• In June 2016, the UK held a nationwide referendum in order to decide whether it should leave the European Union (EU)
    • Around 52% of the population voted to leave the EU, thereby resulting in a phenomenon known as Brexit
    • Although the UK was scheduled to leave the EU in March 2019, Brexit was delayed due to a parliamentary deadlock
    • Finally, in January 2020, the UK formally left the EU
  • However, this did not mean that the Brexit process was completed
    • There are multiple issues related to Brexit that are yet to be resolved. Some of these issues include trade procedures and border checks
    • The UK is currently in the middle of a one-year transition period
    • This transition period has been designed to iron out any potential issues between the EU and the UK
    • However, not much progress has been made till the end of October. Things have also been delayed due to the coronavirus pandemic
  • This blog discusses the current situation with respect to Brexit and assesses future possibilitie

The Current Brexit Situation

  • The transition period is still ongoing, and negotiators are still at work
    • It is important to note that there will not be a major impact on the daily lives of UK residents even after the transition period ends
    • However, there could be major implications for businesses and traders that are based in the UK
    • The UK will also not be represented in EU decision-making, thereby meaning that it will operate as an independent market
    • On the other hand, Michel Barnier is the main negotiator for the EU
    • The major areas of contention include trade deals, the regulation of medicines, fishing access, as well as cooperation in areas such as security
    • Another major issue is that the two parties are still not in agreement when it comes to border checks
      • The UK believes that if too many border checks are implemented, then it could hurt its traders to a great extent
      • Conversely, the EU feels that border checks are an integral part of the post-Brexit era simply because the UK is no longer a part of the single market
    • In addition to the above, another issue that needs to be resolved is that the UK parliament is still divided on the topic of border checks
  • Although the UK government is trying its best to ensure that all of the above issues are ironed out before the end of the transition period, it looks unlikely as of now
    • In the meantime, the UK government has also released guidelines for traders
    • These guidelines highlight the key ways in which trade is expected to be impacted in 2021

To conclude, it is clear that Brexit continues to have a negative impact on traders based in the UK. There are still a lot of uncertain aspects that need to be addressed. Institutions such as Euro Exim Bank offer customized support to traders in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available here