Brexit: what happens next?

The coming days will be filled with uncertainty as financial markets and politicians react to the UK’s vote to leave the EU. The actual process of leaving will take a long time, and the details will take hard negotiation. Here’s what we do know about the process.

In the next few days, there will be a huge political reaction to the decision. Statements from British Prime Minister David Cameron, EU leaders, finance ministers, and central bankers are expected. There will be continued turmoil in the financial markets, and Bank of England Governor Mark Carney along with his peers across major economies are likely to be key figures in trying to soften the blow.

Just how the rest of the EU reacts could be critical to how things move forward. If things turn nasty, the exit and new trade deal negotiations are going to be far harder. It’s no easy task for the EU leaders either, many of whom are facing growing challenges from populist parties calling for their own countries to hold referendums.

Cameron has previously said he’d start the 'Leave' process by activating Article 50 of the 2009 Lisbon Treaty without undue delay. However, this is just the start of the process. The exit has to be negotiated with the rest of the EU, a process that’s supposed to be completed within two years. Activating Article 50 could also be delayed while initial talks on a new deal take place, according to senior 'Leave' campaigners.

If all goes to timetable, then Britain’s exit from the EU would take place in the summer of 2018. But it’s not that simple. The UK may not have negotiated a new relationship in full by then. That could take years longer. The 'Leave' campaign has said it wants to complete talks on a new trade deal between the UK and EU by 2020.

More will become clear in coming days and weeks, but for now it’s clear that the UK is taking a step into the unknown with years of hard negotiation ahead of it. 

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.