What does it mean for you?
The Consequences of Brexit
The departure of the UK from the EU, or Brexit as it has now become universally known will, without doubt, affect every person in the UK in some way and impinge upon most businesses either directly or indirectly.
The preparation for Brexit should have been at least on par with Y2K inasmuch as no one really knows the real damage that will be done to the economy in the short/medium term.
Recent Brexit Milestones
The third attempt at passing Withdrawal Bill fails to gain a majority by 58 votes
Brexit Events to Watch
There is no doubt that there will be a “Brexit impact” for business, whether that is disruption of your supply chain, dealing with existing customers within the EU or finding new markets. Not all the consequences will be negative but it is vital that businesses are prepared for every foreseeable development.
The most visible effect of the Brexit negotiations so far has been the “Brexit pound” relationship. The foreign exchange market immediately took on the view that Brexit was bad for the UK economy as soon as the result was announced. Sterling fell from a high of 1.5015 to a low of 1.3315 in the month of June 2016 alone and has resided mostly in a range between 1.3500 and 1.2500 ever since. As the negotiations ended and Brussels stance hardened, the market concentrated on the prospect of the UK leaving with no deal. Following the disagreement over the Irish Backstop, a no deal departure became more possible and the pound hit its post-referendum low.
The lack of desire for a no deal Brexit is one of the few matters that Parliament can agree upon although several Brexiteer MPs considered it to be an important bargaining item that the Government should have retained in its “armoury”.
Eventually, we have reached the point we are at with less than a month to go until March 29th. The Prime Minister is still, ever more frantically, trying to persuade EU Negotiators to agree legally binding changes to the Backstop agreement while at home she has been forced to concede to a meaningful vote at which if her proposals are rejected two further votes will take place.
The first will be on Parliament’s approval for a no deal Brexit, then if (when) that is voted down, a vote to delay Brexit entirely. The vote to delay will anger Brexiteers who may try to wrench control of Brexit from the Prime Minister’s grasp.
Brexit Risk Management
The Brexit exchange rate impact risks are not equal. A no deal Brexit could see Sterling fall to 1.2000 versus the dollar, while any rally a softer Brexit would be limited by continued uncertainty.
It is almost impossible to say how long markets will be affected by the fallout from Brexit as the entire UK and Eurozone economic picture will be entering an entirely new and never before seen paradigm.