UK challenges

Brexit is a result of discontent by the overall UK population. 52% of voters want to leave the EU. A large number of these votes were a ‘protest vote’ against the established order and elite. It seems that politicians failed to listen to the voice of the general public. Brexit is a very strong response that indicates the Brits want serious changes. However, there are a number of issues that cannot be resolved easily. We name; immigration, health care, pensions, real estate, job market and external EU subsidies.

Immigration: The main concern from those who voted to leave the EU is mass immigration from people (often with a different religious point of view) from outside the EU. The refugee debate is a though discussion. There are many angles that have to lead to one workable solution. Thus far the freedom to travel within the EU member states make things difficult.

Health care: One of the hidden threats in many Northern European countries are the social benefits and health care insurance coverage. The population gets older and health care is more expensive. Two main factors that justify a potential problem.

Pensions: Pension funds invest periodic premiums paid by the individual participants. The goal of a pension fund is to provide the participant with a recurring income during retirement. Rules and regulations in a country determine the level of risk a pension fund can take. Market fluctuations therefore should have a small effect on the value of the total investment portfolio. The investment strategy of a pension fund must contain investments in low risk government bonds. The yield on UK government bonds is currently so poor that complete portfolios of pension funds are at risk. This can lead to lower payouts and even liquidation of the fund itself.

Real estate: Many of the big cities in the world have a real estate bubble. Supply and demand was for a long period of time the benchmark for pricing. Income, inflation and rising property prices cannot keep pace anymore. It means that property prices will fall, we just don’t know yet when.

Job market: Labor is expensive. The industrial evolution is in rapid progress. Apps like Uberpop change the way we look at taxi’s and supermarkets have less need for cashiers  due to electronic payment terminals. The economy is changing and politicians fail to recognize this fact by taking action to re-educate the population. Chances go faster than we can manage. Therefore another worldwide challenge.

EU subsidies: The media often states how much countries spend on the EU. Conveniently, they forget to mention what comes back. Complete industries, like farming, social innovation and renewable energy have no legitimacy to exist without EU subsidies. This can have a huge impact on the job market, pensions and social services.

Good news is that some of these issues can be resolved on an individual basis. Now is the time to do something and protect yourself. Protection does not mean that you reject change. It simply means that you take matters in your own hand without being victimized by politicians who don’t really know where to go and what to do. Just read the article on short term Brexit strategies to see what you can do.