Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 382

Britain amid COVID and the pain of the final exit talks

The allegations went like this. The now-defunct UK arm of the US political consultancy Cambridge Analytica employed a Russian-born computer whizz to make an app-based survey. The app was placed on Facebook. When 300,000 people used the app, data was secretly gathered on 87 million, mainly US, users. The political consultancy bought more data and boasted of models and analysis that could ‘change audience behaviour’. The Russians meddled in some way. Lo and behold, 1.8 million more UK voters opted to leave rather than stay in the EU in the 2016 referendum (to give a 52%-48% split), in defiance of the business, cultural, financial, political and technocratic elite.

Did this activity 'change behaviour'?

The Information Commissioner’s Office launched a probe. Over three years and armed with search warrants, the body that enforces data-protection laws in the UK examined 42 laptops and computers, 31 servers, 700,000 gigabytes of data, more than 300,000 documents, other material in paper form and still more data on cloud-storage devices.

And it found nothing.

Well, that’s one Brexit controversy resolved. But others need addressing even though the UK left the bloc on 31 January 2020, an action that ended the first phase of the post-vote saga. That period was essentially a rerun of the referendum.

‘Remainers’ sought to nullify the 2016 result while pushing for a ‘soft’ or token Brexit, where the UK effectively stayed under EU control within the common market.

‘Leavers’ pushed for a ‘hard’ Brexit, where the UK recouped its sovereignty and faced conditional access to the common market. They feigned calm about a ‘no-deal’ Brexit, a world of border controls, customs inspections, quotas and tariffs as the UK suddenly sat outside the common market (as countries such as Australia do), thus a likely economic blow epitomised by truck queues, shortages and rising prices.

Even after Brexit, options remain

The triumph of Prime Minister Boris Johnson’s Conservative party in the 2019 elections torpedoed the Remainer campaign. The UK left the EU and moved to the second part of the post-vote saga. That comprises an 11-month ‘transition’ phase during which the UK stays a member of the EU common market while Brussels and London settle on their future relationship. The options are a hard or no-deal Brexit.

Most of the details are agreed on how to manage EU-UK trade and security but three disputes prevent an agreement:

1. One is over fishing rights. The UK eyes restoring a distinct aquatic zone while the EU seeks to maintain a quota system across connecting waters.

2. The second quarrel is over state aid to companies.

3. The third is on how to resolve disputes. Other disputes of note that could flare up include the UK territory of Gibraltar, data protection and the status of the City of London.

These issues are almost distractions compared with the problem of Ireland, an EU member. No one has solved how Northern Ireland adheres to UK laws while staying within the EU customs union to ensure a frictionless border and political calm across Ireland. London’s latest proposal, the Internal Markets Bill, violates the Northern Ireland Protocol attached to the Withdrawal Agreement of 2019 that demands an invisible border across Ireland. The conundrum for London is that a seamless EU-UK border across Ireland splits the UK as an economic entity because Brussels won’t countenance an ex-member staying in the common market. It’s possible the impasse over which laws and legal system apply to Northern Ireland could lead to border barriers and political violence that could push the province to reunite with the south.

The EU has warned it will take legal action against the UK if the Internal Markets Bill becomes law. The threat is mixed up with the ambit claims, bluffs, brinkmanship, broken deadlines, fruitless summits, theatrics and ultimatums between Brussels and London that are reviving a more-pressing existential threat to the UK. The Brexit saga is fuelling support for Scotland to depart the UK to rejoin the EU.

An economic and political shock amid COVID

The year-end deadline could soon force decisions and a messy divorce is possible, though more out of miscalculation than desire. Some last-minute fudge that all hail as satisfactory and final is likely. But whatever the shape of any deal, Brexit will be an economic and political shock that will reverberate through the UK for years and could even break it.

Some caveats. Brexit is a secondary issue since the coronavirus escaped from China. Given the economic damage of the pandemic, a no-deal Brexit holds fewer concerns for many than before. Hard Brexit covers a range of outcomes that include a soft-enough exit that disappoints Leavers. Would Scotland really flee the UK and trigger the mayhem involved? Would Ireland unite after a century of partition? These were possibilities before the Brexit vote and could take years to occur.

Even so, the Irish problem appears unsolvable and Brexit has marked UK politics for the foreseeable future by making identity politics around Remainers versus Leavers the country’s biggest political tear. The latter manifests in issues from immigration and inequality to the environment and, ominously, in pushing component nations to leave a UK troubled by however visible or invisible is the border across Ireland.

All because of that vote in 2016 when enough UK voters, for some reason not linked to Cambridge Analytica, Facebook or Russia, defied the elite.

 

Michael Collins is an Investment Specialist at Magellan Asset Management, a sponsor of Firstlinks. This article is for general information purposes only, not investment advice. For the full version of this article and to view sources, go to: https://www.magellangroup.com.au/insights/.

For more articles and papers from Magellan, please click here.

 


 

Leave a Comment:

RELATED ARTICLES

10 reasons low interest rates may limit growth

This 'forgotten' inflation indicator signals better times ahead

This vital yet "forgotten" indicator of inflation holds good news

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

The 2025 Australian Federal election – implications for investors

With an election due by 17 May, we are effectively in campaign mode with the Government announcing numerous spending promises since January and the Coalition often matching them. Here's what the election means for investors.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

World's largest asset manager wants to revolutionise your portfolio

Larry Fink is one of the smartest people in the finance industry. In his latest shareholder letter, the Blackrock CEO outlines his quest to become the biggest player in private assets and upend investor portfolios.

Economy

Australia's economic report card heading into the polls

Our economy grew by a nominal rate of 7% per annum from 2017 to 2024, but it benefited from the largesse of fiscal and monetary policies, both of which are now fading. We need a new, credible economic growth agenda.

Preference votes matter

If the recent polls are anything to go by, we are headed for a hung parliament at the upcoming federal election. So more than ever, Australians need to give serious consideration to their preference votes.

SMSF strategies

Meg on SMSFs: Tips for the last member standing

It’s common for people as they age to seek more help in running their SMSF if their capacity declines. An alternate director may be a great solution for someone just planning for short-term help in the meantime.

Wilson Asset Management on markets and its new income fund

In this interview, Matthew Haupt from Wilson Asset Management discusses his outloook for the ASX, sectors such as REITs that he likes, and his firm's launch of a new income-oriented listed investment company.  

Planning

‘Life expectancy’ – and why I don’t like the expression

Life expectancy isn't just a number - it's a concept that changes with survival rates over time. This article breaks down how age, survival, and societal factors shape our understanding of life expectancy, especially post-Covid. 

The shine is back on gold, and gold miners

Gold mining stocks outperformed in 2024 and are expected to do well in 2025. At this point in the rally, it's worth considering what has driven gold prices higher and why miners could still have some catching up to do.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.