Prime Minister Theresa May has signed the six-page document that will trigger Britain’s exit from the European Union. The document triggering Article 50 of the Lisbon Treaty was delivered at 12:30 GMT to Donald Tusk, thus formally notifying the EU of the country’s intent to depart from the union. Although Britain voted to leave the EU back in June of 2016, the Government has spent time readying itself for the upcoming exit negotiations. These can now begin.
Upon the UK’s Permanent Representative to the EU delivering the letter to President of the European Council, the Prime Minister took to Westminster to deliver a statement to the House of Commons. The PM stated that there would be no turning back, that ‘we are going to make our own decisions and make our own laws. We are going to take control of things that matter most to us.’ In a rousing statement the PM declared ‘I choose to believe in Britain and that our best days lie ahead.’ However, the Tory leader also noted that her plan for future negotiations is ambitious.
The Next Steps
This afternoon, President of the EU Council, Donald Tusk held his own press conference. During the press event, he stated that there was ‘no reason to pretend this is a happy day. We already miss you. Thank you and goodbye.’ Following the triggering of exit procedures, an emergency summit is due to be held by EU leaders. The aim of this summit will be to discuss the strategy to be adopted during the upcoming exit talks. The exit talks could last up to two years, with the formal deadline for negotiations now set as 29th March 2019. Until this time, or until a withdrawal agreement is reached, the UK will remain in the EU with the same rights as a full member.
At present, it is difficult to speculate on what could happen during these talks. The PM has stated that she will be seeking a ‘hard Brexit’. If this occurs, Britain will no longer be part of the single market nor will it have to accept the free movement of people from EU member nations.
The free movement of people has been one of the most oft-discussed aspects of the withdrawal process. It was a huge part of the campaign rolled out by Brexiteers before the Referendum. It will surely be just as big a part of the exit negotiations. However, many are unconvinced that Theresa May will be able to pull off such a ‘hard Brexit’. The free movement of people is one of the EU’s core principles and will not be easily brushed aside by officials.
EU Political Climate
Further complicating the impending exit talks are the major elections facing other member states. In countries, such as France and Germany, there has already been murmurings of following in a similar path to the UK. In the upcoming elections, right wing factions stand to gain a great deal and could call on their countries to begin petitioning for withdrawal. For this reason, EU officials are likely to oppose a ‘hard Brexit’ out of fear of prompting similar action elsewhere.
Deal or No Deal?
As mentioned above, the UK has until the 29th of March 2019 to reach a withdrawal agreement with the rest of the EU member states. However, there is always a chance that no agreement will have been reached by this date. The deadline can be extended but this will require the unanimous agreement of all member states to implement.
If the deadline is not extended and no agreement is reached, the UK will leave the EU and will be forced to uptake the terms for trade set out by the World Trade Organisation. These terms impose 14.3% tariffs on agriculture trades and then 4.3% on trades of non-agricultural value. Many are concerned that these tariffs would result in a devastating blow to the UK economy. It is therefore in the interest of the nation that a favourable deal is struck with the EU to allow the UK access to the single market, albeit no longer as a part of it.
Today is undeniably a significant day. The initial impact of the Brexit process is already being seen in many different sectors, with the pound suffering several fluctuations throughout the day. It is hard to predict how the process will truly play out. Like many others across the planet, we will now be waiting with baited breath for news of the outcomes of future negotiations as they take place. If you have any concerns about how Brexit may affect your investment and pension portfolios, please do not hesitate to get in touch