2017 should reveal what Brexit actually means for the UK and for the EU it is leaving behind. We consider the outcome of the Brexit vote and the prospects for Irish businesses as the year unfolds.
The UK is Ireland's largest trading partner and therefore the Irish economy is very dependent on the UK's success. We will be following even more closely than our European neighbours the developments over the next year including how that affects the British economy.
2016 saw a reduction in mergers and acquisitions across the UK and Ireland presumably as a result of the macroeconomic issues surrounding Brexit and the political events in the US. However, the FTSE has proved to be strong since the vote to leave and it will be interesting if this continues throughout 2017 once Article 50 has been triggered and it becomes clearer how negotiations to leave will develop. It is likely that there will be an upturn in transactional work around this time.
Additionally, the recent fluctuations in foreign exchange rates have had some effect on the markets and level of transactional activity. There is interest in UK assets from buyers in other jurisdictions where those UK assets have become cheaper, but may not continue to be so for a long time. Therefore, we expect that this interest will grow in 2017. There will be interest in UK assets from Irish buyers but also interest from the US where there is a UK-Irish business and the valuation is driven by the UK company's share price.
The public markets have also been quiet in 2016 but we predict an increase in IPOs and public takeovers during 2017 in the UK and Ireland.
Movement of People and Institutions
Although some predicted that there would be a wide-scale movement of people and businesses out of Britain as a result of the vote to leave, that has not yet happened. It remains to be seen whether the further developments around the mechanism for leaving the EU will trigger such an exodus, but it feels unlikely.
To the extent that businesses are looking to move operations overseas Ireland is naturally one of the top choices, being an English-speaking, common law, GMT time zone, progressive jurisdiction already with strong financial services and technology hubs in Dublin and across the country. Its proximity to London and ease of travel is also attractive, as is its close relations with the US.
We think it is unlikely that the City of London is going anywhere en masse either. Dublin needs to make the...