Uncertainty gives way to pragmatism
London is reacting to Brexit, in Spain investors’ juridical security is increasing and it is expected that the Qatari’s economy will enhance in following years.
No one is doubting that Brexit has been a setback for the British economy and, after the referendum, the markets suffered from huge drops. But it seems that the United Kingdom is reacting. The Bank of England announced interest rate drops and, following The Guardian, they will be lowered from 0.5% to 0.25% next Thursday.
Besides, Theresa May’s nomination as PM David Cameron’s successor has provoked a FTSE 100’s upload (the index of London Stock Exchange’s one hundred main stocks) reaching up to 1.145 points.
Furthermore, during the first semester of the year, the operations conducted’s total value in the M&A market has dropped to 17.1%: 647 deals worth 41.3 millions of pounds compared with 702 deals worth 122.9 millions of pounds in the same period of 2015, as is stated by the British economic journal, City AM.
However, this M&A sector’s weakness in the UK could be only temporary, because after the Brexit, “most of the sectors, ultimately, will find ways to cope the new European landmark” and “the sterling’s low value will attract foreign businesses looking for cut-price UK assets”, as it has been pointed out by William Turvill, from City AM journal, quoting a Mergermarket’s report, a business intelligence firm.
Meanwhile, in Spain, the Constitutional Court has declared “unconstitutional” the so-called stock options (a financial instrument by the buyer acquires the right to buy or sell goods or shares) profits’ fiscal restraints with retroactive effect. These restraints had been implemented in 2011 by the Spanish Sustainable Economy Law affecting years 2004-2010. Investors would have been overtaxed for their granted incomes during that period and, after this decision, they could be given their amounts back, as it is noted by the Spanish journal Expansión, advising that this Constitutional Court’s sentence could also affect “the assets abroad declaration and its indefeasible penalty system”.
If in Europe uncertainty is the common ground, in the Middle East it seems that we are only receiving good news. The main international Qatari journal, The Peninsula, informs that Qatar’s GDP will gradually grow from this-year-expected 3.3% to 4.3% in 2018 despite its economy has been weathered by the oil prices drop. Those prices will be recovering from $41 per barrel in 2016 to $51 per barrel in 2018, a year when the Emirate’s government is expected to implement a 5% VAT rate tax in order to increase the state’s incomes.
Finally, it seems that the opportunities are ending up to come although is it not the most enabling environment. The business’ pragmatism, sometimes, is more than a commonplace.
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Del Canto Chambers’ Newsroom.