On Wednesday, March 29, negotiations for Britain to split from the European Union will officially begin. In this week’s Brexit Tracker, British Prime Minister Theresa May was given the go-ahead to pull the trigger on Article 50, and Robert Bolle, regional manager at AFEX, joined PYMNTS to discuss how political volatility as a result of events like Brexit are impacting global trade and international currency.
Article 50 Trigger Date in Sight
The formal mechanism required to kick off negotiations between Britain and the European Union (EU) about the country’s impeding exit, also known as Article 50, will officially be enacted by British Prime Minister Theresa May on March 29, The Guardian reported.
The news was confirmed by the prime minister’s spokesman on Monday (March 20) and will start the course toward the U.K. leaving the EU by the end of March 2019.
Sir Tim Barrow, the U.K.’s permanent representative to the EU, notified the EU that they can expect a letter on March 29 about the start of Brexit talks.
“I am very clear that I want to ensure we get the best possible deal for the United Kingdom that works for everyone across the United Kingdom and all parts of the U.K. when we enter these negotiations,” May said after the date was made public.
“I have set out my objectives. These include getting a good free trade deal. They include putting issues like continuing working together on issues like security at the core of what we are doing. We are going to be out there negotiating hard, delivering on what the British people voted for,” the prime minister continued.
It’s expected that formal negotiations will not start until sometime in May at the earliest, but some member states believe the Brexit talks will not begin until June.
Gianni Pittella, the president of the socialist bloc in the European parliament, commented to the Guardian about the slow progress in starting Brexit talks and also said the EU will want to settle on Britain’s estimated £57 billion divorce bill before any trade talks will actually take place.
“Congratulations, Theresa May. Nine months to give birth on a date for Article 50 notification. We will make sure that Brexit won’t affect EU- and U.K.-acquired citizens’ rights. Before negotiating the new relationship with U.K., first and foremost, we want substantial progresses on the withdrawal agreement to be ensured,” Pittella said.
How SMEs Really Feel about Brexit
Global political uncertainty from events like Brexit and the election of Donald Trump continue to have major impacts on global trade, currency volatility and the ability for businesses to manage risks.
In its third annual Currency Risk Outlook Survey, AFEX revealed that small- and medium-sized enterprises (SMEs) in North America are concerned about major political earthquakes taking place around the world and how those events will impact how they manage their businesses.
“The shock ‘Brexit’ result in the U.K. last summer and Donald Trump’s presidential victory in the States has altered the focus of the markets from economic data to shock political events. Markets are being driven more on sentiment and less on economic data — and the global rise in right wing politics has greatly increased global political uncertainty,” Robert Bolle told PYMNTS.
The majority (56 percent) of the 650 financial decision-makers surveyed said they expect currency instability to only increase over the course of the next year, due to rising geo-political risk. Nearly 32 percent of respondents also see currency volatility as the most significant challenge to their efforts to efficiently manage risks.
“Historic trade agreements between developed economies are being put into question more than ever before — not least with the U.K.’s long integration with the European Union ready to get dismantled and re-organized,” Bolle explained.
“One decade ago, key market data (such as Non-Farm Payroll reports, inflation and GDP data) drove the currency markets. Today, political and economic uncertainty is the main driver behind very significant market volatility.”