author jordan rochester 2

The triggering of Article 50 marked the end of the debate within UK politics and started the real negotiations between the UK and EU-27. It’s hard to gauge every moving part and we expect many headline surprises during the two years negotiation process, but here are the things to watch out for in the initial rounds of negotiation:

What are the key dates?

03060 Brexit Timeline post Article 50 v4 LITE

What could impact the markets?

1. The solidarity of the EU negotiators

So far the 27 EU states have held a firm and united position on Brexit. However, the negotiations may cause division between member states who care for the exit bill versus those who do not wish it to sour future EU-UK relations. The disagreement between the member states would perhaps allow the UK more room to manoeuvre.

2. Tariff or free trade

Whether a free trade agreement could be strike between the EU and the UK would have huge market implications. If the free trade rhetoric turns protectionist, this could be the “no deal is better than a bad deal” moment where the market would react negatively. The good news is that several trade experts agree that tariff–free trade is more likely than not. However, it is agreeing to the common technical standards that is the hard part which will drag out the negotiations

3. Scottish referendum

If a Scottish independence referendum is granted (and there is no guarantee at this stage that it will be), there will again be much debate about Scotland’s monetary arrangements, particularly in relation to EU/euro area membership. A referendum would inject further political volatility into an already uncertain state of affairs and impact markets negatively.

The Brexit story has many moving parts and it is likely to be a feature of the news cycle over the next two years. EU-UK negotiations at each and every turn could provide uncertainty and worries about a "cliff edge" with no deal being reached and the UK falling onto WTO rules. However, with both sides having publicly recognised the need to avoid this scenario, there is a lower risk of no deals being reached.

For further insights on what to expect after Article 50, download the full report here and tune into our podcast on the possible market implications here.

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