What if…Britain were to leave the EU?
I don’t know about you, but I’m more and more befuddled by the claims and counterclaims in the Brexit campaign. Late last month, the Government warned that leaving the EU would add £230 to a family holiday, cost 820,000 UK jobs and slash £32,000 from the average pension. Not to mention the incipient threat of World War 3 and unchecked terrorists stalking our streets. Meanwhile, the Leave campaigners bellow about the arrival of hundreds of thousands more immigrants, jumping the queues for housing, benefits and NHS operations. No doubt with killer Spanish slugs stowed away in their hand luggage! Separating the facts from the hype Ok, so I made the last bit up, but as 23rd June looms ever nearer, it’s increasingly hard to separate the facts from the hype. And in truth, no-one knows what will happen if we stay or go – with due respect to my colleagues, macroeconomics is more art than science! In all, the balance of probability suggests that in the short term, leaving the EU would have a negative effect on the UK economy. In the two years it would take to negotiate a new deal on trade and market access, there would be considerable uncertainty. Exchange rates would fall, pushing up import prices. Share prices would tumble, along with corporate confidence. And house prices in London and the south east would suffer as international banks and foreign investors moved elsewhere. Negative, but far from disastrous Well-respected forecasters Oxford Economics – a level-headed and independent bunch – have developed a range of nine alternative post-Brexit scenarios. Their conclusion is that “the opportunities and risks of EU withdrawal are asymmetric”. In other words, the downside is greater than the upside. At best, GDP would fall by just 0.1%...at worst it would drop by a “far from disastrous” 3.9%. Why does this matter for charitable legacies? Because the legacy income received at any one time is linked to the value of the houses, shares and other assets left in people’s estates. So if the UK were to leave the EU, we’re likely to see legacy incomes stutter, maybe fall. Family top of mind The deep-rooted uncertainty underlying the Brexit debate (whichever way it falls) may also dampen the ‘propensity’ to leave a gift to charity. At times like these, people’s desire to protect their family - now and well into the future - comes top of mind, leaving little space for other beneficiaries. While the effect of this change would not be seen for 5-10 years (the average gap between last Will and death is 6 years,) it could reduce the number of charitable bequests left in the longer term. Let’s not panic! But hold on...I’m starting to sound like one of the “Gloomadon Poppers” Boris Johnson loves to hate. Despite the narrowing gap between leavers and remainers in the polls, my money is still on us staying in a (duly reformed) EU. And if we choose to leave the Union, like Oxford Economics, I believe it would be far from disastrous in the long run. We are a resourceful and resilient country that will thrive whichever route we choose. I’m far more worried about those killer slugs! Meg Abdy, Director of Legacy Foresight Have you read our blog from Katie Lindsay, Royal Hospital for Neuro-disability supporter?
