EDITOR'S LETTERMerryn Somerset Webb
When the UK voted for Brexit in June last year a lot of people (some MoneyWeek staff included) were very upset. Some of them so upset that before the day was out they had downloaded an application for an Irish passport to make certain that they would be able to remain citizens of the European Union even as the nation crashed out. The Irish foreign minister had to remind everyone that it would be at least two years before the UK left the EU – and that it only takes six weeks to get an Irish passport.
I wonder how many still feel the sense of panic they felt on 24 June. Since the vote there has been no economic disaster. The fall in the pound has been partially responsible for giving the Bank of England the inflation it has been desperate for since 2009. There are signs that the UK economy is finally beginning to rebalance slightly. The stockmarket has not suffered. Far from it. The FTSE 100 is up 17%, the FTSE 250 is up 11.3% and the domestically focused FTSE Small Cap index is up 19%. UK equities might now be more dear than we’d like, but no more so than anything else.
Finally, negotiations have got off to a perfectly good start. Theresa May’s letter was firm but co-operative in tone. She asks that we hang on to our special partnership and that we work out a “bold and ambitious” free-trade agreement – something which presumably the likes of Germany want (the UK is the second largest importer of German goods by value). And the EU already seems to have met the UK part way on the timetable by conceding that should “substantial progress” be made on the exit deal it is possible to talk about transitional arrangements at the same time. So what next?
Here’s my guess. Over the next two years there will be periods of trying stalemate and administration followed by odd moments of activity and breakthrough. Assuming there’s no crisis in the EU that interrupts negotiations (far from a given), in two years there will be a compromise deal which gives more or less free trade and more or less freedom of movement. Our civil servants will be exhausted. The rest of us will be bored. The real results of changing our trading arrangements with the EU (which I think will be very positive) won’t be visible for a decade.
What should you do about it? Nothing. Lots of different things affect the way you should invest. The invocation of Article 50 isn’t one of them. Still, if you are worried about not being a full part of the EU any more and your Irish passport application has failed, you might turn to our cover story – there we explain how you can stay in the UK but be an EU citizen as well. The truth is, as I bet Theresa May knows, that if you are happy to do a little administration and to hand over a medium-sized pile of cash, you can have your cake and eat it.