No matter how many times Brexit is postponed or swept under the rug, it still remains a very trendy subject. Furthermore, it keeps plaguing the market with its unpredictable hikes and fluctuations in the GBP, and the traders are becoming more and more frustrated.
No matter what happens, it’s probably reasonable to believe that Brexit will still happen. There’s very little chance that the government will opt for a new referendum. In fact, if they did opt for a new one, the vote to stay would probably win by a landslide. Now, the only thing to consider is whether or not the EU will be willing to let the UK back in after the economic havoc it has wrought upon the continent.
While most countries will be at a massive disadvantage in terms of trades, travel, and labour in the UK, there are some who will benefit from the UK’s withdrawal. According to ForexBrokersList.co.za, one of the countries on that list is South Africa, which is believed to benefit both export and economic development wise. This includes exclusive free trade deals with the UK, which helps drive prices up, more institutional immigration between the countries
and a decrease of local emmigration thanks to stricter entrance laws in the UK.
Let’s take a look at the economic development prospects that Brexit will bring for South Africa.
UK firms on the run
Many may think that postponing Brexit gives them more time to strike a deal, while it is the complete opposite. The UK had its chance to withdraw as fast as possible to retain most of their companies within its borders. Now that it has been postponed for a further 5 months, the companies will be given more time to look for opportunities abroad.
Most of those companies are financial institutions or brokers, hedge funds and investment firms. They are starting to find it unprofitable to cater to only the local population, and are looking more towards the EU market or the global market. Unfortunately, Brexit will cause a lot of issues in terms of EU customer relations, therefore a more “neutral” platform is needed.
This was a big question for UK banks, which resolved in them withdrawing vast amounts of funds from the island and distributing them to EU-based subsidiaries. This was done to avoid losses at all costs, and it will most likely succeed. But these are banks that can afford billions in expenses and still stay afloat. What about the smaller Forex brokerages? Where will they go?
The South Africa Rush
There are very few qualifications a country needs to have to host foreign Forex brokerages. These are political stability, economic opportunity, a large population, English speaking community, and relatively cheap operational costs. South Africa is able to tick all of these requirements.
The only other countries that tick the majority of these are the USA, Canada, Australia, and New Zealand. But these countries mostly suffer from high costs, strict regulations, or small local populations, whereas South Africa is able to field a vast market of 53 million people, cheap costs and a welcoming regulatory framework from the FSCA, which by itself takes the responsibility to deliver quality financial education to its citizens. This lowers the cost even more.
Furthermore, South Africans are well aware of Forex and are in fact devote participants in the market. For now, there are very few brokers actually stationed in the country. In most cases, foreign brokerages are able to out-perform local ones, which immediately gives UK companies an edge. They would be able to tap into the market immediately.
Benefits for South Africa
Such a large influx of multi-million dollar companies in South Africa means significantly increased revenue tax for the government. Furthermore, it means more employment, an increase of spendable income, and overall financial stability for educated traders.
Once compiled, it will form a beneficial revenue and stability source for the country.
