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Brexit: The New Normal

Uncertainty increases the risk of business insolvencies in the U.K. and across Europe. Here’s what to keep an eye on.

By David Culotta | March 04, 2020 at 01:20 PM

More than three years after the U.K. voted to leave the European Union (EU), it has accomplished that goal. On Friday, January 31, at midnight CET, the U.K.’s exit became a reality through a structured withdrawal agreement. While attention now turns to the future, the U.K.’s departure is bringing difficulties to the nation’s businesses in the near term.

Now that the Brexit date has passed, the U.K. can begin to negotiate new trade agreements in earnest. The most important of these will define the country’s future trading relationship with the EU. Current U.K.-EU trading arrangements remain in place only until December 31, 2020. This short timeline makes it likely that the deal reached this year will be limited in scope, which could potentially spell a painful adjustment in 2021.

Worse, should the two parties fail to negotiate a trading agreement by the end of the transition period, they risk falling back on World Trade Organization (WTO) rules. The pressures on the economic environment and the underlying uncertainties continue to take a toll across U.K. and EU markets.

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