BREXIT EXTENSION CALMS NERVES — THE UK LOOKS TO COME UP WITH THE ANSWERSBrought to you by AskTraders
- The UK is now due to leave the EU on 31st January 2020.
- The extension, which was approved by EU members on Monday reduces the risk of a no-deal Brexit, but the UK looks set for a general election and the new faces needed to push any deal through.
The EU has approved the UK’s request for an extension to the Article 50 deadline, which denotes the day the UK and EU officially part company. The deadline has shifted from 31st October 2019 to 31st January 2020, and this version of the extension comes with the option of an early break clause being triggered. The optionality of the agreement has earned it the name ‘flextension’. This most recent of delays comes at a time when the Westminster political landscape is at its most dysfunctional. There is little hope that the three-month extension will necessarily form time well spent and Tuesday brings the increased likelihood of a December general election.
The business community has expressed relief at the news that a Halloween no-deal Brexit has been avoided, but the political gridlock at the palace of Westminster appears to be missing the mood of business leaders who now want Brexit done. The deal, any deal, would be welcomed as it then allows them to focus on other issues. Reports suggest that across the UK, and parts of the EU, companies are in a holding pattern. The stockpiling of goods, which was carried out to manage risks associated with the 31st October deadline will likely be rolled over to the next deadline as it is only three months away. This process involves tens of millions of pounds worth of working capital being tied up in inventories — the management of which is a further drain on resources.
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