A Vintage Year
Brexit (or not)

by Alan Hill of Treasury Consultancy  alanhill@treausryconsultancy.com

I voted leave in the Brexit referendum and nothing I have seen since has convinced me of anything other than the fact I was right.

Controversial? Yes of course but I’m not a raving kick out immigrants right-wing nationalist. Over the period of negotiation, I have read literally thousands of pages of argument and I have little doubt that those who control the agenda of the EU and the basis of what the EU wants to become in the coming years do not comply with the wishes of the majority of the British population.

The remain and leave campaigners share one thing in common; they have been radicalized by the events in Parliament and the outrageous fake news that has been promulgated by both sides.

Theresa May’s draft agreement will be voted down by Parliament during the week of January 14th. The other two hugely optimistic demands the Remain, a second, or peoples, vote and/or revocation of Article 50 are also not going to happen. As this stands that leaves no deal, which as Andrea Leadson said before the Holidays, is the default position.

The Fallout

A short-term run on Sterling will be the first order in the financial markets. 1.2000 versus the dollar and 1.05 or 0.95 versus the euro depending on which way you look at it. A lower FTSE 100 possibly testing 5,800.

There have been some outrageous claims made in defence of staying in the EU. Unemployment doubling to 10%+, inflation at 7.5%+. These are the outer edges of possibility, not even probability.

The p[aid will last between three and five years. A lot depends on whether Britain is able to negotiate FTA’s, in particular, will the U.S. and the South American Trading bloc, Mercosur. This will be very significant in the journey back to growth.

Politically, there is unlikely to be a General Election before the appointed time in May 2022. However, the fallout from Brexit will probably mean that Theresa May “falls on her sword”.

The choice the Government makes on who will lead them will be significant since it will determine how they fare in the 2022 election. There will be a plethora of possible candidates and a great deal of horse trading done before the vote takes place.