“Soft Brexit is nowhere in sight yet”

The British Prime Minister is dedicated to a so-called soft Brexit. In this case, there would be no extended visa requirement and strict border controls. However, for now, the chaos in British politics and the fluctuations of the pound are now still requiring attention, according to Joost Derks of the Nederlandsche Betaal- en Wisselmaatschappij (NBWM).

Good news for entrepreneurs doing business in the UK: the country appears to be heading for a soft Brexit. This would mean free movement of persons to some degree. Those traveling to the UK for work or a holiday would not require a visa. Besides, May is making a case for a Customs agreement which would not require border controls. If it actually comes to this, Dutch export companies could continue to do business with British buyers under fairly normal circumstances. The bad news is that it’s not yet certain whether it would actually come to this. Even before May was given the chance to propose her plans to the EU, the political chaos was complete in the UK. On Monday morning 9 July, Brexit minister David Davis resigned, and early in the evening, Boris Johnson of Foreign Affairs followed his example. Both MPs think May is making too many concessions. In Johnson’s opinion, the country would become a colony of the EU if she can go through with her plans.

Fuel to fire

May soothed the imminent mutiny within her own party by quickly appointing successors for Davis and Johnson. However, American President Trump immediately added fuel to fire. In an interview with British newspaper The Sun, he said a favourable trade treaty with the US wasn’t an option if May refuses to cut ties with the EU completely. A few days later, it was even reported Trump had advised May to sue the EU. This weekend, it was finally May’s turn to put the cat among the pigeons. Writing in a column, she threatened there might not be a Brexit at all if the Conservative party doesn’t follow her course. The great uncertainty surrounding the British leaving the EU is keeping international politics very much occupied, as well as the currency markets. The pound is bouncing around between hope and fear.

Bad surprisesAs long as there are no bad surprises, the pound could remain around the current level, and it might even gain some ground. However, many things could still throw a spanner in the works. Trump could change his mind and choose a tough stance regarding trade policies with the UK. The EU could implement new requirements so May would have to take a tougher stance. May might even have to personally resign if her support among the Tories is lost. Considering all these obstacles May still has to take within her own government and in the negotiations with the EU, everyone doing business in the UK should prepare themselves for a few more significant currency shocks.

For more information:
Nederlandsche Betaal & Wisselmaatschappij
Beursplein 5
1012 JW Amsterdam, the Netherlands
Tel: +31 (0)20 578 24 39
Mob: +31 (0)6 517 551 26
joost@nbwm.nl
www.nbwm.nl