All hope for a Brexit deal is not lost, but for how long would it buoy Britain?
- While the prospect of Britain crashing out of the European Union without a deal looks likely, Brussels is famous for last-minute compromises
- Even if a deal materialises, UK financial markets are vulnerable without the country charting a credible strategy for long-term industrial revival
Emotions are running high and negotiators from both sides look so far apart that the prospect of Britain crashing out of Europe on bad terms looks very likely. But could the impossible still happen?
After all, Brussels is famous for pulling off last-minute compromises, so it may still be possible to snatch some sort of victory out of the jaws of defeat. It’s the outcome markets are least expecting which could catch investors off guard, sparking major risk reversals all round.
If Brexit tensions can be defused, the British pound, equities and debt markets would all enjoy major reversals of fortune.
There are already good reasons to think more positively about the future. Bargaining positions may seem entrenched, but there is growing awareness about the potential damage that a hard Brexit shock could inflict on growth prospects, job creation and financial stability on both sides.
