After almost four years, three prime ministers, and multiple national votes, the UK finally pulled out of the European Union (EU) on Jan. 31, 2020. What does this mean in practice? One could say: very little. Most everything will continue to operate as is, since the UK will be in a ‘transition phase’ until the end of 2020. Although the UK will no longer be a part of the EU, it will continue to operate under the laws and regulations of the EU. Here’s a roundup for what will stay the same and what will change during the 2020 transition phase:
What Stays the Same: Pretty Much Everything
***UK-EU trade will continue without any extra costs or checks.
***UK citizens will still be able to live and work in the EU, and vice versa.
***Travel: Flights, boats, and trains will operate as normal.
***Driver licenses and pet passports will remain the same.
***UK government healthcare coverage will continue to be effective in the EU.
***UK citizens living in the EU will continue to receive their state pension.
***The UK will continue to pay into the EU budget during the transition, allowing existing programs paid for by EU grants to be funded.
What Changes: Not Much for Now
****The UK will start bi-lateral negotiations with countries around the world, including the US, about the terms of new trade agreements.
***The UK’s 73 MEPs (Members of the European Parliament) will lose their seats and the ability to have a say in new EU laws and regulations.
***British ministers will no longer attend EU meetings and summits.
***The UK flag will be removed from all EU institutions.
The UK now has just 11 months to come up with a trade agreement with the EU or face the reality of postponing Brexit further. If UK Prime Minister Boris Johnson fails to reach a trade agreement, he will be forced to extend the transition period. Pen to paper is not enough, however, Johnson might still be forced to delay Brexit, if the necessary infrastructure to support the new deal is not in place. Meanwhile, Johnson told his ministers at a cabinet meeting in Sunderland, that the British government is aiming to have 80% of the UK trade with other nations covered by free-trade agreements within three years. As I’ve mentioned in previous notes on Brexit, only time will tell if everything goes according to plan. We here at LNWM’s Investment Strategy and Research team, as always, are keeping a close watch on the situation and the potential impact.