Britain and the European Union have apparently made a breakthrough in the ongoing “divorce settlement” between the two entities. According to reports, the deal stipulates that there will be no “hard border” between Ireland and Northern Ireland, and that the rights of UK and EU citizens will be protected in both blocs.
The “divorce settlement” is expected to be between £35 and £39 billion. The deal will allow Britain to move forward with much-needed trade talks and avoids a potential political catastrophe in Ireland. However, no trade deal can technically be reached until Britain formally leaves in March 2019.
The iShares MSCI United Kingdom ETF (NYSE:EWU) is now an interesting target heading into 2018. The ETF has climbed 14.2% in 2017. Britain has been embroiled with ongoing political strife as ruling circles are bitterly divided over how to proceed with Brexit. Indeed, there are powerful voices within the Labour Party to abandon Brexit altogether.
Some of the top holdings in this ETF include HSCBC Holdings PLC, British American Tobacco PLC, and Royal Dutch PLC Class A. The ETF has declined 7.2% since its inception in October 2014. However, with global growth picking up Britain should see activity improve as it looks to reorient its national economic strategy in 2018.
The two sides are still in the midst of negotiations, and key points need to be hashed out before the next round of trade talks can commence. However, it appears Britain has achieved some clarity regarding its future as investors look to the New Year.