Brexit: Deadline approaches

You may remember from the school days that a famous conversation topic in Britain is the weather forecast. Once, but not anymore. It’s not proper research yet, but each day you hear a couple of stories about the effects of Brexit on ordinary lives. Whether it’s a redundancy announcement (Ford) or relocation of the business (Sony) or calling from National Health Service to Royal Navy in case of shortages of medicine for exports. Where are the confident and competent civil servants or reasonable politicians? In each new edition of the BBC’s flagship news program Today, you hear company executives in desperate efforts to strengthen company finances and production for the upcoming crescendo of Brexit. But, you may listen to just a few words from the government executives without a proper roadmap. That’s the reality the $2.7 trillion UK economy is facing.

Ever since the UK voted in June 2016 to leave the EU, markets have paid close attention to UK politics and the Brexit negotiations. Will the UK commit an extraordinary act of economic self-harm by going for a hard Brexit? Or will it reach a sensible agreement with the EU to limit the damage from leaving its most significant market? The assessment of the likely outcome has shifted a lot over the past two and a half years – as highlighted by sterling’s volatility. On several occasions, a day or two of bad headlines to stoke fears of a hard Brexit depreciated the pound while gains emanated from rising optimism of a soft Brexit. Is this time different?

This week, British Prime Minister Theresa May is set to return once more to the European Union to renegotiate parts of her Brexit deal. By focusing on changes to the Irish backstop, the PM is again concentrating on winning over her Conservative party and its supporting partner DUP MPs. The motion will be debated and voted on in parliament on January 30, alongside various amendments being tabled by MPs seeking to hamstring the government’s control over the Brexit process. Prime Minister May will then return to the EU for renegotiations and aim to present a second meaningful vote on her amended deal at some point in mid-February. If this deal were to pass, the government would still need to pass various pieces of legislation to get Brexit over the finish line, but the end would be in sight. If the deal fails again, this is when we would be likely to see parliament’s influence over the Brexit process begin to take shape.

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