Even though Boris Johnson has stated that a deal has been struck to allow the UK to finally “Brexit” the European Union, the real consequences of the Brexit vote in seven days still remains muted. The revised March 2019 Brexit deal that is being tabled at the end of this month includes agreements on multiple issues for a new UK that is independent of EU regulations, including new regulations regarding customs, tariffs, goods, borders (for Ireland), and so on. Thus, a referendum, overwhelmingly voted affirmative by a great majority of people (72% of UK citizens voted on the original Brexit referendum) more than three years ago in June of 2016, still has no resolution 3-½ years after the vote, which is why new PM Boris Johnson has repeatedly voiced his determination to make Brexit a reality in seven days. In fact, an earlier agreement this past March was rejected partially because the deal would have kept the UK subject to all EU laws until the end of 2020 for another year and nine months in a transition period, during which the details of leaving the EU would be finalized. This would have been like voting a new President into office with the President not assuming any political powers until more than 4 years after the vote. Thus, the March 2019 deal was rejected because it would have delayed any real consequences of the Brexit vote for another 21 months. In any event, some UK MPs (Members of Parliament) are attempting to block the current agreement from passing on 31 October at the current time, so there is no guarantee that Brexit will actually become a reality in seven days. On two prior occasions, at the end of last year, and earlier in March of this year, in which a final deal was being reported to allow Brexit to finally materialize, both ultimately were delayed. The Brexit deal that former UK PM Theresa May attempted to pass this past March was also rejected because she had included provisions in the agreement that would have possibly blocked the UK nations from negotiating independent trade deals, again significantly muting the real consequences of the Brexit vote. Based upon her betrayal of the wishes of UK citizens, citizens rose up and forced May out of office with Boris Johnson assuming the UK Prime Minister office this past July. However, though this “backstop” that could have kept the UK tied to EU trade laws has been removed in the new deal, apparently language that would make the new deal legal has not yet been finalized, so MPs may block the vote on the new deal in Parliament scheduled in seven days until the end of January 2020.
So what will happen if no deal materializes in seven days? If there is no deal, it has been speculated that the British pound would tank, meaning that the US dollar would strengthen and the US stock market should fall. However, if a deal is agreed upon in seven days, I really don’t see how the deal would be great for the British pound, bad for the US dollar and great for the US stock market in the immediate term, as should be the case given the strong narrative in the global financial media that the British pound will weaken considerably if no deal happens. Personally, I believe that both outcomes are preposterous, as a deal would still subject the UK to most EU regulations for more than another entire year during a “transition” process until the end of December 2020. In reality, even if a deal is voted into existence in seven days, the only significant change would be all UK nations leaving EU customs regulations. In any event, this is just another example of the banker puppet masters selling whatever narrative they desire to control global financial markets and outcomes. In the long-term, independence from global bankers is always good, so despite all the headlines that ran in the mainstream media earlier this year of a Brexit deal being disastrous for the British pound, written by analysts that maintain extremely close relationships with Central Bankers, in the long-term, I completely believe that Brexit would help strengthen the British pound, which would be bad for the big global UK corporations but ultimately a positive development for UK citizens. Consequently, as is every political deal with business implications, this is really a fight between the UK politicians/corporations and the UK citizens, with narratives being promoted, that are at times, not fully honest or transparent as these issues are not black and white, but nearly always presented as black and white by the media.
In the end, I would not assign too much significance into immediate market reactions to the Brexit deal or no-deal announcement that happens seven days from now, as long-term market reactions are often quite different than the immediate perception that is forwarded by mainstream financial media to big events, especially since no real consequences of the Brexit vote in the regulatory relationship between the UK and the EU, outside of customs regulations, will take effect until the end of 2020 at the earliest. Still, the deal would be significant because the UK would finally be leaving the EU for good by the end of next year.