On top of the impact of Christmas and Covid-19 the culmination of Brexit negotiations - whilst not a totally unexpected shock - is going to cause a lot of short-term pain if nothing is agreed in the next few days.
Talk of shortages and price increases are probably not without foundation but may be short lived. The government is treading a very dangerous path and has - in my opinion - been offered a very reasonable deal by the European Union. What's on the table would allow the country to get on with life and for companies to buy and sell goods on reasonable terms that will not damage their businesses much, if at all. The strings attached to the offer and questions about issues of sovereignty and policing the deal raise some understandable issues (which I will not discuss) but from an economic point of view they look pretty good.
I have always believed that the need for both sides to trade with each other would lead to a reasonable outcome. I still think it will but, unfortunately, it might take a dose of chaos and disruption to get it done.
This all puts short-term pressure on the value of the pound and could mean that the share prices of UK companies with largely domestic earnings could be in for a rocky ride.Download PDF