BREXIT: What's Next?

With four weeks to go until Brexit, there is still zero visibility as to what Britain’s departure from the EU will look like. Future historians will look back and marvel at the UK’s determination to inflict harm upon itself. Whether Brexit is a bad or very bad idea, time will tell. But the U.K. economy is already being damaged, jobs lost and the British reputation for tolerance and competence has been shredded.

Recent events in parliament have led to even more confusion than ever. Expert commentators have reached wildly different conclusions about what it all means. The uncertainty about what happens next has never been greater. 

Having made concessions to various factions, Theresa May has bought some time. Having appeased some of her critics, some analysts are speculating that the House of Commons could be set to approve her deal, perhaps within the next few days. By contrast, some commentators think that Brexit will be delayed, but only for 2 or 3 months, and that the cliff-edge is only being postponed. The EU may or may not agree to a Brexit delay or many even insist on a longer stay of execution.

Nobody knows if Jeremy Corbyn is serious about pushing for a second referendum: this is the potential game changer. It could even be the route that sees Corbyn as the next Prime Minister, possibly after a general election that take place sooner rather than later.

Amidst all of these uncertainties, Sterling has risen. The foreign exchanges are taking the view that a chaotic Brexit is becoming increasingly unlikely, so the pound is going up. It’s a point of view. Given the chaos, it would seem more prudent not to reach a view, or at least to bet on one via the currency markets. There are still too many routes to a hard Brexit. And if his new stance on Brexit helps Corbyn into power, I would guess that sterling will be 10-20% lower than it is now.

Something pretty big has to change by March 29th if the U.K. is not to leave. That’s what the Article 50 process means. A delay does look distinctly possible, but it is by no means guaranteed: Theresa May has to ask for it and 27 countries in the EU all have to agree to grant it. The scope for an accident is enormous. 

If something like a delay happens, it is possible that a new, equally opaque, dynamic will quickly be established. All of this uncertainty is toxic for business: visibility is needed.