Will Article 50 be triggered in March 2017 or is a Brexit delay unavoidable? So far it has been quite a mess with roadblocks, competing interests, BOE conspiracy (?), and simple legislative “consent” fatigue. In case of a Brexit delay, what are the new trading opportunities?
5 December, Xtrade – UK PM May’s touted March 2017 triggering of the Article 50 two-year notification period seems no closer now. Then it did after the vote some 5 months ago. Xtrade offers a review on how we got here; analysis on where this is going and what new trading opportunities to look for.
Both backbench Labour MKs and senior MEPs are veritably vituperative and gleeful in their criticisms of “the Government for not having a Brexit strategy”, what with the Cabinet “headless chickens.” Yet, there do exist logical reasons for the delay and slow progress:
- High Court ruling that consent of both the House of Commons and House of Lords before triggering Article 50. (PM May’s appeal may have the Supreme Court on 5 December punting on the controversy to the European Court of Justice (ECJ), creating more delay)
- Upcoming French and German elections
- “UK” Irish and Scottish problems. Look for a second Scottish independence referendum.
- Various and sundry financial costs associated with the split
- 2019 European Parliamentary elections. Wherein a tortuous two-year negotiation terms finally agreed-upon are scuttled at the end of the process by a new Parliament.
All this against a Bank of England Governor Mark Carney ‘secret plan’ for a transitional arrangement. Likely to include freedom of movement for EU citizens, to keep Britain in the single market until 2021 to ensure “continuity.” And the chorus for a revote grows, stemming from a variety of motivations and agendas. While former Labour PM Tony Blair argued “cost-benefit” realism. And former PM Sir John Major inveighing against abusing a “tyranny of the majority.”
Leaked transcript of Government Brexit notes
This week’s leaked transcript of embarrassing private Government Brexit notes also does not inspire confidence, with:
- The vain hope of free trade without freedom of movement
- Hardball EU “very French” negotiators demanding that Britain invoke Article 50 and reveal its final negotiating position before beginning any discussions
- A deal on services being “harder” compared with a “relatively straightforward” deal on manufacturing
More generally, British new trading opportunities and commercial firms are expressing concern over the implications of a prolonged EU divorce process and the negative effects arising from the uncertainty.
And still, at its core, the Brexit effort remains confused. While Chancellor of the Exchequer Philip Hammond last week pledged to borrow for extra spending on housing and infrastructure projects. The 214,000 EU construction workers expected to be excluded by 2020. Including some 54 percent of London construction workers, which will deepen the industry’s skill shortage.
The dithering economy and inevitably confused (and lavishly expensive) political response will spark inflation to some 4% next year. To date, the post-Brexit vote period has surprised sceptics, with retail sales growing at the fastest pace in years, consumer confidence remaining robust and business investment increasing. But in 2017 look for businesses to suffer, but not the Pound Sterling which should respond to a rise in interest rates, and certainly in response to a Euro to be plagued by political uncertainty and divisiveness. Bottom Line: November witnessed the best month for Sterling against the Euro in eight years and we can expect a follow-through until the March self-imposed deadline and beyond.
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