Brexit ‘reset’
It’s been nearly a decade since the Brexit vote, which saw the United Kingdom decide to withdraw its European Union membership. The referendum was a close one, with a 52% to 48% vote in favor of leaving the economic and political bloc, and even took several years until arrangements were finally made to facilitate the exit. The matter is still subject to great debate, as well as the benefits or detriments incurred since ties were severed, but the Labour government of Keir Starmer is trying to facilitate closer ties after ousting the Conservatives from power following 14 years of Tory rule.
The latest: The UK and EU have agreed to several new agreements, including pacts on defense and security, fishing, and agricultural exports. Other areas include energy trading, as well as exploring student exchange programs and mutual recognition of professional qualifications. The deals aim to “reset” the Brexit tone and pave the way for a deeper relationship in the future, especially given President Trump’s hardline push on tariffs and trade, and Europe beefing up its military investments to levels not seen since WWII.
“It’s time to move on from the stale old debates and political fights to find common sense, practical solutions which get the best for the British people,” Prime Minister Keir Starmer said in a statement. “That’s what this deal is all about – facing out into the world once again.” While the Labour government has ruled out rejoining the EU single market or customs union, there are concerns that new sectoral deals will expand into more industries and undermine Brexit.
SA commentary: “It’s taken nearly nine years, but on a trade-weighted basis, sterling is now barely 2% away from the levels it traded at before the June 2016 Brexit referendum,” ING’s Chris Turner writes in a new Seeking Alpha article. “The European deal with Britain won’t massively boost the economy, nor help avoid tax rises in the autumn. Further regulatory alignment might do that and would help boost sterling, but existing UK and EU red lines make that a daunting task.”