In the past two weeks, investors have been paying close attention to the United Kingdom. This is after the UK and the EU reached a preliminary agreement on Brexit. This came after a prolonged period of negotiations between the two parties. After the deal was announced, May’s cabinet saw a number of resignations including that of Dominic Raab. He served as the minister in charge of Brexit. There are a number of scenarios that traders should pay close attention to.
May’s Deal is Passed By Parliament
After the EU’s parliament votes for the deal, it will need to go to the House of Commons for a vote. As things stand, it will be difficult for Theresa May to find enough supporters for this deal. Even among May’s close allies, many have expressed their opposition for the deal. The two major issues are about backstop that relates to North Ireland and the fact that UK businesses will need to abide by EU’s trade policies. This is the deal supported by many international businesses in the UK.
MPs Vote Against May’s Deal
Potentially, This is the most likely scenario. Already, Labor MPs have expressed their opposition to the deal that May has proposed. They have however not offered an alternative to the deal. If the MPs vote against the deal, and with time running out, the inevitable is that a no-Brexit deal will happen. No one wants such a situation. In the past, May has said that she would support a no deal instead of a deal that is worse to the UK. Many are now accusing her of supporting a bad deal.
If there will be no deal, a number of things are likely to happen. First, the EU and the UK could impose tariffs on one another. Second, the safety of UK residents in Europe and vice versa may be changed. Already, the UK has said that EU’s residents in the UK may be free to stay. Third, there may would be chaos in Dover. Today, it takes a truck less than five minutes to pass. Without a deal, it will take days. Fourth, supply chains – including those of necessary items like drugs and food – may be impacted.
If parliament fails to pass the deal suggested by May, there has been talk about having another referendum. This move has been supported by the labor party. In the referendum, the questions could be on reversing the previous Brexit vote. It could also be about the type of Brexit that the people wants. This could be about whether they want a soft or hard Brexit. A hard Brexit is one where the UK leaves the EU and gives up on the access to the European market. It would also mean leaving the customs union and the European Court of Justice. A soft Brexit may mean that the UK leaves the EU but continues to retain a close relationship. It may have all the access to the single market. This approach is hated by the pro-Brexit members.