“Although the implementation of Brexit tonight, 31 January 2020 obviously marks an historic fork in the road in the economic relations between the United Kingdom (UK) and the European Union (UE), not much will change in the immediate future.”
This is according to Prof Raymond Parsons, a well-known economist and academic from the North-West University (NWU) Business School.
Prof Parsons says although the UK election in December 2019 brought an end to the protracted uncertainty which had preceded it, today is not the end of the Brexit journey.
“Brexit is a process, not an event. The hard part of Brexit still lies ahead, given the large unfinished business on the Brexit agenda.”
He says existing trade and other arrangements remain in place until the end of 2020, while the UK and the EU negotiate the terms of their future economic relations and a possible free trade agreement.
“However, these will be tough and complex negotiations which, if not finalised by 31 December 2020, could generate renewed uncertainty about the UK's global trading status and its trade relations with third countries. There remain strong doubts about the technical and political feasibility of completing these negotiations by year end.”
As for South Africa with its major trading stake in the UK economy, Prof Parsons says the country’s trade relations with the UK will remain protected in the post-Brexit period. This is because of the agreement signed towards the end of last year between the UK and the Southern African Customs Union – of which South Africa is a prominent member.
“This keeps the existing tariff regime with the UK intact while the Brexit process unfolds. It provides a strong degree of predictability and certainty for South African business in their trade relations with the UK,” he says.
“However, South African should from now on regularly evaluate which new risks or opportunities may emerge from the commencement of the Brexit process. Preliminary research done by the NWU suggests that other bilateral deals, which a post-Brexit UK may eventually strike with various countries such as the US, may affect South Africa's future competitive position in the UK market.
“Post-Brexit there are still a number of economic unknowns, Therefore South Africa must remain alert to the possible unintended consequences of Brexit and be prepared to respond appropriately if they should arise.”
