Falkenhäll believes sterling will probably remain stable as it has been undervalued for some time, providing the government remains in office and continues to try to find a way forward.
However, he warns, “It’s hard to see how the U.K. government could come up with a solution within just a couple of weeks’ time, so an extension of Article 50 would probably be positive because, at the end of the day, it increases the likelihood that the U.K. would remain as an EU member or has a further referendum.”
The results of a survey of Swedish business in the U.K. by the Swedish Chamber of Commerce in London and 12 other foreign chambers in the U.K. in October 2017 have proved remarkably prescient. The majority believed that a deal would not be achieved by the 29 March 2019 deadline. The survey also found that almost half of the Swedish businesses in the U.K. believe that Brexit would have a negative impact on future investments in the U.K. over the next five to ten years.
This matters because many Swedish businesses use the U.K. as their first global market outside the Nordics. Savage believes that Brexit may change this. “If Britain coalesces around a soft Brexit, or if Brexit is reversed, then the damage will be limited. On the other hand, a no-deal Brexit will damage Britain’s reputation as a country in which to do business and some businesses will pivot to other markets, such as Germany.”
The importance of freedom of movement shouldn’t be understated – many Swedes have spent time living in London and removing that opportunity will gradually reduce Britain’s importance in the Swedish consciousness.
Nonetheless, Savage believes that the bonds between Britain and Sweden – and London in particular – will not be dissolved overnight. There is a reasonable chance that the sheer number of Swedish companies – and Swedes – in the U.K. will see to that.