The negotiators finalized the deal, which will complete Britain’s separation from the bloc on Christmas Eve, days before the country leaves the bloc’s single market and customs union.
The deal will allow trade in goods without tariffs and quotas after 31 December, but this will not apply to the service industry – around 80% of the UK economy – or the financial services sector.
Companies exporting goods will also face a rush to prepare for the return of customs and border controls at the end of the year amid warnings of disruptions in British ports. The deal comes after three days of chaos at the main crossroads between Britain and France, and offered a reminder of how quickly border blockades can stifle international trade.
More than five turbulent years after a general election triggered a chain reaction that would transform British politics and the country’s connections with the rest of Europe, the deal sets a new framework for business on both sides of the country. Channel and frees the British Parliament from many of the constraints imposed by EU membership.
For Boris Johnson, the Brexit architect and the third prime minister since the 2016 vote to leave the EU, he marks another landmark just over 12 months after he claimed a decisive mandate from voters with a promise to “lead to Brexit is over “.
With the electorate divided, public finances battered by the Covid-19 pandemic and the Scots pushing for a split from the rest of the UK, the prime minister’s next challenge is to prove that the UK can thrive outside the single market and of the EU customs union, a status that puts it behind other non-members like Norway and Switzerland when it comes to EU access.
Businesses still face border controls for which surveys have shown they are unprepared and consumers in Northern Ireland face the prospect of shortages of some goods as businesses adjust to new paperwork.
At worst, Johnson’s own government has warned of a line of 7,000 trucks, enough to extend from the Port of Dover to the Palace of Westminster.
The UK got a taste of the potential chaos this week after France closed its border in response to the outbreak of a new coronavirus strain in Britain, leaving hundreds of backed-up trucks heading to the port of Dover on local roads. To mitigate the risk, the government has built truck parking lots and motorists entering Kent will either apply for a permit or face a fine.
Read more: Isolated UK seeks to reopen trade route after days of chaos
Outside the EU single market, UK financial services firms will be deprived of the passport that allows them to offer their services throughout the bloc and will have to wait to see if the EU grants them access – something. which is still far from certain and, even if granted, could be withdrawn at any time.
This allowed Dublin, Frankfurt, Amsterdam and Paris to begin to dent London’s dominance as a European financial center. Companies from JPMorgan Chase & Co. to Goldman Sachs Group Inc. are among the companies that have already moved around 7,500 employees and $ 1.6 trillion in business out of the UK due to Brexit.
The deal mitigates some of the immediate economic costs of leaving the EU, even as Britain’s long-term growth is set to stall. A no-deal Brexit would cut 1.5% of the UK’s gross domestic product in 2021, according to Bloomberg Economics. But growth is still forecast to be 0.5 percentage points lower each year for the next decade than it would have been if Britain remained in the bloc.
Against the dollar, the pound is still trading below its level before the Brexit vote. The UK benchmark FTSE 100 index is one of the worst benchmarks in Western Europe this year.
For the EU, reaching an agreement avoids poisoning relations with a key diplomatic and commercial neighbor for years and provides a basis for further cooperation in the future.
Unlike other similar trade agreements, the agreement will establish frameworks for common standards in aviation, business subsidies, workers’ rights and the environment, as well as law enforcement.
The broad scope of the agreement made the negotiation even more complicated: Britain opposed EU demands to align its corporate subsidy rules with those of the bloc, while France pushed for access continued to British fishing waters.
With the two sides at loggerheads on these two issues – and any broader agreement impossible until it was resolved – the negotiations quickly stalled.
After the coronavirus prevented negotiators from meeting in person, Johnson refused to extend the post-Brexit transition period beyond the end of the year. This put a strain on the teams, with officials working around the clock because there were more deadlines missing. At one point in October, the prime minister threatened to leave without a deal.
Now that he has one, Johnson faces the challenge of ruling without the Brussels bogey to blame for the setbacks, knowing that he and his Conservative party will be judged on how the country fares as an independent nation.
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