We get almost 50% of our export income, food, medicine and 40% of our energy from our European friends and partners.
So, what will happen after Brexit, when those countries are no longer partners, and possibly not very friendly?
At Continuum, we are keeping a very close watch on developments – to see how they will affect our clients.
There are several scenarios to consider.
No deal – and no agreement
If both sides dig their heels in on the backstop, the whole Brexit deal is stalled.
This could mean no Brexit – or crashing out of the EU at the end of the month.
This could lead to chaos at all Britain’s borders, with new tariffs, customs checks and regulatory controls and problems at the Channel tunnel and Dover. The EU would be suffering as well as the UK, with the effective loss of a major export market.
There could be shortages of some key supplies until new supply chain arrangements are established.
One of the biggest losers in this type of scenario would be the UK financial sector, which would lose the automatic right to offer banking, insurance and other services to European clients. However, many institutions have already set up offices in European cites which might overcome the restrictions.
A ‘civilised’ no deal
Although Brussels may have an ideological point to make, the costs of not coming to some kind of agreement would be so great that compromise is inevitable.
This could take several forms. Britain could accept the backstop and the transition period as agreed by Mrs May. This could lead to a free trade agreement – avoiding tariffs – but with a ‘soft’ border for Northern Ireland, a hard border in the Irish Sea and in the English Channel.
Some kind of arrangement for financial services would have to be agreed. If restrictions on the City and the services it still currently provides to Europe could be avoided, some of the major hurdles to a fairly orderly Brexit could be avoided, and the damage to the UK financial sector minimised. But there would still be problems for Northern Ireland, which might find the new customs arrangements unacceptable.
A Customs union
Brexit could be agreed with Britain remaining in a customs union with the EU. This would avoid the hard border in Ireland, and allow an orderly withdrawal, while a free-trade agreement and a customs union with the EU might let goods in and out of the UK, albeit with more checks on conformity to single market rules than today. Restrictions on financial services would be difficult for the sector, but the main drawback would be the inability of the UK to sign new trade deals because it remains in the customs union. Brexiteers may complain that Brexit has not happened at all.
Goods-only single market access
This could be close to Theresa May’s Chequers blueprint, with regulatory alignment for goods. But there would also be the European Court of Justice, movement of EU citizens, big budgetary contributions and common external tariffs with the EU. The services sector would be much worse off than they are today unless a deal could be done.
It might be hard to see how this kind of deal leaves the UK any better off.
What is the most likely outcome?
There are powerful forces against a no deal Brexit, even if the only alternative might be no Brexit at all. It may be impossible to say what form Brexit will take – and to predict the consequences. The fallout from the leave decision after the referendum was not the immediate collapse of the UK economy predicted by doomsayers – but a fall in the value of sterling that triggered an export boom.
What will it mean for your money?
It is hard to know what the impact of Brexit will be on your money until you know what Brexit we will have. At Continuum, we can help you keep up with the latest financial news with our weekly education mailer and our regular updates.
We can also give you personal help, with a financial adviser to call on when you have a particular question – or general worries about the way things are going. Their up to the minute knowledge could help you see where dangers lie – and where any opportunities may be found in the fallout from Brexit.
Getting help with your money is easier with our experts working with you. Why not call us today?
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.