North West University business school economist Professor Raymond Parsons says the now re-elected Conservative Party government in the UK provides a strong political mandate to pass the necessary legislation in time to leave the European Union (EU) formally on January 31.
Britain will then move into transition, during which its EU membership will, nevertheless, in effect continue in terms of the negotiated withdrawal agreement.
After January 31 next year, the UK and the EU will start negotiating their future economic and political relations within the framework of an orderly Brexit.
“The clear general election outcome in the UK reduces the policy uncertainty that has prevailed around Brexit. Greater certainty and confidence about the future trading framework in 2020 can now return to decision-making by businesses and governments in both the UK and the EU.
“However, the latest UK election outcome is no 'silver bullet' for the Brexit issue. Brexit is a process, not an event. Complex negotiations will now start for a new long-term free trade agreement between the UK and the EU, with a deadline at the end of 2020,” Parsons explains.
He notes that if the parties fail to reach a free trade agreement by then, and unless an extension is agreed, the real risk remains of the UK leaving the EU with no trade deal in place, with all the supply-chain disruption and trade barriers that it implies.
South Africa has already, fortunately, concluded an agreement – through the Southern African Customs Union – with the UK to ensure continuity and predictability in UK–South Africa trade relations in the post-Brexit period.
Parsons says South Africa's post-Brexit trade relations with the UK are therefore protected for now, but it remains essential for South Africa to continue monitoring and nurturing these important trade relations between the two countries during the Brexit transition and to timeously assess any new developments that may arise.