Article26 February 2019Reading time 2 minutes

Delaying Brexit: What does it mean for the economy and markets?

With time running out, it looks increasingly likely that the 29 March Brexit date will need to be pushed back. But there's a big question about how long an extension to the Article 50 negotiating period might last. We take a look at how the length might alter the outlook for the UK economy, Bank of England and markets

In this article

Extending Article 50: What does it mean for the economy & markets?

As the clock counts down to 29 March, there is a growing sense that the deadline will need to be pushed back to allow more time to find a deal that the UK parliament can get behind. One way or another, it's looking increasingly likely that lawmakers will get a two-way vote between 'no deal' and an extension to Article 50 in mid-March. But even if the UK does ultimately request a delay via an extension to the two-year Article 50 negotiating period, there’s a big question over how long it might last.

A shorter extension might have short-term political and practical advantages, but it would likely be more damaging for the economy and could easily write off a Bank of England rate hike until much later in the year or beyond.

A longer extension, while potentially more politically awkward for the UK government, could see growth recover a touch in the near-term as the imminent ‘no deal’ threat recedes.