Theresa May will trigger Article 50, the process of leaving the EU, on 29 March. The office of EU Council president Donald Tusk has been notified by No 10.
For Michael Stanes, investment director at Heartwood Investment Management, the hard work now begins for the UK as it starts negotiations to exit the European Union.
"Triggering Article 50 no doubt marks a period of ongoing uncertainty for UK business and markets, but perhaps there is also some relief that the process is finally underway. While Brexit dominates UK concerns, French and German politicians will probably be more focused on their own national elections, which will further test anti-establishment sentiment. We continue to remain cautious on UK assets and expect higher inflation to weigh on real income growth this year,” commented Mr Stanes.
Dean Turner, economist at UBS Wealth Management agrees that the negotiations between the UK and the EU are likely to be long and difficult and that some form of transition or implementation period might be brokered in order to smooth the path. However, he considers that the risk that no deal is agreed is appreciably high and there is a decent likelihood that the success or failure of the talks will not be known until the very last minute.
Mr Turner warns that walking away from the talks could save the UK money, but it would come at the cost of no trade deal, the "hardest of hard Brexits". This would likely cause huge disruption to the UK economy, he said, which could take many, many years to recover from.
With regards to the UK economy, Mr Turner commented: "While the UK’s existing trade agreement with the single market will not change over the next few years, the behaviour of firms and households might and that business investment is already slowing. If negotiations look to be proceeding in the direction where a trade deal looks unlikely, firms who use the UK as a base to export to the EU to begin to look elsewhere, causing a further slump in business investment. But Brexit presents opportunities as well as threats to the UK's potential growth rate. If the UK fails to strike a trade deal with the EU, the government will use all of its newfound freedoms to make the UK a competitive place to invest."
Mr Turner concluded that the ongoing uncertainty around negotiations, together with additional uncertainty about whether Scotland holds a second independence referendum, are likely to keep market volatility elevated although the act of triggering Article 50 is unlikely to create much volatility in the markets in the short-term.
However, he said, how the negotiations unfold will be crucial: "Constructive, collaborative negotiations could lead to a recovery of the pound closer to its long-term fair value. But the pound could suffer some weakness if negotiations are more hostile. Markets have to be braced for the very real possibility that any deal is only agreed at the last possible moment given the potential wealth of diverging opinions around the negotiating table."