On a flight to London I’ve had time to ponder last night’s UK election results, and wonder what it might mean for British demand for property in Spain.
On Wednesday I took a stab at this question in advance of the election, looking at what the different electoral outcomes might mean for demand. I assumed a big majority for May’s Conservatives would be good for the pound and therefore demand, and a hung parliament or Labour victory would be bad for both. Now we know the outcome of the election itself, though not exactly what Government to expect, my thinking has changed.
First I should say the result took me by surprise. I live amongst Spaniards, don’t watch British TV, and only get my information from the papers I read online, so I can hardly claim to have my finger on the pulse. But my gut told me the hard left would never gain enough traction with the British electorate to avoid losing seats. Yet somehow Corbyn managed to gain seats, not lose them, so he clearly reached the parts of the electorate other politicians can’t reach.
Mind you, he is making it sound like a great victory, which it really wasn’t. Labour should have thumped the Tories . This was not a victory for Labour, it was a victory for Corbyn and the hard left.
So, what does a hung parliament mean for demand in Spain, and the Spanish property market? I think it all depends what it means for the pound. What is good for the pound, is good for British demand for property in Spain. EU rights are a secondary concern, which is not to say they are not important.
I think a hard Brexit would be a disaster for the British economy and the pound. A soft Brexit would be better for both, as it’s basically like being in the EU with access to the single market and all those workers the UK needs to keep its economy going, but no voice at the table. A rule taker, not a rule maker.
I’m warming to the theory that a hung parliament is more likely to lead to a soft Brexit. If it ever gets off the ground, May’s coalition Government will be weak and feeble, and I can’t see it lasting long in the turbulent times ahead. I expect fresh elections will come round again before long, by which time the economy will be struggling, real incomes falling, and voters even more angry. The Conservatives brought this about, they will be punished for it, and Labour will benefit.
So I wouldn’t be surprised if we end up with a Labour-led coalition before long. I imagine that is more likely to lead to a soft Brexit, which would be good for the pound, EU residency rights, and British demand for property in Spain.
On the other hand, in that scenario the hard-left would be in control of British economic policy, which might not be good for the pound. So I guess the question becomes what would be worse for the British economy and the pound: Hard Brexit or hard left? Hard to say.