By Daniel Archibald | CFA
In June 2016, the global order of things was turned on its head when a majority of the UK people decided it was best to leave the comforts of the EU behind. Brexit seemed to be the beginning of a period of global political unrest and critically halted the progress of globalisation. And now, Brits are frantically trying to figure out whether it was such a great idea, with many issues (Irish border, European court jurisdiction, divorce bill, etc) threatening to make the process rather painful.
As it stands now, there seems to be 3 main paths that the UK might take once the March 2019 deadline is upon us:
- Slow Brexit - This is a Brexit with a long and staggered transition period out of the EU with nothing really changing for at least a year. Owing to politician's tendency to 'kick the can down the road', this is probably the most likely of outcomes. The EU and 'remainers' will hope that this will give more time for a total reconsideration of the UK exit and the 'leave' voters will be pushing for tight and binding deadlines.
- No Brexit - This is also growing as a real possibility, with politicians seriously considering a revote or even disregarding the referendum results based on the national interest. This would likely be political suicide for some, but it may be a better option than a...
- Hard Brexit - This is the 'no deal' exit of the UK out of the EU with hard and soft borders going up overnight. If the UK fail to pass the Brussels-accepted plan through parliament, and if there is no successful bid for a deadline extension, Article 50 will be enforced and all the trade, migration, legal, financial and customs ties between the UK and the EU will be severed. The fate of trillions of pounds/Euros of transactions and millions of citizens will be instantly made uncertain. And the European and global economy will slide into a likely recession.
Regardless of the outcome, the UK has been changed forever. The calm and proper demeanour of the UK has given ground to the unknowns of popularism and nationalism. Advocates of an independent Scotland have had their voices amplified and those who believe in a reunified Ireland have a new footing with which to work. And yes... It is unlikely that Theresa May will survive this poisoned chalice.
Another group who has gained momentum out of the Brexit vote are those that are looking for stronger ties between the UK and Commonwealth nations. CANZUK (Canada, Australia, New Zealand and the UK) is a serious push to build a free trade/free movement bloc between the developed countries of the Commonwealth. It is similar to the EU in regards to freedoms of business and citizens, however it is not calling for a fiscal or monetary union. This, of course, will benefit those within these countries looking to travel, work or do business overseas.
What the world of Post-Brexit and Post-Trump will look like is still a major unknown. For us rational optimists, this period will hopefully lead to a revitalisation of considerate discourse and a respurring of thoughtful globalisation. However, the risks of a spiral down into further isolationist policies and war have not gone away. The outcome of Brexit might be a good indicator as to which way the world will go.