Portugal’s Prime Minister António Costa has a laudable ability to say the right thing at the right time and today was no exception as Europe and world markets were rocked by the British defection from the European Union.
Costa admitted that today “is a sad day for Europe”, but said the 1373 Treaty of Windsor signed between Portugal and the UK is very old and will “carry on.”
“We have the oldest alliance in the world with the United Kingdom and it will carry on long after what the departure of the UK from the European Union” the Prime Minister told reporters in his best statesman-like manner.
António Costa suggested the remaining 27 member states carefully ponder the Brexit result, adding that Portugal will do everything to ensure that all the rights of the Portuguese community in the UK are guaranteed, “along with all the rights of the British citizens who live, visit or invest in Portugal.”
European Union is a place of "peace, solidarity and European prosperity," said Portugal’s Social Democrat parliamentary leader Luís Montenegro while admitting that the UK’s leaving is at a difficult time but insisting that this does not mean the end of what he called ‘the European project.”
"It is the sovereign expression of the will of the British and must be respected as such, the European integration project has always been based on safeguarding the sovereignty of peoples and member states," said Montenegro who clearly has not been paying attention.
- Leave vote is 51.9%
- 17.4 million votes
- 72.2 voter turnout
- David Cameron will step down in October
Correio da Manhã referred to the ‘historic Referendum’ and said the reaction of the leaders of the European Union is unequivocal: there is no turning back for Britain.
Commissioners have requested the United Kingdom invokes article 50 of the Treaty of Lisbon, which is the formal notification of an ‘out’ decision, “as soon as possible"
"We now expect the UK to give effect to the decision British people as soon as possible, no matter how painful the process can be" agreed the EU top brass Jean-Claude Juncker, Donald Tusk, Martin Schulz, and Mark Rutter.
Angela Merkel, the German Chancellor, said "it is a blow to Europe," and that what will happen in the coming days, months, years, will depend on what the other 27 European Union nations are able and available to do."
"June 23 is the independence day," was the widely reported statement from Nigel Farage, the leader of the UK Independence Party (UKIP), known for his fierce anti-European stance.
The results brought down Asian stocks, caused a devaluation of the pound and opens the way for a Scottish referendum on independence from the UK, which the Scottish First Minister, Nicola Sturgeon says is "highly likely."
The Canadian governor of the Bank of England said he is taking "all necessary measures" to ensure stability.
"The Bank of England will take all necessary measures to fulfill its responsibility in terms of monetary and financial stability," adding that it is closely monitoring post-referendum developments.
PM in waiting, Boris Johnson, did not fail to praise David Cameron, who he referred to as a courageous and principled man, and whom he thanked for having enabled the Referendum to take place.
Johnson then went all Churchillian and stated for the record, "Above all we find our voice in the world again -powerful, liberal, human and an extraordinary force for good. Yesterday, the English people spoke for democracy," he concluded.
Diario de Noticias focussed on European leaders who wanted the UK to exit quickly as they do not want uncertainty so require a quick divorce, however painful.
The Portuguese planning and infrastructure minitser, Pedro Marques, regretted the UK’s decision to exit the European Union, but concluded that it had been a democratic act.
“It is a decision we obviously regret. Not the fact that the people voted democratically, because that is normal and healthy in a democracy. We are European supporters and we want Europe to continue to expand and continue to be an area of cohesion and peace."
Expresso covered Juncker, the President of the European Commission, who wants the Brexit negotiation to be done quickly to avoid prolonging uncertainty, "We need to speed things up," said the Eurocrat before reading a statement.
Asked whether he considered that "this is the beginning of the end of the EU," Juncker said "no" and quickly left the press room to the applause of fawning European officials who were in the press conference.
Negócios looked at the Referendum result’s affect on European Union stock markets which reacted with sharp declines with stocks tumbled and the Portuguese PSI-20 falling more than €3 billion.
The news site also looked at Scotland and its probably referendum and at comments from European leaders, concluding that this is a sad day for Europe.
Público also looked at Scotland and said a Referendum there is, "highly likely," while describing a deeply divided UK with Northern Ireland also calling for a referendum.
News agency Lusa reported that Silva Peneda, special adviser to the president of the European Commission, Jean-Claude Juncker, said that the Brexit will start a financial crisis due the current climate of uncertainty which will affect investment and job creation.
Peneda believes that "England will suffer greatly, not least because farmers will no longer have any support from the EU through the Common Agricultural Policy. The stock market has shown what happens - there will be shrinkage in terms of economic growth and in terms of employment. From a general point of view, the UK will suffer a lot from this ‘out’ decision."
The special adviser warned also that Europe will suffer the so-called domino effect as there already are countries like the Netherlands, Denmark and now Italy which want to have Referenda of their own.
Carlos Moedas, the Commissioner for Research, Innovation and Science, conveyed his "deep sadness, but also a deep respect for the British decision."
For migrants in the UK, including the Portuguese, Moedas said it is necessary to give a message of hope, saying that the UK continues to share European values which guide us and it will always continue to be a partner for Europe. We have to be calm at this time.
“But the EU has overcome many crises and will overcome this challenge and that is important," said the Portuguese Commissioner, who said there would be no breakdown of the European project, which is "irreversible, which will have and has many challenges and crises."
From a business viewpoint, US bank JPMorgan, which employs 16,000 people in the UK, said on Friday that its workers are able to move out of the country following the Brexit victory.
"Maybe we need to adopt changes in the structure of our European legal entity and the location of certain jobs," said Jamie Dimon, CEO of JPMorgan, who warned before the Referendum that between 1,000 and 4,000 jobs could be moved.
"Even if these changes are not certain, we must be prepared to adopt new laws and to serve our customers around the world," read an internal e-mail.
HSBC says "a new era for Britain and British companies," has started and that 1,000 jobs might now go to Paris.
What should British expats in Portugal do next?
Richard Mills of Azul Properties in Boliqueime posted some sane advice today:
"With the announcement that the UK has voted to leave the EU, many of our clients are concerned about how this will affect their future as property owners, or potential property owners, in Portugal.
Those who run businesses or are resident in Portugal are also wondering how this will affect them.
As many people have already asked us to give our opinion, this short article has been written to use as a reference source, to help people understand what we think are the initial implications of the UK´s exit from the EU. It is also important to consider the future implications, but these can only be educated guesses.
What should I do now?
Nothing. At the moment the money markets are very volatile (which is to be expected) but, like a ripple in a lake, they will settle down.
Nothing is going to change overnight, next week, next month or even next year. One fact that we do know is that there is a minimum two year period for the UK´s exit to be finalised. During this period, Portugal will have to maintain all current rules and obligations.
I live in Portugal full time. What should I be considering?
Firstly, it is even more important than ever before to make your you are correctly registered as a resident, integrated in the health system, part of the fiscal system and are a bona-fide Portuguese resident. It is important to remember that the rights you have at the moment will definitely be maintained in the next two years, and it seems they are likely to remain in the future, as these rights will be difficult to extinguish.
For those that reside permanently in Portugal, but don't officially register their presence, now is the time to put their affairs correctly in order, which is no less than should be done in any case.
I have a second home in Portugal, should I be worried?
I don't think so. As a second home owner, there is no practical difference for EU and non EU citizens at the moment. Second home owners from the EU have no special benefits at the moment, so they have nothing to lose.
What about my driving licence?
At the moment, UK (and other EU) driving licences are valid, and can be used in Portugal until their expiry date, at which point they must be exchanged for a Portuguese licence. The only obligation is that the licence holder's address must be registered with IMTT, the entity responsible for motor vehicles.
Once the UK leaves the EU I presume that all UK licence holders will be obliged to exchange their licence for a Portuguese licence. This is not a complicated process, and the new points system is more forgiving than the UK system.
Of course this is only relevant for residents, visitors will be able to use the driving licence from their own country.
What about the exchange rate?
Exchange rates are like hot air balloons, they go up and down. Whilst in the immediate aftermath of the no vote the pound has weakened, it has settled at around 1.24. The highest rate before the vote was around 1.31. So, in the immediate wake of the vote, the pound has weakened around 5%.
If we look back over the last few years, the pound has been as low as 1.13 (early 2013) and briefly as high as 1.43 (July and November 2015).
There will always be fluctuations in the exchange rate and whether you are buying pounds or euros you need, as always, to plan ahead and be realistic about your expectations. When you feel that the time is right to purchase currency, you can fix the rate you buy at to protect your financial position.
What about health care?
At the moment, when someone becomes resident in Portugal, they also inscribe in the health system. So, for those already in the system the status quo will remain.
For those visiting, at present they have free health care as part of the EU agreement. In the worst case
What will this do to the property market in the Algarve?
(Rubs the crystal ball) It will affect different people in different ways. Because the property market is so diverse in the Algarve, there is unlikely to be one particular trend. I think the following could occur:
Those who already want to leave the UK will still want to do so, and once the furore dies down, will probably make sure they move within the two year exit window
People who are already planning to return to the UK from Portugal will accelerate their plans, or perhaps be keener to sell sooner rather than later.
Purchasers who are undecided will remain on the fence until the situation is clearer, or until they can see an advantage in purchasing in the short term.
Is there any chance that the UK will stay in the EU?
Strangely, yes. The result of the referendum is not binding, and this has to be ratified by the UK government. Time will tell, but nothing is certain.
What about taxation?
There are going to be changes in how taxes are applied to income and gains for UK residents, as the existing rules relate to EU citizens. It is for the Portuguese fiscal authorities to decide how they implement this, and it is quite possible that they choose to maintain the status quo.
The key points that we will be monitoring are:
Capital gains tax from property sales
Any changes to this will only have an impact on full time residents selling their primary residence and then returning to the UK. At the moment any profit created from a sale can be re-invested in a propety purchase within the EU, and is then free of capital gains taxes. Once the UK leaves the EU, this may no longer be possible.
There is no difference for those selling a second home.
Day to day taxes
One possible change that could occur is the treatment of taxation from other EU countries (double taxation agreement). There is a mechanism in place already to deal with non-EU income, so this is likely to be applied to UK income in the future.
The taxation alterations are something that we will monitor closely, with the assistance of local experts.
Conclusion
Portugal is a country where legislation is constantly changing and being updated, and we are used to reacting to the changes. The important point is to wait until the alterations are defined, and then consider how this affects you personally.
In the short term, our advice is not to make any snap decisions, whether you are buying or selling. If you already have a medium to long term plan, then stick to it, and make some allowances for the possible changes.
Above all, don't panic because all will become clear in the future, and there will be clear mechanisms to deal with any changes."
