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Brexit Begins

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You may recall that last summer the investment markets were panicked by the U.K. voting to exit the European Union. There were dire predictions about the impact on the U.K. economy, which never materialized, in part because the U.K. had not yet formally opted out of its Eurozone agreements. 

At the end of March 2017, the U.K. did pull the trigger, making the departure official. So that means those dire predictions will finally come true. Right?

Under the bylaws, the divorce will be negotiated over the next two years, meaning that any change in economic circumstances will be gradual and perhaps accommodated as they happen. How gradual? Over the next several weeks, the EU’s remaining 27 members will discuss their priorities in before the negotiations and then hold a summit on April 29. Only then will the European Commission have a mandate to negotiate with representatives from London. 

Items Negotiated in Brexit  

What will the negotiations cover? Britain’s obligations to the EU for its participation thus far, which could total up to roughly $65 billion. Perhaps most important in the day-to-day lives of people: what will be the rights of 3 million EU citizens living in the U.K. and the rights of more than 1 million Britons living and working in the Eurozone? 

After that, it is believed that the British government will seek to negotiate a broad free-trade agreement which will attempt to replicate the provisions of its former membership in the European Union, as a way to protect its commercial ties with the Continent. On the EU side, a simple majority of countries will decide what proposals are accepted and which are sent back to the negotiating table—with one notable exception: any free trade agreement between the two sides much win unanimous approval.  

What You Should Do As An Investor   

The bottom line is that nothing dramatic is likely to happen for years. Throughout the two years of negotiations, the U.K. will remain a full EU member without EU decision-making authority. Some are predicting that the discussions will last for several additional years, with extensions on the status quo until issues can be ironed out. 

Both sides in this negotiation have a stake in not having anything dramatic happening, and they will probably succeed in making Brexit a boring exercise in bureaucratic handover.

Stay disciplined. Focus on what you can control (Hint: It’s not Brexit). Ignore the rest.

To Your Prosperity, 
Kevin Kroskey, CFP®, MBA  


Sources: 
This article adapted with permission from BobVeres.com.
https://www.stratfor.com/geopolitical-diary/brexit-has-begun-now-what?utm_source=Twitter&utm_medium=social&utm_campaign=article
https://www.theatlantic.com/news/archive/2017/03/brexit-faq/521175/?utm_source=atltw

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