It’s been 3-1/2 years since the United Kingdom voted to leave the European Union, and the process known as Brexit has been far from smooth. Now that the deadline to leave has passed, what’s next for the United Kingdom, and for Europe? Our Head of European Fixed Income David Zahn says that while there’s no turning back, there are still quite a few kinks to be worked out, including the all-important trade agreements.

On June 23, 2016, a referendum was put forth to citizens of the United Kingdom with a profound choice: remain in the European Union (EU) or leave. It was a close vote, but the choice was leave, and the process known then forward as Brexit has been fraught with controversy, confusion and many delays.

But, here we are at the end of the Brexit deadline—and there’s no turning back. Now that the United Kingdom has officially left the EU, many fixed income investors are wondering what comes next for both regions—and what it may mean for their portfolios.

Trade Negotiations: So Much to Do, So Little Time

Trade negotiations are arguably the most significant piece of unresolved work. The EU has allowed for the unfettered movement of people and goods within its 28-member countries. Now, the remaining 27 countries and the European Parliament must figure out how the goods and services relationship progresses with the United Kingdom outside the bloc.

The early worst-case fears were tied to border gridlock preventing the movement of goods into and out of the United Kingdom, along with the potential for a massive departure of UK-headquartered multinational companies to other countries. While there have been a few hiccups, the worst-case fears largely haven’t materialized.

We have seen some UK companies leave the country, and business and consumer confidence have been negatively affected throughout the Brexit process. But, on the flip side, some domestic companies have benefited from the weaker British pound as exports become cheaper to foreign buyers.

The Brexit deal negotiated with the EU calls for the United Kingdom to leave the customs union. Still, Northern Ireland will continue to follow and enforce many EU rules, making for some potential sticking points at the border or in the middle of the Irish sea.