A Weak Pound Is Great News For Overseas Investors
All clouds have a silver lining. And Brexit is no exception. For those looking for mid-to-long term investment opportunities when applying to enter the UK on the Investor Visa route, the devaluation of the pound is providing plenty of scope for savvy overseas investors to pick up a bargain in the UK.
To successfully apply for a UK Tier 1 (Investor) Visa, applicants must invest £2 million of funds in UK government bonds, share capital or loan capital in active and trading UK-registered companies. By engaging the best financial advisors and Immigration lawyers, UK Tier 1 (investor) Visa applicants can ensure they meet the visa requirements.
The short-term effects of a weaker pound
The main fear surrounding the devaluation of the UK currency (which many economic experts believe was long overdue and needed to occur regardless of the Referendum result), is rising inflation. Imported goods will become increasingly expensive and higher costs for businesses are likely to be passed on to consumers. Clearly, UK consumers are concerned about what this will mean for the affordability of their goods and services. Inflation has already crept up to 1% since the referendum and is very likely to move higher.
But economic experts point out that the global trend at present is continuing to revolve around deflation, which may prevent UK inflation rising to excessive levels. On 4th October 2016, the Wall Street Journal reported global inflation rates had fallen for the second month in a row and were at their lowest levels since 2009. Although inflation rates in developing countries picked up slightly, China and India experienced big drops.
This will lead to many global banks, including those in the UK, either keeping interest rates low or slashing them even further to stimulate sluggish economies. Such a move would lead to UK exporters will become increasingly competitive on price versus their foreign peers. Therefore, foreign Tier 1 (investor) Visa holders planning to invest in UK companies that have operations abroad (which a large number of listed companies do) could see solid ROI over the medium-term.
American investors already snapping up bargains
This week the Financial Times reported that a ‘flood’ of American investment money was pouring into the UK, with US citizens living in Britain rushing to take advantage of the plummeting pound by secure investment and property bargains.
On October 20, the pound traded at about $1.23, down from $2.07 just nine years ago. Since June 24, it has fallen by almost 20 per cent.
Wealth managers, financial planners and Britain’s best Immigration solicitors also reported a marked increase in US expats moving money to the UK.
Despite concerns that the UK might pull out of the EU customs union or face restrictions on free movement across the remaining member states, money continues to flow into the UK from the US. American citizens still view Britain as a stable economic market and believe that any wobbles in business confidence caused by Brexit will be short-lived.
“We have seen a significant uplift in customers with dollar cash or assets investing heavily into the UK,” said Islay Robinson, co-founder and chief executive of Enness Private Clients, a mortgage broker for the super-rich. He told the told the Financial Times that, “the currency exchange differential since the referendum has created a significant increase in the purchasing power of US citizens coupled with a property buyers’ market”.
Worries over a possible Trump presidency were also driving US expats to exchange their dollar assets for sterling, Mr Robinson added; “this seems to be a perfect time to invest in non-US assets”.
Entrepreneurs can also take advantage of the weakening pound
It is not just Tier 1 (investor) Visa holders who benefit from the weak pound. Savvy Tier 1 (entrepreneur) Visa applicants, who choose to invest their £200,000 in an existing business will also find companies with strong growth potential ripe for funding in the UK market. Organisations that concentrate on exporting and manufacturing can provide sound opportunities for growth, providing a solid ROI and commercial challenge for entrepreneurs looking to move to the UK.
Concluding comments
Despite the sometimes gloomy reports generated by the UK media, the markets and economic experts are showing that there are many opportunities for smart foreign investors, wanting to take advantage of the devaluing pound.
By engaging professionals such as wealth managers and Immigration lawyers to provide you with the best advice, you are guaranteed to secure investments that will provide a solid medium to long term return.
OTS Solicitors is one of the most respected Immigration law firms in London. By making an appointment with one of our Immigration solicitors, you can be assured of receiving some of the best legal advice available in the UK today. We will assist you with all aspects of applying for a Tier 1 entrepreneur or Investor Visa and will support you throughout the process.
If you wish to discuss any of the points raised in this blog, please phone our London office on 0203 959 9123.