Brexit – where to from here?
Despite being on track to leave the EU on 31 January, the UK’s Brexit uncertainty continues to perplex investors around the globe.
Boris Johnston enjoyed a landslide win at the late 2019 general election, effectively wiping out his opponents and securing a comfortable majority with his pulsing mantra, Get Brexit Done.
His withdrawal agreement has since been passed by the UK parliament and now negotiations are in full flow for future trading arrangements with the EU.
With the balance of power and extensive negotiating experience clearing being on the side of the EU, it is not yet clear what those trading arrangements might look like. That said, the Prime Minster’s clear majority does give him a little more clout than before the election, and perhaps a little more confidence to threaten to walk away from negotiations if he cannot secure the deal that he wants for Britain.
There are still many possibilities. The path ahead is still not smooth or clear – Jim Power Chief Economist
One thing is for certain, a second referendum is no longer on the cards, bringing at least some certainty to the process.
For now, the UK will continue business-as-usual while in the transition phase to 31 December 2020 and if a deal still isn’t secured by this time, the UK can apply for a two-year extension to 31 December 2022 if needed. The Prime Minister did rule out any extensions in his election campaign however, so risks further frustration from voters if an extension is sought.
Given the Prime Minister does however hold a majority, he isn’t beholden to so-called hard Brexiteers, meaning he may take a more moderate approach to trade negotiations. This is balanced by the risk that if sufficient inroads towards a deal are not achieved by the end of 2020 that the UK may end up being forced to trade on WTO terms, which in reality is similar to a “hard Brexit”.
While we can be sure what the future yet holds for the UK’s Brexit outcomes, there is hope on the horizon. Sterling enjoyed a boost after the election result and with at least some uncertainty alleviated, we may see a return in UK business confidence and investment. That said, in the words of Chief Economist Jim Power, “…one should not get carried away by all of this, particularly the financial markets”. Ireland’s own relationship with the UK has changed irrevocably and now is not the time for complacency.
To learn more about the impact of Brexit on your own financial goals and investments, get in touch with your qualified financial advisor at Hennelly Finance. We can help you navigate the uncertainty, review your risk profile and help you take advantage of market opportunities as they arise. Get in touch with us today.