Brexit Progress At Last, Ireland’s History Comes Back to Life, Reform for Fannie and Freddie


  • Brexit: Close To the Finish Line
  • What's Old Is New Again in Ireland
  • The Future of Freddie and Fanniey

Last October, former British Prime Minister Theresa May was negotiating a deal with the European Union (EU) for a Brexit plan under which the United Kingdom would stay in a “temporary” customs union, but with no end date. That deal didn’t lead to Brexit, but rather Thexit – Mrs. May’s departure from high office.

One year later, current Prime Minister Boris Johnson has surprisingly secured a modified deal and has a decent chance of securing the legislative approval that eluded his predecessor. The timing of ultimate resolution remains somewhat uncertain, but recent developments must be viewed as encouraging for the U.K.

Last week, the U.K. and EU agreed to a reworked Withdrawal Agreement Bill (WAB). This outcome, which came less than two weeks before the current Brexit deadline, surprised many observers. Johnson, it was thought, was more interested in scoring political points by stressing differences with the EU than negotiating with them.

Johnson’s deal differs from May’s in that the U.K. will have no customs union with the EU, no “level playing field” arrangements and a more limited free trade agreement. Northern Ireland will become part of the U.K. customs territory rather than the EU customs area and will comply with certain EU rules. This will lead to regulatory and customs checks between Britain and Northern Ireland, but in the Irish Sea instead of at the land border. The WAB also guarantees the rights of EU citizens to stay, sets a £39 billion divorce bill and extends all EU laws through 2020.

“The current deal might be the least-worst solution to Brexit.”

Weekly Economic Commentary - 10/25/19 - Chart 1

Many forecasters expected Brexit to plunge the country into recession. Even the government’s own 2016 study predicted a significant house price crash and a substantial rise in unemployment. Thankfully, those downside risks haven’t materialized. The economy has held up relatively well: the unemployment rate has dropped to a 25-year low while equity market returns have stayed positive. Only the pound has shown some weakness.