Look, I know my headline is a bit silly. That phrase ‘a successful Brexit deal’ is on absolutely nobody’s lips, and never will be. In the unlikely event that British and EU negotiators do produce something vaguely serviceable, everybody will trash it anyway. Half the country will be disappointed, possibly all of it. Or we may never get a deal at all. We might just crash out.
Black October
Worse, we are in the dark until Parliament gets back from its lengthy hols, and September seems a long way away. We are supposed to strike a deal with Brussels by October, but that seems unlikely right now. After that, who knows? We are due to leave the EU on 29 March 2019. We could be squabbling over the details at five to midnight, and mopping up for years after that.
I believe we will strike some kind of deal, at some point, and it will be a bit rubbish and please absolutely nobody. We will hand over our £39bn, with further EU bungs for years to come. Then 30 March will be upon us, I will coincidentally celebrate my birthday, and life will go on. Kent will not become a lorry park. Donkey will not be on the menu. There will be no checkpoints on the Irish border.
Muddle on
When that happens, everyday life will kick in again. People will start talking about something else. Please! There will be no more blather about a second referendum. A wave of pent-up business investment will start gushing through the economy, and GDP growth will pick up. The pound will rebound, possibly quite a lot. Foreign holidays will become cheaper and, oh my, the FTSE 100 will fall!
One of the main factors that has been driving up the index since June 2016 will go into reverse. FTSE 100 companies earn more than three quarters of their revenues overseas, and these will fall once converted back into newly resplendent post-Brexit sterling. Blue-chips will come crashing down. Investors will feel sad.
Life after Brexit
This could even happen as early as October. Newly-appointed Brexit Secretary Dominic Raab is straining “every sinew” to make sure we strike a deal by then, although he’s no longer in charge of negotiations, so it will be Prime Minister Theresa May who leads an admiring nation to glorious victory.
Both Raab and EU negotiator Michel Barnier have noted that 80% of the withdrawal agreement is already settled. Of course it’s always the 20% that causes most of the problem, but this is more optimistic than we have been led to think.
Perhaps this is a Panglossian view. But there’s a lot of noise at the moment and some point it will stop and we will cobble together something unsatisfactory but survivable. The pound will rise and FTSE 100 will fall. It will hurt but we’ll get over it. The FTSE 100 will still be packed with juicy high-yielding stocks and long-sighted investors will see this as a nice buying opportunity, because all the silliness will finally be behind us. The end.