Sobre el Brexit

David Page, AXA IM - Lunes, 22 de Enero

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Irreconcilable Brexit risks political upset “Sufficient progress” stores up trouble for the future §  The conclusion of Phase I of the Brexit negotiations in December allowed the talks to move on to focus on the UK’s future relationship with the EU.

§  However the issue of the Irish border remains unresolved. UK commitments suggest a ‘default’ outcome that is much ‘softer’ than the Brexit currently being discussed.

§  These commitments seem inconsistent with the UK’s key Brexit objectives i.e. moving beyond the jurisdiction of the European Court of Justice, striking free trade deals with the rest of the world and avoiding a physical border in Ireland.

§  The resolution of this unstable agreement is likely to affect financial markets. But its impact will be highly dependent, on when and how, this resolution occurs.

§  A resolution after the UK has accepted the current deal (and left the EU) is likely to lead to a softer Brexit than markets currently consider, and is on balance, now our central view. This will  likely have modest and benign market implications. 

§  Yet, if this problem arises before the UK’s exit, it could de-rail the ongoing negotiations. This threatens a political crisis as well as a broad range of possible outcomes and market implications, which we consider a real risk for this year.

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