CEO at Navas Cusí, Mr. Juan Ignacio Navas, about the latest news in Brexit: “Panic in the city”
Juan Ignacio Navas
Socio-director de Navas & Cusí
Already three fund management companies declared the so called “corralito” to avoid capital flights. Did somebody say that the “corralito” was a practice only used by developing countries?
In the same time, the pound doesn’t stop to depreciate and is now at the lowest price since 1985.
The Bank of England injects liquidity in order to avoid even worse consequences:
The head of the Bank of England admits that “financial stability is threatened” and injects liquidity for 180.000 million euros to prevent more blood spill.
Facts show that the uncertainties of “Brexit” spread fear among investors and savers.
Postponing the negotiation of the terms of this “divorce”, as Cameron pretends to do, doesn’t have any other effect than deepening the wound.
Companies -especially financial ones- can endure almost anything, but not uncertainty.
The unknown generates panic, overreaction and distrust. Exactly what the financial world can’t afford.
It is probably that the “state-of-panic” due to the “corralito” is not justified:
Probably the panic that the “corralito” created is not justified: the three fund management companies are related with the Spanish real estate sector, which came out reasonably healthy after the last crisis. The “brick” keeps on being there, and there is no delocalization in sight…
However, the free fall of the English Pound can surely affect the average citizen up to the point to push him to refer his savings to a stronger currency.
The only way to stop the tendency is a tourniquet: Or urgently discuss Brexit before the UK Parliament or accelerate the exit procedure to dispel doubts and wipe out uncertainties.
If the British government chooses to buy time, as it seems, we think that the panic effect is destined to repeat. And the “corralitos”, even if low scale, don’t generate tranquility, but ring alarms instead.
Let’s hope for the good of everyone that the Britons will take the bull by the horns. For their own advantage and for the financial stability of them and of all Europe.
Navas & Cusí Lawyers.