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31 January 2020

Brexit is finally here. Now what happens?

With all that is dominating the headlines since the turn of the decade, one would be forgiven for forgetting that ‘Brexit Day’ is today. While most of the country celebrate a day they have been demanding for years, the rest may lament the country’s new position in the world.

So, what will change when we wake up on Saturday? Although the UK has agreed an 11-month transition period to the end of 2020, it still does allow for the retention of many of the compulsions that come with EU membership. British citizenship will automatically impose non-citizenship of the EU, however, visa-free movement within the European Union will remain a right. Perhaps more importantly, British ex-pats will retain their right to work, and live, in the EU member state in which they reside.

The advent of certainty has now provided some stability to Sterling and UK stock markets. The information given to the public is now clear, ensuring all risks and rewards of the UK’s EU departure is now priced into markets. To this end, we assume little immediate fallout from today’s withdrawal.

The remainder of 2020 will no doubt bring fresh volatility to markets as further news flow hits the headlines. As has been the case for the last three years, businesses that rely on favourable import costs will be most at risk, but also those most likely to benefit from any positive sentiment.

In the shorter term, there will be ongoing back and forth between the Bloc and the UK, in which any finalised arrangement will impact Ireland significantly; we expect the country’s Prime Minister, Leo Varadkar to provide market sensitive commentary over the next 11 months, assuming he retains power following February’s election. Already taunting the UK, Mr Varadkar suggested that the EU had the upper hand in ongoing talks, stating; "I think the reality of the situation is that the European Union is a union of 27 member states. The UK is only one country".

Most importantly, and for the long term, will be the terms of the new trade deals reached with the UK’s largest trading partners. Recent tensions arising between the UK and US over allowing Huawei to support the country’s 5G infrastructure demonstrates the delicate task facing the government; balancing new trading arrangements, while keeping allies on side. Keeping all sides happy during the negotiation period will likely continue to give policymakers a headache, with Brexit retaining its top spot on the agenda.
Brexit is finally here. Now what happens?
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