Brexit and its Promises: Another Year of Uncertainty
Finally, United Kingdom (UK) left the European Union (EU), but without a proper deal, continuing the uncertainty. The talks of UK-EU trade deal have opened doors to unpredictable negotiations ahead. Though there are promises of long term benefits, there is a higher probability that the coming short-term will have negative outcomes.
But now, the deal is done and the country has entered in a transition phase where it still retains most of the obligations of EU membership. According to the promises by Prime Minister Boris Johnson, this phase will be till December 2020. Brexit may extend for two years if it is agreed by July 1.
While all this seemed sorted, until UK government passed a law to rule this out.
Politically speaking, the December 2020 deadline proved as a negotiating tactic on the part of the UK as there is no going back anymore. The guarantee for this is only that PM Johnson has said it. If the transition phase extends and the deal gets into a never-ending negotiating vicious cycle by the EU, then Conservative voters will think Brexit and its promises as a huge bluff making Johnson look like his predecessors.
Experts are quite certain that closing an agreement on the UK-EU trade deal that covers goods and services will be impossible by year-end. What can be expected is a limited agreement with zero tariff on goods and no provision for services. It is difficult to shape the trade agreement, but there are a few scenarios that might happen. These include a no deal – this implies a no agreement between the UK and the EU which will then make World Trade Organization (WTO) terms applicable. If this happens, the outcome can lead to recession in 2021.
The best scenario will be where UK and the EU manage to agree on a trade deal which keeps Britain in close regulatory alignment with the EU and this aids in minimizing the economic disruption. Considering the effect on the industries due to the uncertainty that was lingering from last over three years, which majorly was holding back the investments, a UK-EU trade deal will actually lead to a material rebound in growth.
Meeta develops credible content about various markets based on deep research, opinions from experts and inputs from industry leaders. As the managing editor at Smart Market News, she assures that every piece of news and article adds to the knowledge of decision makers. An avid bike rider, Meeta, is a postgraduate from Indian Institute of Journalism and New Media (IIJNM) Bangalore, where her specialization was Business Journalism. She carries experience from mainstream print media including The Times Group and Sakal Media Group.