Brexit in-limbo aside, sentiment is improving

Even though our prediction that Brexit would neither happen on 29 March nor 12 April has turned into reality, there seems little point in celebrating. Yes, the immediate threat of a cycle-ending shock event to the pan-European economy has been averted. However, the economic drag brought to the economy by this extension of uncertainty – continued deferment of business investment and potentially unnecessary worst-case preparations – has also simply been extended for six months. For the time being we are grateful that level-headedness has prevailed. This should help the UK economy to participate fully in the anticipated recovery of global trade volumes over the coming months – following the 2018 slump. On the other hand, the only way – or so it currently seems – to prevent the proponents of a ‘dirty break’ from the EU seizing power, may well lead to political instability as well. A confirmatory second referendum or a general election appears inevitable in order to break the deadlock in a parliament which of late is far less reflective of party politics and far more representative of a highly divided UK public.