Fitch: Brexit Negotiations Have Already Started

LONDON--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: Global Perspectives: Brexit Negotiations Have Already Started

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884644

Britain's exit from the EU appears almost certain. Less clear are its timing, the eventual impact on the UK and any existential implications for the EU, says Fitch Ratings in its latest Global Perspectives commentary.

Negotiations effectively began as soon as the referendum result was known, with leaders in the UK and the EU staking out positions and drawing lines beyond which their flexibility will not be extended. Although negotiations started quickly, they will be protracted and contentious, and are likely to be subject to setbacks and outright reversals.

Both sides enter negotiations from positions of weakness. For the UK, its two biggest negotiating priorities - maintaining preferential market access and controlling immigration - have been clearly articulated, allowing the EU to play them off against each other or use them to extract major concessions elsewhere.

The EU's greatest challenge will be co-ordinating the various parties involved, including the European Commission, member states and the European Parliament. There is plenty of scope for disagreements on negotiating positons as well as strategy and tactics. A consistent European position will be further complicated by national elections during the negotiating period, which could result in incoming governments backtracking on previous agreements.

It is impossible to know how Brexit negotiations will conclude, as protagonists on both sides will change midstream, and issues not even identified yet could be major stumbling blocks. What seems certain is negotiations will be long. This will provide an unfavourable backdrop for the UK economy, with consumption and investment spending affected by the uncertainties ahead. The longer the uncertainties persist, the greater the cumulative negative economic implications. Project Europe will fare no better. Attentions will be unaccustomedly focused on simple preservation, with "ever closer union" at risk of becoming an ever distant prospect.

Global Perspectives is a monthly commentary series by James McCormack, Fitch's Global Head of Sovereign Ratings, on key issues affecting the world economy.

Read the full commentary by clicking the link above or go to www.fitchratings.com.

Additional information is available on www.fitchratings.com

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Fitch Ratings
James McCormack
Managing Director
+44 20 3530 1286
Fitch Ratings Limited
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London E14 5GN
or
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Source: Fitch Ratings

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