B-Day Dawns: Britain (Finally) Quits The European Union

B-Day Dawns: Britain (Finally) Quits The European Union

about 4 years ago2 mins

The United Kingdom is officially leaving the European Union– a mere three-and-a-half years after the country voted to do so (and we first wrote about it!) 🧐

What does this mean?

Perhaps not what you might think. The Brexit deal establishes an eleven-month transition period during which people, money, goods, and services will continue to move freely between the UK and EU. The idea is that the two will strike another deal on their future trading relationship between now and 2021 – because, y’know, the last one went so smoothly

Brexit allows the UK to strike new trade deals with other parts of the world too. But it’s impossible to please everyone, as the recent Huawei decision demonstrates. A post-Brexit UK can’t afford to ignore China – but it’s also counting on US investment 🤞

Speaking of investment, December’s decisive election gave UK stocks a brief boost. But European and American share prices have still outperformed significantly in recent years…

Green = US stocks, Red = EU stocks, Blue = UK stocks…
Green = US stocks, Red = EU stocks, Blue = UK stocks…

Why should I care?

Some see in Brexit an opportunity for UK-focused investors. Construction companies, for example, could benefit from increased government infrastructure spending. And with record employment, rising wages and strong consumer spending – albeit fueled by low inflation and interest rates – the UK economy isn’t doomed just yet 😅

Nevertheless, increased barriers to business with the EU could hit Britain’s crucial services sector hard, as well as industries like car manufacturing. Such concerns may have helped push British auto production down to its lowest level since 2010 last year. And what’s more, confidence among those crucial UK consumers remains fragile.

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If Britain nails its trade deals this year and the global economy remains on track, Brexit could be a boon for UK investors. But that’s a big if. The country is, after all, stepping into the unknown. Britain’s central bank said on Thursday that it would be keeping a close eye on developments in the coming months – and investors would be wise to do the same 🇬🇧

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