Brexit is finally here
After court battles, a House of Lords dissent and the emerging prospect of a Scottish Referendum, we have finally seen the UK government trigger Article 50, and Brexit. On 29 March, UK PM Theresa May officially notified her European counterparts of the UK’s intention to leave the EU by delivering a letter of intention to European Council President Donald Tusk. This provides one of the most exciting opportunities to trade stock markets since the EU referendum and the US election, but the jury remains split on how the process will ultimately pan out.
So, what comes next? When will Europe respond? Here are some of the key Brexit dates to put in your calendar.
On 31 March the EU President Donald Tusk should provide the Union’s first response to Brexit, while there may also be comments from the EU’s chief negotiator, Michel Barnier. The EU will then undertake a series of special meetings, the first of which will take place on 29 April, to piece together the group’s negotiating hand, while formal negotiations between the UK and the EU are expected to begin sometime in June.
Added into the schedule of events is, of course, the French presidential election, with the first and second rounds of voting taking place on 23 April and 7 May respectively, while the German federal election takes place in September. This throws up the prospect of the UK having to negotiate with new leaders of the two leading economic powers in Europe, who may potentially use Brexit as a platform to flex their political muscles.
With all of this happening in the space of just a few weeks, there could be room for a significant market reaction in either direction. With no set course for negotiations, sometimes financial market movement might not reflect media headlines. Our in-house research is here to help you dissect the news and remove the grey noise. Why not try it out beforehand by signing up here to have it delivered directly to your inbox before we begin Brexit.
How might stock markets react?
While market reaction might not be as sharp and immediate as the referendum aftermath – after all, it won’t come as a surprise – however, the divorce negotiation will likely see markets continually influenced next two years.
Talks will cover a multitude of topics, including (but certainly not limited to) free trade, determining legal jurisdiction, travel and working rights of UK and EU citizens in the others’ respective territory and, of course, access to the European Single Market. With majority approval from 27 states needed, the worst-case scenario leaves the UK without any negotiated deal and forced to adopt WTO trade rules. This leaves Britain to go it alone against the rest of the world as an outsider, not only Europe but also in key areas such as the US and Asia.
This could see UK companies listed on the London Stock Exchange, as well as Pound Sterling, sell-off sharply as a Hard Brexit becomes a reality. So how can you prepare for this potentially difficult scenario?
