Brexit disaster is getting closer

The British House of Commons will vote on the Brexit deal on Tuesday 15 January. Will British Prime Minister Theresa May get the green light for her plans in a special way? And can the damage be foreseen if the agreements are voted down?

a brexit without good agreements costs the Dutch economy (according to the Court of Audit) €2,3 billion in extra EU contributions, higher customs costs and other matters. That is child's play compared to what is at stake for Britain. The government estimates the price tag will be £252 billion (€280 billion). Are British MPs willing to put their pride aside to avoid a massive financial loss?

The answer to this question will probably come Tuesday, January 15. At the moment, everything points to May's agreement being voted down. Anyone doing business with parties on the other side of the Channel or planning a city break to London should brace themselves.

Withering defeat
However, it is not the first time that the British House of Commons has had to prepare for a round of voting on the agreement. Initially, that was supposed to happen on Tuesday, December 11, but May canceled that vote at the last minute. This is because she was heading for a devastating defeat.

Little has changed in the past month. The European Union (EU) still refuses to adjust the existing agreements and offers May little certainty about future trade relations. On the other hand, British politicians do not seem sensitive to the time pressure. After all, Britain will leave the EU on March 29.

Huge interests
If a miracle does not come and the House of Commons votes down the agreement, the pound will undoubtedly receive another blow. Since mid-November, the currency has already fallen by almost 4%. The damage since the referendum in June 2016 is even more than 15%. In the event of a huge defeat for May, it is not yet certain that there will be a so-called hard Brexit. The interests are simply too great for that.

Besides enormous financial sums, the health of many Europeans is also at stake. Dutch hospitals warned that they are concerned about a shortage of medicines. The Netherlands imports more than €2 billion worth of medicines and medical devices from Great Britain every year, part of which is re-exported.

New scenarios
If the agreement is voted down, various scenarios are open. May could keep the credit to himself, after which a successor quickly tries to conclude new agreements with the EU. It is more likely that May is cleverly playing on European nerves and still pushing some changes to the current agreement through the EU.

Finally, a new referendum cannot be ruled out. According to British betting shops, the chance of that happening is almost 20%. Before there is clarity about what the route to Brexit actually looks like, there must of course first be a vote. Strap in!

Joost Derks

Joost Derks is a currency specialist at iBanFirst. He has over twenty years of experience in the currency world. This column reflects his personal opinion and is not intended as professional (investment) advice.

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