After nearly four years, three prime ministers, and numerous national referendums, the United Kingdom (UK) eventually exited the European Union (EU) on January 31, 2020. In practice, what does this mean? Very little, one could say. Because the UK will be in a "transition phase" until the end of 2020, most things will remain as they are. Despite the fact that the UK will no longer be a member of the EU, it will continue to function under EU laws and regulations. Here's a rundown of what will remain constant and what will change during the 2020 transition period:
What Stays the Same: Pretty Much Everything?
- Trade between the United Kingdom and the European Union will continue as usual, with no additional costs or checks.
- UK nationals can continue to live and work in the EU, and vice versa.
- Travel: Flights, boats, and railroads will continue to operate normally.
- Driver licenses and pet passports will not change.
- The UK government's healthcare coverage will remain effective in the EU.
- UK people living in the EU will keep receiving their state pension.
- During the transition, the UK will continue to contribute to the EU budget, allowing existing projects supported by EU funding to continue.
What Changes: Not Much for Now
- The United Kingdom will begin bi-lateral talks with countries throughout the world, including the United States, concerning the conditions of new trade deals.
- The United Kingdom's 73 MEPs (Members of the European Parliament) will lose their seats as well as the power to vote on new EU rules and regulations.
- British ministers will no longer attend EU summits and meetings.
- The flag of the United Kingdom will be withdrawn from all EU institutions.
Looking Forward
The UK now has only 11 months to reach a trade agreement with the EU or face the prospect of further postponing Brexit. If UK Prime Minister Boris Johnson fails to reach a trade agreement, the transition time will be extended. Although putting pen to paper is not enough, Johnson may still be compelled to postpone Brexit if the required infrastructure to implement the new deal is not in place. Meanwhile, at a cabinet meeting in Sunderland, Johnson told his ministers that the British government's goal is to establish free-trade agreements covering 80 percent of the UK's trade with foreign countries within three years. As I've indicated in prior Brexit remarks, only time will tell if everything works as planned. As always, the Aldwin Callen Investment Strategy and Research team is keeping a careful eye on the situation and its potential impact.
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