Page 5 - ISQ UK_October 2017

OCTOBER 2018

"In hindsight, do you think Britain was right or wrong to vote to leave the EU?"

PO LLING
4-5 43% 11% 46%
SEPTEMBER

PO LLING
10-11 41% 13% 46%
JULY

"Right to Leave" "I Don't Know" "Wrong to Leave"

Source: YouGov

It is clearly not perfect but it is should be good enough to satisfy unclear and newspaper headline catnip. It has held back the Pound,
enough people initially to get something through and agreed UK domestic shares and even the broader continuing European
Union. But from the current desperately mixed sentiment backdrop,
CHEQUERS OR NO DEAL any resulting deal will lift all these boats in a potentially tradeable
And then there is trade. The careful compromise of the ‘Chequers manner for investors.
deal’ and its facilitated customs arrangements looks unlikely to But - as we started this piece - what happens beyond March 2019
politically hold up, and the ongoing EU’s binary focus (outside ‘no depends on how consumers, businesses and politicians react to
deal’) on either something like the current status quo or an off-the- any deal. Forging a deal is important but with the backdrop of a
shelf existing ‘Canada-style’ deal seem at face value to be the only competitive, evolving world, what everyone does with it matters
options on the table (and the latter causes Irish border challenges). much, much more. In short, even with compromises, challenges
Clearly, here is where UK politics kicks in, but if you take away those and opportunities exist with the Brexit debate.
with very firm and vocal views, the closeness of the 2016
referendum - especially when combined with a UK Parliamentary
majority in favour of ‘remain’ - indicates the most likely outcome is
for Brexit... but only in a soft and transitional manner. With a
twenty-one month transition period already on the table for the
post end of the March 2019 period, efforts have already been made KEY TAKEAWAYS:
to try and avoid an aggressive cliff edge. • The whole Brexit process has been a series of forward
steps followed by backward ones.
Now some will say that such a scenario is impossible because the
current UK government will be unable to muster sufficient support • Every new frictional cost or barrier is a hindrance or a
on its own benches, however, remember the general, average loss that has to be overcome or sourced from elsewhere.
Parliamentary view, which is likely to be in favour of a soft Brexit at • The general, average Parliamentary view - which is
most. At some point - despite obvious party politicking incentives likely to be in favour of a soft Brexit - offers some hope
- such a huge constitutional matter cuts across party boundaries of the scope for a compromise deal.
irrespective of which political party nominally has a majority (or
not). Meanwhile, the trouble with the rationale for a second • Any resulting deal could help the Pound, UK domestic
referendum is that any question gets hijacked and is unclear in a shares and even the broader continuing European
transitional scenario. Union.
• Forging a deal is important but with a backdrop of a
WHAT HAPPENS NEXT competitive, evolving world, what everyone does with
What we have now is clearly an impasse, but not an unassailable it matters so much more.
one. Brexit, with its step forward and backwards, remains tricky,

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