Quick take: Brexit explained
Confused by Brexit? You’re certainly not alone.
The Brexit referendum was decided by a 52 per cent majority for leave and prime minister Theresa May began the exit process on March 29, 2017, setting a two-year deadline to agree the terms of the split. With less than 150 days left to the deadline, uncertainties remain as to what the new relationship may look like.
How close is the deal?
Crossing the last hurdles – especially those guaranteeing open trade across the border in Ireland – is proving to be fraught with difficulty. Last month, the government delivered a giveaway budget in an attempt to smooth the way for a possible deal and provide ballast for the economy if that proves impossible. The UK has gone so far as to prepare to charter ships to bring in food if the EU shuts its borders.
What are the sticking points?
The main sticking point is a customs union with the EU that preserves both the British internal market and Northern Ireland’s alignment with the rest of the island. Mrs May says she wants a solution where the UK remains in a customs arrangement for a time-limited period, but Brussels refuses to agree to allowing the UK unilaterally pull out with trade still intact. Talks are expected to intensify through the next week. Irish prime minister Leo Varadkar told Mrs May on Monday that he would consider a review mechanism as part of a “backstop” arrangement to keep the border open after Brexit.
How are markets and businesses reacting to Brexit?
Markets have been volatile as investors react to Brexit smoke signals. The pound jumped as much as half a percentage point against the dollar following the news of a financial service deal and generally maintained its recent strength. But London stocks fell into the red on Tuesday. Things are likely to get worse for the pound unless there is some positive news on a Brexit deal.
What are the financial implications of a no-deal?
A no-deal Brexit would mean a difference of 1.6 percentage points to UK growth next year.
If Britain leaves the European Union without an agreement, the UK's gross domestic product would increase only 0.3 per cent in 2019, according to the National Institute of Economic and Social Research (Niesr). A trade accord that preserves most of the current arrangements would instead mean a growth of 1.9 per cent next year.
Updated: November 8, 2018 09:17 AM