So, what has changed? Although the UK has agreed an 11- month transition period to the end of 2020, it still does allow for the retention of many of the compulsions that come with EU membership.
British citizenship will automatically impose non-citizenship of the EU, however, visa-free movement within the European Union will remain a right.
Perhaps more importantly, British expats will retain their right to work and live in the EU member state in which they reside.
The end of the political deadlock in Westminster has led to the removal of uncertainty, which gave Sterling and the markets an initial boost before the realisation that trade terms were
still to be agreed took away some of that momentum.
The remainder of 2020 will no doubt bring fresh volatility to markets as investors focus on the terms of the new trade agreements with the EU.
As has been the case for the last three years, businesses that rely on favourable import costs will be most at risk, but also those most likely to benefit from any positive sentiment.
In the shorter term, there will be ongoing back and forth between the EU and the UK, in which any finalised arrangement will impact Ireland significantly; we expect the country’s Prime Minister, Leo Varadkar, to provide market sensitive commentary over the next 11 months, assuming he retains power following February’s election.
Mr Varadkar suggested that the EU had the upper hand in ongoing talks, stating: “I think the reality of the situation is that the European Union is a union of 27 member states. The UK is
only one country.”
However, the large conservative majority means the EU will have to be careful given the power Johnson now wields.
Most importantly, and for the long term, will be the terms of the new trade deals reached with the UK’s largest trading partners.
Recent tensions arising between the UK and US over allowing Huawei to support the country’s 5G infrastructure demonstrates the delicate task facing the government – balancing new trading arrangements, while keeping allies on side.
Keeping all sides happy during the negotiation period will likely continue to give policymakers a headache, with Brexit retaining its top spot on the agenda.
James Andrews, Director – Head of Investment Management at Redmayne Bentley