The UK’s grueling divorce process from the EU entered a new phase on Monday (28 October) as Council President Donald Tusk announced the bloc has agreed with yet another extension. Being aptly dubbed a ‘flextension’, this is already the third date set out by the EU for the Withdrawal Agreement to enter into force in the long-running Brexit soap opera. The terms of the so-called ‘flextension’ stipulate that the UK can leave the EU before 31 January 2020 if the Withdrawal Agreement is ratified by the UK Parliament before this point.
MEP reaction to the news saw deputies generally praising the EU’s flexibility and welcoming the possibility of finding a way to untangle the conundrum surrounding Brexit. Parliament President David Sassoli called the move “positive,” expressing his hope that the extension now “gives time for the UK to make clear what it wants.” He also added that “in the meantime, the European Parliament will continue to scrutinize the Withdrawal Agreement.”
In the meantime, Brits are being asked to vote on 12 December in what will already be the third general election in only four years, which, many hope, could end years of paralysis caused by Brexit. But investors and traders will now be faced with weeks of tumult and new risks ahead of the vote – whatever the result. The election could end over three years of Brexit uncertainty, or plunge the country’s political system into an even deeper turmoil.
Each potential outcome comes with risks for investors. One scenario is the continuation of a deeply divided parliament and no path forward on Brexit. Another tricky scenario is when Prime Minister Boris Johnson could emerge emboldened, resurfacing fears of a damaging break with the EU. The vote could also install a left-wing government led by Labor chief Jeremy Corbyn, which investors fear would mean major structural changes to the UK economy.
