The Great British sell-off
Sterling is set for further declines as we approach 2017 and its not difficult to see why. The latest announcement and deadlines for Article 50 are just the start of things to come. Its possible that some of these pitfalls could have been avoided if only the Government prepared itself for what was always going to be a difficult divorce.
And now it looks as though the UK-EU debate has hit stale mate, Theresa May announced during her Tory conference that tighter borders will be the priority for the new Government. Amber Rudd through her weight at the debate by insisting foreign workers should be named, a move that has not been met with open arms amongst Labour members.
So the UK is heading for a hard Brexit then, lets be honest, the EU are not going to allow the UK to nudge on their underlining principals or they could face backlash amongst other EU members. The UK must accept the rules of the club or go elsewhere, a message echoed by many EU officials.
But where is the UK going? No one really knows but the implications of a hard Brexit are well known. The UK’s status as the financial hub of the world is at stake as business looks to retain its relationships with other EU members. Border controls only add unnecessary headaches to trade and given that May cannot guarantee existing relationships will remain, why would they stay amongst all the uncertainty?
The Brexit supporters claim the UK can just go about setting up free trade with other nations now, but this is not the case. As long as the UK remains a member of the EU (which will be for at least another 2 years), the UK will not be able to set up trade deals with other nations, and could face fines if it does so.
But what about other nations that have free trade agreements with the EU? Canada doesn’t have to accept free movement so why can’t the UK? For starters, the Canadian-EU deal took almost a decade to materialise, and is still in the latter part of a full agreement. The UK does not have the luxury of time and even if it did, why would other EU countries agree to it?
It’s difficult to determine which way the UK is heading and the markets know it. The value of Sterling is now based on sentiment, and the sentiment is not looking positive.