If the days and weeks leading up to the election were tense, the result itself was anything but. From 10pm on the evening of Thursday 12th December, when the exit polls were announced, the result was never really in doubt.
With the Conservative Party winning such a convincing majority, one thing that became abundantly clear was that Brexit – or rather, moving on with Brexit – was certainly one of the most important issues. A huge proportion of the British people voted to put an end to the saga by electing Boris Johnson as the Prime Minister, with his promise that Brexit would finally… ‘Get Done’. And, after three and a half years of uncertainty, that’s completely understandable.
So, what does this election result mean for Brexit and for those of you that will be looking to trade with, relocate to or simply go on holiday to Europe?
Is it done?
The Conservatives had a few slogans throughout their campaign, but perhaps the most common was ‘get Brexit done’. So… is it done?
Well, no. Not yet. There is still a fair amount of work to do. However, the result should mean that progress will be made and that the uncertainty, which has hung over the country and stalled British business for the last few years, should dissipate.
Before the election, Boris Johnson was 45 seats short of a majority. This made it all but impossible for him to get his Brexit bill passed by parliament and enter into proper negotiations with the EU about how the future relationship might look. This was ultimately the reason he felt a general election was the only option and, after winning a convincing majority of 80 seats, it seems to have paid off.
The Prime Minister now has a strong working majority within parliament, so the withdrawal agreement ought to be passed without issue and the UK’s ongoing constitutional crisis should be over. This is so important for businesses as, though there are still questions to be answered and deals to be made, they are now able to see a clear path and plan accordingly.
As things stand, Britain will leave the EU on the 31st January 2020. So that element of the process, at least, should get done!
It’s important to understand that leaving the EU is just the first part in a complex series of agreements and negotiations that will then need to happen. The existing withdrawal agreement covers ‘the divorce’ but not the future relationship between the UK and Europe.
Having officially left the EU, Britain will enter into a transition period. During this time it will remain part of the single market and customs union, and will still be bound by EU laws and regulations. So, for the coming year at least, travel and trade between the UK and Europe will seem to continue as it is now. This transition period is designed to avoid any sudden changes to the day-to-day needs of people and the way in which the economy works as a whole. This has given some assurance to businesses.
The transition period will give Britain until the end of 2020 to complete various negotiations around trade, citizenship, movement and regulations. There are still a number of possible ways that these negotiations could go, of course, but the path to leaving the EU is clearer and many of the uncertainties that plagued British industry have gone.
Deal or No Deal?
Back in September, we examined the ramifications of a hard, no deal Brexit.
Manufacturing had slowed down to a seven-year low as EU-based customers avoided committing to British manufactures in case of a no-deal Brexit. Economists predicted it would cause a sudden economic downturn. Questions were raised over how No Deal might affect the UK workforce and businesses worried that it could damage trade and lead to huge disruptions at customs.
There was not only a decline in investment in the UK from European countries, but also from the US and Asia. This was a direct consequence of the ongoing political uncertainty surrounding the exact impact of a No Deal Brexit.
Now, while this election result can’t completely rule out the possibility of No Deal, it has become significantly less likely. Many skeptics have commented that, to strike the necessary trade deals, Boris Johnson will need longer than the 11 months that is currently available to him. While, as things stand, the UK would leave the EU without a deal if an agreement is not reached and a deal is not ratified by the end of 2020, the EU has already said they’d be open to another extension. Boris Johnson has stated that this will not be necessary, but his large majority means that he has less pressure and more flexibility when it comes to making future amendments.
The long and the short of it
In the long term, it remains to be seen what the future will hold. There are plenty of details that need to be agreed and there’s no definite answer as to how the UK’s future relationship with the EU (and the world as a whole) will look. But that was always the case. The thing that had stalled British business, British politics and the confidence of the British people was the lack of progress in even getting to that stage, and the uncertainty that was causing.
Now, however, it seems there is a clear path to the negotiating table; a mandate for getting the process started and a timeline (albeit, an optimistic one) for the future to be mapped out. We’ve already seen the markets improve and the pound become stronger. This is because, in the short term, what the election result has done is restore confidence. Businesses can plan ahead, trade can continue and people can travel without ongoing uncertainty.
We know from past experience that Britain can deal with anything that comes its way. It can adapt to change and find solutions. The one thing the country could not contend with, and could not abide, was remaining in a constant state of limbo as the constant lack of progress made it unclear as to whether Brexit would ever ‘Get Done’.
Picture credits: Element5 Digital, Eva Dang, Chris Lawton and vanveenjf