Brexit follows the referendum on June 23, 2016, when the UK has voted to leave Europe by 51.9% of citizens.
From the referendum to UK leaving the European Union
Immediately after the referendum, the process of United Kingdom (consisting of England, Wales, Scotland and Northern Ireland) leaving the European Union started. Brexit is due to take place on March 29, 2019 at 11 pm, although, there will be a no great change until December 31st 2020, taking into consideration the consequences of Brexit on businesses and society.
Brexit negotiations
On January 15, 2019 The Parliament of Westminster overwhelmingly refused the agreement that the May government had laboriously reached with the European Union. This agreement comes after 18 months of negotiations and Europe considers it as the only possible deal, both for what it says and because there would be no time for a new one anyway.
What will happen with no agreement
As long as Brexit is concerned the British situation is somehow worrying because there is not a real plan B: that is, there is neither a majority wanting the United Kingdom to remain in the EU nor a majority wishing its exit. Even a second referendum is not conceivable, because it would end up rekindling the contrasts and making them irreversible.
According to analysts, therefore, United Kingdom will end up leaving the country in a disorderly manner, without an agreement or with a downward agreement, which will not protect the UK’s access to free trade with other European countries.
If this scenario, called hard Brexit, should actually become real, it would cause serious consequences, especially for the financial sector, given the importance of the London Stock Exchange in Europe.
Hard Brexit could also trigger a long series of bilateral negotiations with individual European governments, aiming to safeguard the performance of financial services.
What will be the next steps of British Prime Minister Theresa May? Will she be able to find a compromise within his own party and other parliamentary political forces, or will she choose to resign? And again, what will be the reactions in Brussels?
“Life is too short to become an expert of the European Union. This is why politicians are needed” said Simon Kuper from the Financial Times on 10 January 2019. The British ruling class has a great responsibility, Brexit is something they should worry about. The time left is too short to act like jurists or economists. We need a ruling class that takes its responsibilities seriously because what they decide has implications throughout Europe, not just in the UK.
And the European Union has not started well 2019, the year of the European elections, when the European project will be seriously questioned, with European citizens expecting something important from European institutions. To find answers to these questions real politicians are needed, not analysts, lawyers or economists.
Brexit, what changes for Italy
What are the risks for Italy? If we compare Italy to other big European Union countries, Italy should be less exposed to the hard Brexit risk, but this is not as simple as that. Considering the total exports of Italy, just a little more than 5% is to the United Kingdom. On the other hand, Italy has the third largest trade surplus in Europe compared to London, equal to 12 billion euros a year, which concerns the largest sectors of Made in Italy, namely instrumental mechanics, textiles, chemistry and food processing.From an investment point of view, Italian economy is one of the least “internationalized”, and that is why it is almost immune to the hard Brexit risk. In 2016 Italy had a share of foreign direct investments equivalent to 19% compared to the EU average of over 45%. Even in this case, however, it is necessary to keep an eye on British investments in Northern Italy, and in Lombardy in particular, which could have a substantial effect at a local level.Another risk concerns the spread, the one between Italian and German government bonds is already very high and the Italian spread already had some gains during the Brexit-related crises. This shows how every element of instability in the European Union also affects Italy due to its high public debt and the fact that it is dependent on financial markets.
