Brexit: Are We Inching Closer To A Clean Break?
Despite turmoil in UK Parliament, the construction sector has held steady for the third quarter of 2019. Now, with the Prime Minister stating that the UK will not be extending EU membership and talk of Northern Ireland agreeing to a deal to remain part of the union, the deadlock could be breaking.
It seems the country is now ready to progress. Unsure how we got to this point? Let us catch you up on possibly the most conclusive Brexit developments of the past three years.
Change in approach
Boris Johnson is currently standing firm over a deal being reached by 31st October. In the time between, following his meeting with Jean-Claude Juncker in Luxembourg, the Queen will reopen parliament on 14th October. An EU summit will be held on 17th and 18th October.
Ahead of these dates, it’s rumoured that Northern Ireland has moved towards an agreement on the grounds they will only be a member for the purposes of agricultural standards. This would remove EU concern over the backstop between the Republic and Northern Ireland – steadying the markets further.
Change in parliament
With no majority in the House of Commons, we should expect a general election. However, with all opposition parties refusing to support an election prior to the Benn Act being implemented (to prevent a no-deal), it’s unlikely one would happen until the Brexit extension period (November 2019-January 2020).
In addition, the suspension of parliament is being contested. This has progressed to the Supreme Court, as Scottish Parliament viewed proroguing as illegal. Therefore, it is possible that Boris Johnson can’t get a deal and will need to extend Article 50 – although he has insisted that he won’t be the one to do it.
Change in leadership
Consequently, we could see Johnson’s resignation, resulting in a potential Corbyn-led coalition. In this case, the UK may request an extension and arrange for a second referendum – a movement which could bridge the divide between Lib Dem and Labour, and further solidify the chances of a soft Brexit/Breturn.
A lack of opposition and the EU refusing to blink could indeed result in a hard Brexit, leading to a drop in interest rates. However, the introduction of Boris’ bullishness and a Labour-Lib Dem alliance has provided somewhat fixed outcomes – boosting the FX markets’ confidence in sterling.
Change in attitude
This firming-up of possibilities is restoring faith in the markets. Specifically, as the talk of a deal increased during the first two weeks of September, we saw shifts of sterling against the dollar improve by 7%.
The job market has also remained robust – we’re not in a recession, unemployment is low, and there has been consistent wage growth. While Johnson has stated that freedom of movement will end across the UK and EU, we are yet to see the EU concede that this will be the case either.
What is certain is that we are in the final throes of the negotiation process. Figures are settling, and while it may seem like we are on a knife-edge economically, we are in fact at the end of a tight rope. Our view is that businesses looking to grow should continue to pursue their expansion plans, as delays could see them being outpaced by competition.
Build Space are here to guide that growth. If you’re looking for a talent partner that’s plugged in to the political conversation and understands the impact of any possible outcome, get in touch today.