The FTSE 100 is sinking as companies face brexite challenges.

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Experts warn that companies in the UK will face extraordinary challenges when Brexit comes into force
The UK government has issued a new 271-page border model for exporters
The FTSE 100 index closed in the red at 1.17%, continuing a series of lower highs

The FTSE 100 opened the week deeper amidst the rising number of new cases and fears of brexite effects. Companies in the UK will face extraordinary challenges when brexite comes into force on 1 January, industry experts warn.

Basic analysis: Prepare for queues

As soon as a new era begins for Britain and it lets the European Union down, UK companies, which together generate nearly $1 trillion in annual trade, will have to comply with a new set of rules and cope with increased costs, all while Coronavirus continues to attack the global economy.

EU members are able to move around the European market with free trade flows, but from January 1, British companies will have to deal with a range of paperwork for each export, including customs and security declarations, and cope with different IT systems to gain access to Europe.

It is also still unknown how the new IT systems will work, as customs brokers are still untrained and unaware of the rules.

Even the British government said that up to 7,000 trucks could wait in 100-kilometer long queues in Kent, England.

“It will be a slaughter,” said Tony Shally, managing director of the international freight forwarder Espace Europe.

“We will be putting out fires from January 1.”

Exporters operating outside of this domestic market will have to do the paperwork and submit products for sampling to gain access, which significantly increases both the cost and time required to complete the transaction.

In order to be able to export goods from January 1, the British government has issued a new 271-page “Border Operating Model” covering everything from trade in diamonds to molluscs, chemicals and cultural goods.

Technical analysis: the bear market continues

The FTSE 100 index closed in the red at 1.17% as it continues its series of lower highs, which is likely to lead to a new short term bottom formation. Any movement below 5716 will automatically lead to a new 5-month low in the index.

Daily chart of the FTSE 100 index (TradingView)

The price action is currently trapped in the descending wedge. As the distance between two converging lines becomes increasingly narrow, sellers have control over price movements. A zone around 5660 provides nearby support.

Summary

British exporters will have to adapt to a number of new rules when the country leaves the European Union and brexite comes into force on January 1. In the meantime, the FTSE 100 has moved further down the road as sellers remain in control.

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