Brexit relief for UK economy might not last long

Brexit relief for UK economy might not last long
Brexit relief for UK economy might not last long

Thank you for reading the news about Brexit relief for UK economy might not last long and now with the details

Jeddah - Yasmine El Tohamy - LONDON: The UK’s economy will cast off some of the Brexit uncertainty that has held it back since 2016 after Prime Minister Boris Johnson’s election triumph, but the risk remains of another “cliff-edge” showdown with Brussels in a year’s time.

With the country’s exit from the EU on Jan. 31 now a foregone conclusion, the question for investors is whether Johnson will stick to his campaign promise not to delay the end-of-2020 deadline for a new EU trade deal.

That deadline is widely seen as tough to meet, given the scale of issues to be resolved.

In the short term, the biggest election victory for Johnson’s Conservative Party since Margaret Thatcher’s 1987 triumph removes the deadlock in parliament over how, or even whether, to proceed with Brexit.

Johnson said in a victory speech on Friday that the UK would leave the EU on Jan. 31 “no ifs, no buts, no maybes.”

His election win also banishes the prospect of a sharp shift to the left under the Labour Party which promised nationalizations, more power for trade unions and a much bigger role for the state, which had worried many business leaders.

“For Brexit, this all means that Johnson’s deal will be ratified, most likely allowing the UK to leave the EU at the end of January,” economists at ING said in a note to clients.

“But more importantly, it could give the prime minister the political breathing room to ask for an extension to the transition period.”

The pound jumped by the most in nearly three years on the first sign of the scale of Johnson’s victory and shares in companies relying on the domestic economy rose.

Investors pared back their bets on the Bank of England cutting interest rates as the uncertainty about Britain’s economy lifted, at least in the short term.

The world’s fifth-biggest economy has slowed since voters decided to take Britain out of the EU three and a half years ago.

Leaving the bloc, which accounts for nearly half the country’s exports, is seen as a drag on its economic growth over the long term.

But the new sense of clarity about the government’s direction, at least in the short term, is likely to lead to a pick-up in the pace of growth in the coming quarters, economists said.

UK government bond prices fell sharply as trading in London’s gilt markets opened, helped not only by the conclusive election result but also by signs of an end to the US-China trade deal that has weighed on the global economy.

But economists turned their attention quickly to what the election result meant for Johnson’s longer-term Brexit plans.

He promised during the campaign not to extend a Brexit transition period beyond Dec. 31 2020.

That raises the prospect of tariffs and other barriers coming into force for Britain’s trade in goods and services with the EU in just over a year’s time.

Economists at RBC Capital Markets said the new government would probably try to keep a no-deal Brexit on the table for as long as possible to maintain leverage with the EU in the trade talks.

“However, with such a comfortable winning margin Johnson is not reliant on any faction of his party, in particular the hard-Brexiteers who might have tried to steer him toward a hard Brexit at the end of the transition period,” they said.

“Some form of extension now looks more likely even if some effort will be made to give the impression that is not the transition period that the Conservative Party promised not to extend in its manifesto.”

But economists at Citi said they thought Johnson would not try to delay the transition phase, having won support from voters who backed the Tories for the first time over their tough stance on Brexit.

These were the details of the news Brexit relief for UK economy might not last long for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.

It is also worth noting that the original news has been published and is available at Arab News and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.

PREV Honeywell announces solutions helping improve building health
NEXT Aramco chief optimistic about second-half of 2020 as China gasoline and diesel demand accelerates