Brexit: Back to square one as UK election looms

Brexit | | MIC Customs Solutions |

There was no movement on Brexit this week after all, other than to call a snap election in the UK.

Today (October 31st 2019) was supposed to be a significant day in political history. It should have been the day when the United Kingdom exited the European Union, whether that was with or without a Brexit deal.

Now, though, with an extension granted and the country potentially facing a change of leadership, it remains business as usual. Let's take a closer look at what exactly has happened - and what happens next.

A snap general election

Earlier this week, leaders of the EU agreed to extend the Brexit deadline to January 31st 2020, despite prime minister Boris Johnson's claims that he would "rather be dead in a ditch" than see this come to pass.

A decision was swiftly made to press for a December general election for the first time since 1923 in a bid to break the impasse and lawmakers in parliament voted 438 to 20 to agree to the nationwide poll.

Peers approved the necessary legislation in less than four hours, meaning Britain will go to the polls on December 12th 2019. Once royal assent has been received, parliament will be dissolved on November 6th to mark the official start of campaigning.

Mr Johnson will be hoping to restore the Conservative majority in the Commons in order to get his Brexit deal through parliament in three months' time.

Ambiguity from Brussels

Meanwhile, outgoing EU council president Donald Tusk made some rather ambiguous remarks on Twitter, saying the latest Brexit delay "may be the last one".

This has led to some suggesting there could be more extensions after next January, although others have argued the comments were unintentionally vague.

Addressing the UK and its government, Mr Tusk added: "Please make the best use of this time. I will keep my fingers crossed for you."

Elsewhere, EU Commission representative Jean-Claude Juncker was more scathing, commenting that Brexit had been "a waste of time and a waste of energy".

The financial implications

Once more, the lack of any real movement in the Brexit debacle has led to speculation as to whether the UK will be better or worse off when the divorce finally happens.

A new report from the National Institute of Economic and Social Research (NIESR) has claimed Mr Johnson's deal would shave nearly four per cent off the British economy by the end of the 2020s.

A no-deal Brexit would make the economy 5.6 per cent smaller than if Britain stayed in the bloc, the think tank claimed.

The deal proposed by the prime minister does not require England, Scotland and Wales to remain in a customs union with the EU in the future, which would make tariffs likely once the dust settles.

"A deal would reduce the risk of a disorderly Brexit outcome but eliminate the possibility of a closer economic relationship," said NIESR economist Arno Hantzsche.

The Treasury insists it would aim to negotiate a more ambitious free trade agreement with the EU than the one used as the basis for this study.

What next?

Once again, we have to end by repeating that all we can do regarding Brexit is wait and see what happens. And rather than only having to wait until the end of today, it will now be December or perhaps even the new year before any major new developments occur.

Until then, if you're trading between the EU or the UK, it's tentatively going to be business as usual.