Dark Mode
Wednesday, 10 August 2022
Logo
Merry Brexmas!
IAN BLACK

Have no doubt: any deal is far better than no deal! Four and a half turbulent and divisive years since the fateful referendum on whether Britain should leave the European Union the UK got a highly controversial present on Christmas Eve.


 To be honest, many people breathed a sigh of relief. After a year dominated by the human and economic ravages of the Covid pandemic, Brexit was finally declared over with the agreement reached after months of cliff-hanging negotiations on future relations with the EU. Boris Johnson, the prime minister, said repeatedly that Britain would “prosper mightily” without a deal. But he dismally failed to convince many people.


 The key to understanding the deal is that it imposes zero tariffs and no quotas on goods, ironically underlining the mutual dependence of the UK and the 27 other European countries that remain members of the most successful single market in the world.


 But even with an agreement, trade in goods will be subject to extra rules, more bureaucratic requirements, and at a higher cost. Ports will face disruption. Everything from safety standards and exporting rules will change. And, to clarify the big picture, official budget forecasters have predicted that the British economy will be 4% smaller over 15 years than it would have been if the UK had stayed in the bloc.


 Crucially, the agreement provides no new arrangements for services, which make up 80% of the UK economy, especially financial services, so free access for Britain’s enormous banking and financial sector to the EU’s single market will end on January 1. Customs rules, regulatory standards and border checks that Brussels requires of third countries will now apply to Britain, making all trade slower and more expensive.


 In the run-up to Christmas, the closure of the French border with the UK – triggered by fears about a new, mutated strain of coronavirus – caused queues of up to 7,000 vehicles and delays of 48 hours at Dover, the UK’s main cross-channel port. Scenes like that are likely to be repeated in the first weeks, if not months, of 2021 as businesses and bureaucracies adjust to the new reality. “There is no country in the world that will be subject to as many export rules to us as the UK,” was the verdict of France’s Europe minister.


 Johnson, of course, was characteristically quick to claim victory. “We have taken back control of our laws and our destiny,” he declared triumphantly, afterwards tweeting a picture of himself smiling with both thumbs lifted in the air with the words: “The deal is done.” But one informed Remainer critic dubbed it acerbically a “Trade Reduction Treaty.” Others called it a “thin deal”.


 In truth, Brexit was always about politics and identity far more than rational economic or financial considerations. The concept of sovereignty and “seizing back control” from Brussels played a disproportionate - and inappropriate - part in our increasingly globalized world. Populist sentiments exploited by Brexiteers like Nigel Farage of the UK Independence Party were hugely influential, as was resentment of immigration from the rest of the EU, especially newer members like Poland. Imperial nostalgia was another factor.


 And the Conservatives (and the Labour opposition) had long been divided over attitudes to Europe. That explained the original decision of David Cameron, the Tory prime minister who called the referendum, but he failed to foresee what a disaster that could turn out to be especially if the result was so close – 52% for and 48% against.


 Johnson, whose character, ambition and florid language are important parts of this story, cynically followed the path he perceived as best serving his own interests. He famously wrote two newspaper articles – for and against Brexit – before the 2016 vote, but chose in the end to lead the leave campaign.


 “Never before has a country so spectacularly shot itself in the foot,” was the conclusion of one former Tory MP. “We are no longer ‘Great’ Britain or a United Kingdom. Leaving the EU single market and customs union diminishes our country, will make us all a little poorer and narrow our horizons.”


 And not all the losses are Britain’s. The EU is losing its principal military power, 15% of its GDP – the City of London, along with New York, is the world’s most important financial capital – and a free market champion that had long behaved in a constraining way on the more integrationist ambitions of France and Germany. Economists have forecast that a Brexit with a free trade agreement would imply a loss of 0.38% for the combined economy of the 27 EU countries and a loss of around 280,000 jobs.


 Ursula Von der Leyen, the German president of the European Commission, attracted a lot of positive, even emotional comments across the country when she announced the trade agreement on Christmas Eve. Back in June 2016, when the UK stunned the world by voting to leave the EU, many in Europe hoped it could stay far more closely aligned. Von der Leyen, quoting Shakespeare’s Romeo and Juliet, said that “parting is such sweet sorrow”. Many Britons sadly agree with her.


 


IAN BLACK