides catch you off guard. At International Wealth Ventures, we offer specialist advice on citizenship by investment, retirement planning, and tax strategies, especially during changing UK-EU ties.