- Explanation of the Brexit process & The Supreme Court ruling have made the UK’s departure date & destination clearer. But, the largest uncertainty now is probably the length of the journey ahead.
- Our negotiations could stretch well beyond the two years assumed by Article 50. Maintaining access to, rather than full membership of, the customs union looks nearest to Canada’s model. But, this took seven years, & ours may have to be even more ambitious.
- As we open the exit ‘trapdoor’ in a highly-charged political year, EU law will forbid our committing trade-deal ‘bigamy’, in terms of enacting quick agreements elsewhere, such as with the US.
- Which leaves the BoE watchful of the pound. Our simulations show further pound weakness &/or oil strength would lift CPI inflation to 3%yoy. But, we’d still expect the Bank to ‘turn a blind eye’.
- Politically, we could be choosing one of the worst times to negotiate an exit, & may have to compromise if we want to keep tariff-free trade. So, any tie-ups in future - with Europe or elsewhere - will probably come ‘with strings’. A bit like EU membership then!...
Keeping risk on the radar in calm conditions