LONDON (Reuters) – Britain’s economy will cast off some of the Brexit uncertainty that has held it back since 2016 after Prime Minister Boris Johnson’s election triumph, but the risk remains of another “cliff-edge” showdown with Brussels in a year’s time.
FILE PHOTO: Clocks in London’s Canary Wharf financial centre strike 07:00 GMT, marking the time the polls open for Britain’s general election, London, Britain December 12, 2019. REUTERS/Russell Boyce
With Britain’s exit from the European Union on Jan. 31 now a foregone conclusion, the question for investors is whether Johnson will stick to his campaign promise not to delay the end-of-2020 deadline for a new EU trade deal.
That deadline is widely seen as tough to meet, given the scale of issues to be resolved.
In the short term, the biggest election victory for Johnson’s Conservative Party since Margaret Thatcher’s 1987 triumph removes a major brake on growth: the deadlock in parliament over how, or even whether, to proceed with Brexit.
Johnson said in a victory speech on Friday that Britain would leave the EU on Jan. 31 “no ifs, no buts, no maybes.”
His election win also banishes the prospect of a sharp shift to the left under the Labour Party which promised nationalisations, more power for trade unions and a much bigger role for the state, which had worried many business leaders.
“For Brexit, this all means that Johnson’s deal will be ratified, most likely allowing the UK to leave the EU at the end of January,” economists at ING said in a note to clients.
“But more importantly, it could give the prime minister the political breathing room to ask for an extension to the transition period.”
The pound jumped by the most in nearly three years on the first sign of the scale of Johnson’s victory and shares in companies that rely on domestic British economy rose.