What impact will Article 50 have on expats?
Brexit has created a lot of anxiety among expats. Lots of questions about expat rights, trade and bills, but will any of this affect expats once the UK declares its formal notice for EU departure? The answer is yes and no, but it may not be as daunting as you think.
Article 50 is the legal framework by which the UK will leave the EU
and begin two years of formal negotiations. Now set for March 29th, the UK Government will give notice and prepare itself for one of the most historic events in European politics.
No country has ever left the EU, which explains in part the level of uncertainty surrounding the vote last June, and a number of key questions will need to be considered once negotiations take form.
What will happen to the rights of British citizens living on the continent and vice versa? Such a question will need to be at the forefront of any negotiations. European Commission President Jean Claude Juncker shed some light on this crucial topic with the BBC last week, calling for reciprocal rights to be guaranteed in the early stages of negotiations.
"This is not about bargaining, this is about respecting human dignity." – Jean-Claude Juncker
This news will be welcomed by British expats who have since the Referendum vote, had to toy with the prospect of returning home once the two-year window for Article 50 draws to an end.
Expats can take comfort in knowing that both the UK and EU will prioritise rights from the beginning of negotiations, but also that the declaration of Article 50 in itself, will not change the UK's status as an EU-member for at least two years.
If no such deal can be reached at the end of negotiations then EU member states will vote on whether to extend negotiations further. It's in both the interest of both the UK and EU to avoid a cliff-edge Brexit, as this would essentially default the UK to World Trade Organisation tariffs which would harm both British and Eurozone exports, and result in huge delays at British and European docks.
It would also have a detrimental effect on the UK's financial sector, by which many European countries rely on for services and the clearance of Euros.
Michel Barnier, the EU's Chief negotiator for Brexit has expressed the need for a successful future relationship between the UK and EU, and has not ruled out an EU-UK free trade agreement.
These are early signs that EU officials are softening their approach to Brexit which could allude to a positive outcome for Britain and EU member states, and although there will be no political changes during the course of Article 50 there is the potential for huge fluctuations in exchange rates that could affect those who are vulnerable to currency requirements.
A volatile period for GBP/EUR
The one element to the Brexit saga which is likely to be impacted by Article 50 is exchange rates, which will remain in volatile territory until negotiations begin to take form.
Markets will be looking for signs that negotiations are taking a positive form, but more importantly, that some form of transitional phase is implemented to allow both economies to adjust to the potential changes that may follow. This is likely to be a very difficult, long winded process which may result in huge swings in exchange rates throughout the Article 50 timeline.
Those that have a requirement for either the Euro or Pound during the period of Article 50 may be prudent to consider the different contract options available to you in order to mitigate risk during this uncertain period. For example, a forward contract option will allow you to lock in a current rate for up to 18 months, providing peace of mind for the majority of the Article 50 window.
Alternatively, you can set upper and lower ranges to help maximise your return whilst limiting risk. This can be utilised by using both a stop loss and limit order contract from a specialist currency brokerage.
If you would like more information on contract options or would like to speak to somewhere regarding how Brexit could affect exchange rates, please contact me at firstname.lastname@example.org or visit www.currencies.co.uk.