On the anniversary of the triggering of Article 50, Richard Buxton, manager of the Old Mutual UK Alpha Fund at Old Mutual Global Investors comments on the countdown to Brexit.
Following the recent draft withdrawal agreement, we have just one year to run before the UK ceases to be a formal member of the European Union. Subject to the principle that ‘nothing is agreed until everything is agreed’, of course.
So provided that over the next twelve months the UK and the EU can find a resolution to the Irish border issue and the minor matter of Gibraltar, and determine the nature of our long-term future trading relationship with Europe, in a year’s time nothing much will change.
We will remain members of the single market and customs union for a 21 month transitional period ending on 31 December 2020, before embarking on our real future outside the EU.
Can we relax now and plan for the future with some certainty?
Sadly not. To this observer, it remains nigh impossible to negotiate the nature of our post-transitional trading relationship in a way which satisfies all the differing factions of the Conservative party – plus Northern Irish MPs – as well as meeting Brussels’ desire to ensure that life outside the EU is sufficiently harder as to discourage any other member state from having the temerity to question the benefits of the European project.
This is the circle I find impossible to square with one year to go, just as I did after the referendum result all those months ago, back in 2016.
The EU negotiators dangled the prospect of including financial services in a free trade agreement, before removing the relevant passage from the guidelines for the future negotiations, whilst stressing it could reappear in due course. So the chances are that we shall still spend the next year subject to contradictory statements from all sides as to the kind of future trading agreement we might be working under.
The scope for last-minute brinksmanship remains as high as ever. Roll on March 2019, but expect many a twist and turn before we genuinely have clarity.