Home Business Insights & Advice Will Brexit get worse before it gets better?

Will Brexit get worse before it gets better?

by Sponsored Content
1st Jul 19 9:45 am

It’s hard to find a period in the last few decades when European politics had been so messed up. In June 2016, the United Kingdom voted to leave the EU and since then tangled negotiations were held, with no actual resolution until now.

If things were not complicated enough, the UK Prime Minister Theresa May already announced her resignation after failing three times a Withdrawal Agreement through the British Parliament. The next deadline for Brexit is set for the end of October and with no actual leader in the UK, it is still uncertain what is going to happen.

Boris Johnson on the rise

Widely-known as a fierce Brexit campaigner, Boris Johnson seems to be the favorite to take the seat of PM in the not too distant future. On June 18th he managed to win the second ballot, with 126 out of 313 votes and is by far quoted with the highest chances of becoming the next PM.

There are almost three years since Britain voted to leave the EU and the country, the parliament and both main parties are deeply divided on how and when Brexit should happen.

Johnson had already mentioned that the UK must leave the EU on October 31st, with or without a deal, sparking fears that the negotiations are far from being done and the following months are going to provide new uncertainties.

Financial markets across the globe had been on the rise as central banks around the globe already announced stimulating measures and trade.com indices had all performed well. S&P 500, DAX 30, and FTSE 100 are climbing at the time of writing, but if the UK and the EU will begin a new standoff, risk aversion could be the defining factor of the rest of the summer.

The British economy had performed well in 2019, despite headwinds generated by Brexit uncertainties, supported by a weaker pound as investors feared the likelihood of a disorderly exit. Not the same can be said about other EU countries. Germany is expected to show less than 1% GDP increase in 2019, while Italy could plunge into recession as divisions between the extremist government and EU institutions continue to widen.

Due to these evident weaknesses in the EU, Boris Johnson could force his hand in order to get a deal much favorable to the UK, but European countries had already announced no willingness to do that. Whether or not the EU will eventually make concessions is still unknown, although the common block is well-known for compromises in negotiations.

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