U.K. Prime Minister Theresa May is expected to trigger Article 50 of the Lisbon Treaty by the end of March to kick off a formal exit. Unraveling Britain's ties with the trade bloc is then expected to take about two years.
The divorce can get messy if the U.K. refuses to pay the exit bill, which will be the first issue to be negotiated, said Jacob Kirkegaard, research fellow at the Peterson Institute for International Economics.
"If the U.K. refuses that, then the EU is going to say in return 'we are not going to be negotiating any future trade relations with the U.K.', at which point there is a real risk these negotiations break down and you may have early elections called in the U.K.," Kirkegaard told CNBC's "The Rundown".
"(This) will create a lot of additional uncertainty and some volatility in the financial markets," he added.
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