Article 50: What will happen to the economy now Theresa May has started Brexit?

Trigger is probably the wrong word.

When you pull the trigger of a gun, the weapon fires and the impact occurs a split second later.

But invoking Article 50 is more like yanking the lever of a medieval trebuchet. The missile has been launched and is sailing through the air, but it will be a while before we see where it lands. And how much damage it does.

The short-term financial implications of Theresa May’s Article 50 letter are unlikely to be very dramatic.

This date of the delivery of the Prime Minster’s missive to the European Council President Donald Tusk was revealed by ministers back on 20 March, giving even the doziest of traders plenty of time to “price in” the event itself.

And the reality is that markets had already done that anyway after Parliamentary resistance to Article 50’s launch finally crumbled on 13 March. That was when any doubt that we would actually end up here melted away.

The key economic significance of this moment is actually political: the weight of negotiating leverage has now been instantly transferred to the EU.

The two-year cut off point for these talks means that the hourglass has been upturned and the grains of sand are now slipping down.

Just about every trade expert thinks this 24 month period is impossibly tight, especially given the inordinate distractions of French and German elections this year and the professed determination of the EU side to settle the issue of dividing up assets and liabilities before any discussion of a trade deal.

And whatever Brexiteers say, the UK has far more to lose economically than the EU if the clock runs down and there is no “comprehensive” trade deal by March 2019.

It’s true that the terms of Article 50 allow for an extension for talks if both sides agree to allow it. It’s even possible that Article 50 may be legally revocable by the UK. But law and politics are separate things. Conservative Party internal politics make any extension unlikely, let…

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