Macro-economic background

13 July 2016, by Ian Bailey

“Uncertainty has to be the key factor and it is very likely that farmland market activity in the second half of this year will be more subdued as potential sellers wait and see”

 

The most optimistic scenario for the UK economies assumes that given the fact that the majority of the UK population voted for the result, the scale of the economic shock will be less than that felt around an “external” shock such as the global financial crisis.

The most pessimistic scenario is that the combination of suspended corporate decision making, sharp falls in consumer confidence, rises in lending rates and other factors leads to a short term recession in early 2017, followed by a period of much lower than forecast growth.

The key question is how long it will take the UK to exit from the EU and negotiate its position regionally and globally? The Prime Minister stated he will not enact Article 50; this will be the responsibility of the new Prime Minister, Theresa May. This leaves us with a base view that the present political landscape is likely to continue until the end of 2018 but more clarity will evolve during this period.

The response of the major European countries will also be important to the prospects for the UK. A vindictive reaction is possible. However, the fact that the UK will become the single largest export market for the EU should temper the likelihood of that sort of reaction.

 

 
Macro-economic background

 

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

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