Sunday, December 22, 2019

Parliament Passes Brexit

We’ve followed the progress of Brexit since before the referendum. Various sources report Boris Johnson’s new Tory parliamentary majority has handily passed his Brexit bill.

The U.K. will leave the EU on January 31 just over a month from now. Going forward, the story will be what kind of trade deal Johnson will be able to work out with the EU.

We know what he’d like, frictionless free trade. He’s unlikely to get that. What the EU wants is more complicated.

On the one hand, the EU does a lot of business with the U.K. and would like to continue to do so. On the other hand, they’d also like to “punish” the U.K. for leaving by making trade more difficult and less free.

The question is how much economic pain the EU is willing to endure in order to punish the U.K. BoJo is betting the EU aren’t masochists, Britain hopes he’s right. The real battle will occur within the EU, and we’ll be watching.