8 November 2019
Watch as our economists analyse the current state of the economy and markets.
Brexit: what are the next steps, the risks and outlook?
31 October passed and the United Kingdom is still a full member of the European Union. If the agreement negotiated in October is approved in January, after the British elections, the transition period can begin. However, there is limited time to agree on a free trade agreement: if the transition period is not extended before 30 June, it will end on 31 December 2020 and there would then be a high risk that Britain will leave the EU without a trade agreement, a major shock for both economies.
Watch the analysis of Julien Manceaux, Senior Economist ING Belgium.
In a nutshell
- The December 12 elections in Britain could result in a majority for the withdrawal agreement, which must be voted before January 31. Uncertainties remain about the results.
- If the agreement is approved in January, a transition period will start to negotiate a free trade agreement. However, this period is supposed to end in December 2020, which is too short. A decision on an extension until 2022 could be taken before 30 June, but many British MEPs are against it because it would imply new British contributions to the European budget.
- The British pound has appreciated since the summer because the risks of a “no deal” Brexit have eased. However, it is not expected to appreciate in 2020 to the point of returning to pre-2016 levels. A level of around 0.88 against the euro in 2020 seems more likely.