Brexit: No Immediate Changes Foreseen

The Brexit vote has taken; however global institutions, industries and financial institutions saw it coming and were well prepared. They kept calm and reasoned that, after a first turmoil of the markets, there would be more of a "soft landing".
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The Brexit vote has taken many of us by surprise; however global institutions, industries and financial institutions saw it coming and were well prepared. They kept calm and reasoned that, after a first turmoil of the markets, there would be more of a "soft landing".

What happened these past two weeks proved they were right. UK's independence from Europe will be a phased process. After all, forty years of integration cannot be undone in an instant. Brexit presents new challenges, new benefits and new opportunities, but nothing seriously will happen overnight.

For the moment, UK retains the body of law it has and will avoid quickly unraveling treaties in order to minimize disruption. In contrast to the political reshuffling that actually takes place on European and local country level, it is quite possible that the British and Europeans won't feel much material differences for a while.

Going forward, what exactly could be the impact of Brexit on the current regulatory framework for important topics such as trading, energy and environment? Will markets be set loose after the shackles of EU regulations are thrown off, or will we see something a bit less dramatic? Difficult to say.

But what we do know is that the UK did not suddenly leave the EU the day following the vote. To the contrary; it needs to trigger the two-years exit-process itself and when this will be, nobody really knows.

As expected the country is now in political instability and will probably need to recollect itself and explain its position to the public, before initiating the process to leave.

Given the enormous complexity, the time it takes to leave the EU could well be longer than two years (Greenland's exit took two years and was mainly focused on fishing rights). If negotiations cover the range of the EU competences going from agriculture, immigration, human rights, to customers over energy and environment policies (and it will); it could even take as long as a decade. Future will tell.

During all this time, the UK will remain a normal EU member, participating in legal discussions and fulfilling its obligations. This also includes for example trade regulation that is currently passing such as MiFID II; expecting to take effect as from January 2018 and well before UK leaves the EU. For the next few years, all seems to be business as usual.

But what about the longer future; will the UK repeal parts of the MiFID II and other trading legislation once free of its EU obligations? It is fair to say that, both the EU leaders and the new UK government will now be forced and challenged to reach for integration and equivalence as future legislation will be drafted without input from the other party.

At this moment however there is all reason to believe that the EU Single market and the UK, a major player in The Commonwealth, will come closer together after all.