Britain faces a choice of direction today. Both in the Brexit question and in economic policy, the ideas of the most important parties diverge widely. The Conservatives under Prime Minister Boris Johnson want to lead Great Britain at the beginning of next year to relatively drastic conditions from the EU. Instead, Jeremy Corbyn’s Labour Party is promoting a softer Brexit with a second referendum. At the same time, however, the party also offers the prospect of radical economic upheavals, including the nationalisation of entire industrial sectors. Smaller parties such as the Liberal Democrats (LibDems) or the Scottish Nationalists (SNP) reject the Brexit altogether.
Current polls put the Conservatives in the lead, but the absolute majority is becoming a nail-biter. If it is achieved, Boris Johnson will be able to „govern through“ it, and the UK’s exit from the EU at the end of January 2020 is unlikely to be hampered by anything. But then the next hurdle in the Brexit process is already waiting – the conclusion of a free trade agreement with the EU after a very short negotiation period of only eleven months. Without a free trade agreement, the break with the EU after the transition period would hardly be any less severe than a no deal exit. It is therefore to be feared that the country will head for another showdown in a year’s time. The interim phase is likely to be extended. However, as long as no agreement has been reached, uncertainty will remain high overall and economic growth will therefore remain subdued.
If, on the other hand, the conservatives miss the absolute majority, it is highly likely that the blockade in the House of Commons will continue. Labour could come together with the Lib-Dems and the SNP to form an anti-Brexit alliance. But we think it unlikely that the smaller parties will also support Corbyn’s extreme economic policy. The hanging party in terms of Brexit would probably continue, even then the British economy would remain below its growth potential. A major risk would certainly be if Johnson again entered into cooperation with the Northern Irish DUP or even the Brexit Party and if Great Britain were to leave the EU disorderly at the end of January. This would result in a recession.