5 things you probably didn’t know about Brexit
If Brexit were a novel it would be James Joyce’s 1939 work Finnegans Wake – widely regarded as one of the most confusing books ever written. For a start, there’s no clear plot. Instead, it’s a stream of random thoughts and words, expressed using peculiar language. Eight decades since it was first published, Joyce scholars are still scratching their heads trying to work out what it all means. Remind you of anything?
In Brexit’s case, over three years have elapsed since the British public voted to leave the EU; an uncertain time, during which most people have become none the wiser. Not only have the powers that be failed to deliver what the 2016 referendum result demanded, the ensuing negotiations, deadlines, elections and rejected deals have created more questions than answers.
With so much uncertainty surrounding Brexit, we thought we’d scratch its surface and explore some intriguing and useful stats and facts.
1) The negotiation process.
If you’re having a bad day at work, spare a thought for the negotiators working on either side of the Brexit divide. Since former Prime Minister Theresa May triggered Article 50 on 29th March 2017, kick-starting the negotiation process, these long-suffering officials have been scrutinising almost 21,000 EU laws and rules as they attempt to agree on a divorce settlement; a job they hoped would be completed by 29th March 2019 – the original Brexit deadline.
2) Britain is not expected to pay off Brexit bill until 2064.
According to the Office for Budget Responsibility (OBR) – the UK’s fiscal watchdog – Britain will take over 45 years to pay off its total Brexit divorce bill. Estimated to a total of £37.1 billion, the settlement will be split into three parts:
- The UK is expected to pay £16.4 billion as part of a multi-year framework until 2020.
- Another £18.2 billion will cover outstanding payments at the end of the framework agreement – to be paid off between 2019 and 2028.
- According to the OBR, the remaining £2.5 billion reflects “pension liabilities less assets returned to the UK”, which probably won’t be settled until 2064.
3) Who is Ursula von der Leyen?
Ursula von der Leyen is a German conservative politician who previously served as the German Defence Minister under Chancellor Angela Merkel. She has been elected to take over from outgoing European Commission President Jean-Claude Juncker. Her term in office will commence on 1st November and will run for the EU’s five-year legislative period to 31st October 2024.
The President-elect will play an important role in Brexit regardless of whether the UK leaves the EU on 31st October or not. If Brexit does happen, the UK must negotiate its post-Brexit relationship with a Commission led by Mrs von der Leyen. If the UK asks for an extension, it would be required to negotiate the deal further with the Commission.
4) Help is on its way.
The UK’s impending departure from the EU will signal a period of significant change for businesses of every size and sector. Therefore, it’s the government’s aim to provide funding that supports businesses across the country, to ensure they are ready for Brexit. This includes:
- £108 million to promote and support businesses preparations for Brexit, including a national programme of business readiness.
- An additional £10 million ‘Brexit Readiness Fund’ will be made available to business groups and trade associations.
- £1.3 billion will be made available to lenders in guarantee schemes via the government-owned British Business Bank. This will facilitate lending to almost 90,000 viable SMEs that already access over £6.6 billion of finance, supported by the British Business Bank.
5) The ‘Headline Effect’
It’s common knowledge that exchange rates fluctuate in response to a range of variables, including economic data releases – from interest rate announcements to GDP figures. After all, it’s these stats that indicate the current health of the domestic economy. However, it’s the headlines surrounding them that usually have the biggest impact.
Sentiment towards most things in the public sphere is heavily influenced by what we see in the press, and the pound is no different. Economists have even coined the phrase the “headline effect” – the influence of negative news in the popular press on the economy and subsequently its currency. The psychology behind the “headline effect” is simple: because the investing public’s reaction to a headline is often dramatic, their reaction to bad news in headlines can be out of proportion compared with good news. Consequently, they might react to an unfavourable economic report disproportionately, causing the pound to depreciate.
Brexit has been the catalyst for a constant stream of inflammatory headlines, born out of political and economic uncertainty; a common trend that has hamstrung the pound in recent times. For example, the currency slumped to a 10-year low against the euro in August, after news that the UK economy had shrunk by 0.2% in the previous quarter – combined with the threat of a no-deal departure from the EU – hit the front pages.
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Brexit – a game changing event that is set to affect UK businesses of all sizes and industries, as well as businesses in the EU who are trading with the UK.