With Boris Johnson winning the election in Britain, you’ve probably seen a bunch of headlines about how Brexit is sure to happen. But it’s not that simple. Let’s break down the event and what it means for the U.K.—and what it might (eventually) mean for the rest of the world.
What just happened?
British Prime Minister Boris Johnson won the election against Jeremy Corbyn.
Johnson is with the Conservative party, also known as the Tories, which wants Brexit to happen right away; Corbyn’s Labour party is not so keen on leaving the E.U. Corbyn wanted another referendum—another vote by the public on whether to stay in the European Union or leave. (The original referendum took place in 2016).
Johnson has served as prime minister since July, when he was elected leader of the Conservative party and appointed as prime minister after the resignation of Conservative Theresa May.
This election was a general (everybody votes) and had a reportedly massive turnout.
When are they leaving, then?
Johnson’s victory is one for Brexit because he has been so adamant about making it happen. But leaving the E.U. isn’t automatic now that his role as prime minister is secure.
Parliament is supposed to vote on the terms of Brexit by the end of January. With Johnson as prime minister, it’s almost a guarantee that’s going to happen. Once the legislation is approved, the U.K. won’t officially be a part of the E.U. anymore, but both parties will still have to negotiate the terms of Brexit, according to Vox. They have until December 31, 2020 to do that. If they need more time, they have to announce that by the end of June.
So, in name, Brexit will likely happen in January, but it’ll still take time beyond that to negotiate the terms for trade, security, and other cross-border issues.
What’s changing with the National Health Service?
The British National Health Service has struggled with a lack of funding in recent years, making it difficult to get care due to long waits and overcrowded medical facilities. Johnson previously made big promises of funding for additional staff and new hospitals, but had to walk those pledges back. At the same time, his Conservative party has been nudging the health system toward privatization.
Meanwhile, Corbyn and the Labour party had focused their attention on the NHS, vowing to pump money into the health system. Labour also wants to keep the NHS a public service.
In his victory speech, Johnson promised to focus on the NHS, claiming again to increase funding to hire thousands of medical professionals and build 40 new hospitals. He did not comment on privatization concerns.
What does this mean for currency?
The British pound shot up as the victory neared, hitting its highest point since May 2018. On the evening of December 11, one British pound could buy you $US1.32 ($2). On the evening of December 12, one pound was worth just over $US1.35 ($2).
But while a three-cent jump looks huge on a chart that tracks the currency by the minute (The Wall Street Journal has a good one), it’s not that severe of a leap. The pound still hasn’t fully recovered since the Brexit referendum in 2016.
The New York Times noted that performance is likely to last a few weeks due to Brexit excitement. But once the U.K. and the E.U. get into Brexit trade discussions in 2020, the pound could weaken.
Does this mean anything for the glboal economy?
Not yet, but keep an eye on this one. Once the U.K. leaves the E.U., it’ll have to create a new trade deal with the U.S. President Trump was very excited about this prospect, per a late-night tweet congratulating Johnson.
Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT. This deal has the potential to be far bigger and more lucrative than any deal that could be made with the E.U. Celebrate Boris!— Donald J. Trump (@realDonaldTrump) December 13, 2019
As far as your personal finances go, you can expect some stock market volatility in response to all that volatility happening across the pond. If you’re investing for the long term, remember not to worry too much about the ups and downs you see—it’ll even out eventually.