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Thoughts on 2021 Brexit?


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Brexit officially begins Jan 01, 2021 following the historic Christmas Eve agreement.

For those based in the UK/Europe, what are your thoughts re the next year, and the next 2-3 years?


The deal is provisional, subject to ratification in early 2021.

Zero rated tariffs and duties, new immigration policy, and many similarities to the Canada/EU September 2017 CETA agreement.



Our specific interest is the provisional impact on pound sterling.

Jan 01 2016 (Brexit rejection anticipated), the Pound traded at 1.36 Euro. The Pound is currently trading at 1.11 Euro, or 18% less.

Do most think that’s about it for devaluation, or is more expected?



We find it highly likely that over the next year, the Pound devalues further to at least parity (10% devaluation), with an additional 10-15% devaluation over years 2-3. Simply because we see the UK/EU trade relationship as broadly similar to the Canada/US trade relationship, and note that CAD traditionally trades at a +/- 30% discount to the USD.


Over the next 12 months we expect both a strengthening CAD as oil prices rise, and a weakening Pound as UK/EU trade logistics adjust to the new reality. We also hope to repatriate the CAD proceeds of a CAD/Pound F/X hedge  ;) and have recently graduated UK based nephews - just a begging to exploit their new opportunities!


What are the boards thoughts?




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No idea on FX, but there are still quiet good bargains in UK smallcap land that might be due for a rerating since clouds have now been lifted. My investments have done fine in the UK, but they're still too cheap despite executing well during brexit. It is quiet interesting how some similar businesses have fared very differently between the US and UK.

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