Brexit negotiations will be long and rocky and will hurt the UK and EU economies
Published: July 7, 2016 at 3:28 p.m. ET
Ciara Linnane
Fitch Ratings says talks effectively began as soon as the referendum result was known
The negotiations between the UK and the European Union on the former's exit from the trading block will be long and rocky and issues that have not even been identified yet will likely become stumbling blocks, Fitch Ratings said Thursday.
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The talks "effectively began as soon as the referendum result was known," said Fitch, and both parties have started to outline their positions.
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"Although negotiations started quickly, they will be protracted and contentious, and are likely to be subject to setbacks and outright reversals," the agency said in a statement.
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For the UK economy, that means further uncertainty that is likely to weigh on investment spending and consumption.
"The longer the uncertainties persist, the greater the cumulative negative economic implications," said the statement.
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The two sides are entering talks from a position of weakness. The UK has already made clear that its top priorities are maintaining market access and controlling immigration, giving the EU an advantage in playing them against each other or demanding concessions on other issues.
For the EU, the challenge will be keeping the European Commission, member states and European Parliament on the same track, as national elections will be held in a number of countries during the negotiating period.
"There is plenty of scope for disagreements on negotiating positions as well as strategy and tactics," said Fitch.
The longer talks get, the worse it will be for all parties.
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Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.