• Marcus Brookes
  • 31 January 2020
  • 5 minutes

Ghosts of Brexit past and present

The UK is set to make its official departure from the European Union (EU) at 11pm on Friday 31st January 2020. This has led to expressions of relief and disappointment depending on who has been doing the expressing. The general mood is one of “Brexit is finally done”.

But it’s not.

The official signing, music and waving goodbye is only the beginning. The UK is now entering a transition period during which it has to extricate itself from legislation that has built up over more than 40 years. It must replace all of it.

This will require a huge swath of head-to-head wrangling followed by the writing and multiple re-writing of numerous laws and regulations.

As I mentioned in my response to the UK election result, the shortest time that the US has taken to negotiate its 20 most recent trade deals is four years . Each of those was a relatively simple one-on-one country deal addressing trade terms which were drawn on a conveniently blank canvas. The UK is facing a much more substantial and daunting task of agreeing trade terms with all remaining 27 member states of the EU as well as with the 40 further countries with which the UK has dealt through the EU.

The short-term solution for replacing much of the remaining legal framework might be to retain existing legislation and replace it piecemeal. But that will be complicated by negotiations over trade.

The obvious risk is that of the UK and EU being unable to agree trade terms. Were this to happen and Mr. Johnson were to stick to his arbitrary deadline, then the UK could be left without a trade agreement with the EU. In other words, a no-deal outcome or “hard” Brexit. Prime Minister Boris Johnson has committed to a December 2020 deadline of completing all of the negotiations and legal documentation. This is ambitious and puts considerable pressure on all involved.

It’s reasonable to anticipate that such an outcome would bring about considerable economic and financial turbulence in the UK as it would be faced with no terms on which to trade with its biggest trading partner (accounting for around half of the UK’s imports and exports).

It might not come to that, but if it were to, inflation, economic growth, employment, service provision and investment prices could all be affected. The ghost of Brexit past might have gone, but the next apparition is looming.

This is one of the reasons why the investments that we manage focus on a long-term future through diversified opportunities. This helps to reduce the implications of short-term events no matter how spooky they might seem at the time.

[1] Source:, accessed December 2019

Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment.

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