What's going on?

Formal Brexit negotiations between Britain and the European Union (EU) begin on Monday � and the British government�s priorities appear unclear in the wake of the recent election.

What does this mean?

On Sunday, Britain�s finance minister (the so-called Chancellor of the Exchequer) said that Britain will be leaving �the single market�, which is the existing EU free trade agreement, while also saying that one priority is to maintain the free movement of goods between Britain and the EU.

He envisages a new trade agreement (what that will look like is unclear at this stage). It would, most likely, follow a transitional agreement that aims to limit the disruption for businesses.

Why should I care?

The bigger picture: There is no clear-cut line between a �hard� and a �soft� Brexit.

Generally speaking, a soft Brexit is seen as one that prioritizes maintaining a free trade agreement with the EU (and perhaps keeping current immigration rules in place), while a �hard Brexit� is seen as more willing to cut ties with the EU (particularly with regards to immigration). But there is also a lot of grey area to these labels. As this process unfolds, it will be important to delve deeper than the superficial description offered by the �soft� versus �hard� rhetoric.

For markets: The economy is vulnerable among this political uncertainty.

The recent election was intended to solidify Prime Minister Theresa May�s political majority and give her a firmer footing on which to negotiate a Brexit deal. Instead, it weakened her politically and her political future is now in doubt. As a result, investors aren�t sure who will really lead the upcoming Brexit negotiations. The negotiations were always going to be complex, but the current political upheaval ratchets up the uncertainty even more. That�s likely to cause less investment by businesses in Britain than there would otherwise be, which threatens the economy and, by extension, UK-focused businesses.