Brexit outcomes and what they mean
What are the Brexit outcomes? If the UK’s latest Brexit proposal is rejected by Brussels, things could get serious.
If the UK cannot get a Brexit deal and exit the EU on 31st October, the Prime Minister has threatened to leave without a deal. This would break the Benn Act, a piece of legislation that requires the government to either reach a deal or get Parliament’s approval for a no-deal by October 19th.
Boris Johnson has told EU leaders that this is the final chance to strike a deal and urged them to show the same level of compromise as the UK. So, how might the Brexit outcomes impact UK businesses and trade?
Leaving the EU with a deal
For the UK to leave with a deal, there are several hurdles that must be cleared:
- EU leaders need to overcome their objections to the UK’s latest proposals and agree to a deal
- If the deal is approved by Brussels, the UK Parliament need to approve it.
If the deal happens on time, the value of the pound could be boosted. This is a logical conclusion because signs of a deal or progress in negotiations have boosted the value of the pound since the 2016 referendum. This is good news for businesses that import goods, as the costs will reduce. However, the strength of the pound depends on the deal. If the market feels it’s economically beneficial to the UK, the pound is likely to gain value on other currencies.
- Trade – a no-deal means the UK would leave the customs union and single market immediately (arrangements designed to make trade easier). Many politicians and businesses believe this would damage the economy, but others say the risks are exaggerated. The UK would then have to trade under the World Trade Organisation rules and face the EU’s external tariffs.
- Pound – the strength of the pound is likely to go down if the UK leaves the EU without a deal. The Bank of England has warned the pound would crash, inflation will soar and interest rates would have to rise.
- Borders – the UK would be free to set its own immigration controls for EU nationals and likewise, the EU could do the same for the UK. This could be long delays at borders if passport and customs checks are heightened.
Cabinet ministers have said the UK will obey the Benn Act if a deal can’t be agreed, but the Prime Minister has made it clear that this is not his intention and his adviser has hinted at “loopholes”. For example, it has been said that Mr Johnson could request an extension, before telling the EU to ignore his request. If he refuses to ask for an extension of Article 50, he is likely to face a legal challenge.
While a further Brexit delay would have a more positive outcome than a no-deal for the pound in the short-term, there will still be uncertainty present.
There is a legal option of cancelling Brexit altogether by revoking Article 50, but this isn’t at all likely. However, with a snap election expected after 31st October, there is a slight potential.
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