Brexit: A Rocky Path to an Uncertain Future

28 July 2016 | Ideas@TheCentre

brexitThe sensationalist post-Brexit news headlines predicting continued losses in global markets have ceased splashing across the covers of major news publications the world over.

The landmark referendum result shock appears to have largely dissipated, while market turbulence has been relatively short-lived.

The UK’s FTSE has gone on to make a strong recovery and add value to a near one year trading high. While a short term rebound is positive for the UK it does not necessarily indicate an end to Brexit-related market volatility.

A caveat placed on the economic success of a Brexit is the UK’s ability to negotiate a series of bilateral free trades agreements (FTAs).

While securing trade networks is crucial, the need to deliver on promises of a reduced regulatory burden is coincidentally paramount to success.

There are a great many concerns regarding the tenacity of the newly sworn-in Secretary of State for International Trade, Dr Liam Fox, to secure a comprehensive FTA with Brussels. This is particularly relevant in light of Angela Merkel’s criticism of Boris Johnson’s “cherry-picking” proposal.

Regardless, it is clear the new Prime Minister’s determination to “make a success” of Brexit echoes throughout the May Ministry.

Prime Minister Turnbull has engaged with the new administration in what has been described as “constructive” discussion on a potential trade agreement. Meanwhile India has embraced the idea of an FTA, with preliminary talks beginning earlier this month.

While the future for the UK remains unclear for now, it is apparent that the economic success or failure of the Brexit rides on the May administration’s ability to negotiate trade deals.

Similarly, a failure to capitalise on their restored sovereignty and roll back the regulatory burden placed on domestic industries will only stifle the UK’s productivity and growth.

Miguel Forjaz is an intern at the Centre for Independent Studies

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