TAIPEI, Taiwan — Ward Henderson Management analysts say relief brought by Brexit extension could come at a hefty price. Last month, with less than 48 hours before the originally scheduled date of departure, European Union leaders agreed to extend the Brexit deadline to 31 October this year with a review scheduled for the end of June.
UK Prime Minister Theresa May had requested an extension until 30th June but European Union leaders rejected this time frame saying that this was an unrealistic deadline.
After many months of back and forth with little progress being made in Brexit negotiations, Ward Henderson Management analysts say many have felt a sense of relief since the extension was granted but the road leading to Britain’s eventual departure from the EU is still littered with significant obstacles and the extension itself could exacerbate an already messy situation.
For the most part the Brexit delay seems to have had a positive impact on economic data in the short term.
In the UK, the services sector returned to marginal growth last month with a closely monitored index rising just above the 50.0 mark that separates contraction from growth. Ward Henderson Management analysts believe the slight improvement can be attributed to the delay of the threat of a no-deal Brexit.
The UK travel sector has also benefited from the news that the Brexit deadline would be extended with leading airlines reporting significant gains after the extension was announced.
In Germany, investor morale improved for the sixth consecutive month last month with the Brexit delay and better than expected resilience in the global economy fueling the increased optimism.
But analysts at Ward Henderson Management have warned that the Brexit delay could hurt small businesses. A prolonged period of uncertainty with no definite ending affects companies’ ability to plan for possible outcomes.
Brexit negotiations have already cost the UK economy dearly and the extension will only increase the cost. Britain’s economy is already 2 percent smaller than it would have been if the country had chosen to remain in the European Union.
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