What Brexit means for you
29 March 2017
Brexit is really happening; the formal countdown to Britain’s departure from the European Union has begun. The UK’s Prime Minister, Theresa May, has signed a letter, officially triggering Article 50 of the Lisbon Treaty. With that stroke of the pen, the actual negotiations can now begin on Britain’s future relationship with the EU.
So what does all this mean for Britain, for Europe, for the pound and crucially for you, wherever you live? In this comprehensive report, ING’s economists have some possible answers on a process that will be neither clear nor straightforward.
Since the referendum on Britain’s membership of the EU in June, both sides have been arguing fiercely over what a future deal will look like. Some believe the referendum decision will be disastrous for both the European Union and for Britain. Brexit supporters think a bright economic future lies ahead. We believe that despite all the posturing, both the UK and the EU need a positive deal. Politics, however, will dominate, not least because of elections in both France and Germany this year. The negotiations are to last two years, and no one knows for sure how things will turn out as no country has ever left the European Union before.
Since the referendum in 2016, Britain’s economy has held up remarkably well, despite some dire predictions before the vote. But the UK’s economic resilience is fading. The pound has fallen about 20% since the referendum and that has boosted exports. Inflation, however, is starting to surge and that is already starting to squeeze wages and living standards. So while trade and manufacturing are growing, hiring and investment are weaker. For how long will those trends continue and how will the Bank of England react? Those are just two of the key questions we address in this report. We also look at what sort of trade deal Britain can expect, whether the UK will have to pay billions in a “divorce settlement” and how financial services companies will be affected.
So much is at stake. Both sides will start the negotiations seeking a deal that will minimise the economic damage and hopefully generate positive results for their respective electorates. But the challenges are huge and an agreement is not assured. Brexit has been described as one of Britain’s biggest constitutional challenges ever. Some think the UK’s departure could be the catalyst for the eventual breakup of the whole European project. A two-year negotiation process may seem like a long time, but given the complexities, 2019 doesn’t seem that far away. While the politicians fight it out, it’s the people in Britain, in the EU and beyond, who will be hoping good sense and judgement prevail.
