Theresa May’s Brexit deal is on life-support. U.K. Parliament gave May’s Brexit deal and thumbs down last week, and there’s no backup plan that makes sense to British lawmakers. The biggest stumbling block in May’s deal with the EU is the border between Northern Ireland and Ireland. If the U.K. leaves the EU, that border would close, and that would create an enormous mess. The EU offered a backdoor solution by saying they would keep the border open, but they reserve the right to close it at a later date, if necessary.
The United Kingdom has to leave the European Union in March under the current agreement. If the EU doesn’t budge on the border situation and other details of the agreement, Britain may leave the EU without a signed deal. That would create an economic nightmare for Britain. No deal would impact not only Britain’s financial industry, but it would also impact the United States financial industry, according to Financial Times expert Peter Spiegel.
Mr. Spiegel thinks the United Kingdom’s economy will come to a screeching halt, and Europe would take a financial hit too. That means the global economy would experience a major slowdown, and Wall Street would respond accordingly.
London is the second largest financial center in the world. Morgan Stanley, Citigroup, and JP Morgan have offices in London. Those companies would feel the impact, according to Spiegel. Those American companies do business with clients throughout Europe. A Brexit hard landing would change the dynamics of their European business. If those Wall Street banks can’t do business in Europe, the recession economists keep talking about will become a reality in 2019, according to Mr. Spiegel.
The big Wall Street firms would have to move their offices to Germany, France, or to some other European Union member in order to do business in Europe. According to May and other British lawmakers, the United States may not help Britain if they leave the EU without a deal. Mr. Trump likes to think he is the best dealmaker in the world, so he might try to take advantage of the U.K.’s Brexit fiasco. Britain would have to take what Trump gives them. Lawmakers know any deal with Trump could make matters worse.
According to Spiegel, crashing out of the EU is a real possibility unless there’s a second referendum vote that produces different results. A second referendum vote could mean the U.K. stays in the EU. At this point, the only person who would hate that outcome is Russian President Putin. Some Brits say Russia influenced the first Brexit vote.