Brexit: Britain asks — Was it worth it? | Business | Economy and finance news from a German perspective | DW
Food shortages, foreign workers leaving and gas stations emptying. Britain has certainly had its fair share of setbacks since the Brexit transition period — intended to help smooth the UK’s exit from the EU — drew to a close a year ago.
A supply chain crisis, exacerbated by a shortage of truck drivers and other workers from EU countries, caused empty supermarket shelves, long lines for fuel for several weeks and even the slaughter and removal of thousands of pigs in September.
New rules for trade between the EU and the UK came into effect in January 2021 and require 4-page customs forms for all goods and health certificates for meat and dairy products. As a result, UK exports to the EU fell by almost 15% in the first 10 months of the year, according to EU statistics agency Eurostat, while UK agri-food exports fell by more than a quarter.
Brexit or COVID to blame?
All of this happened as the country battled the then-new Delta strain of the coronavirus that sent the UK into its third national lockdown. While the government insisted it was impossible to decouple Brexit from the COVID effect, many economists disagreed.
“What we can say is that the remarkable loss of British trade with continental Europe… was not reflected in British trade with the rest of the world,” Iain Begg, Professorial Research Fellow at the European Institute, London School of Economics (LSE), DW told.
Brexit was supposed to end the EU bureaucracy, but instead of allowing for a bonfire of red tape, the extra paper export costs soared that hit many UK and EU-based businesses hard.
Small British companies in particular said their sales to the EU had fallen off a cliff. Simon Spurrell, the co-founder of the Cheshire Cheese Company, recently told The Guardian that the post-Brexit trade deal was “the biggest disaster a government has ever negotiated”. Some EU retailers have stopped taking orders from the UK.
“It’s the small businesses that suffer from the excessive paperwork, not the giants like Nissan,” Begg said, referring to the Japanese carmaker that has renewed its commitment to British manufacturing despite the uncertainty over Brexit.
Supply chain problems, exacerbated by Brexit and the COVID-19 pandemic, left UK supermarket shelves empty
Yes, more bureaucracy!
The red tape will get much worse from January as the UK introduces new papers for imports from the EU, which must be submitted to authorities before goods are loaded onto trains or lorries to Britain. The plans have been delayed three times in the past year to avoid further hurting businesses.
Even worse for British Prime Minister Boris Johnson was the resignation this month of his chief Brexit negotiator, Lord David Frost. Some analysts speculated that the departure was hastened by pressure on Johnson to soften negotiations with Brussels as an all-out trade war loomed over several thorny issues.
Lots of ‘unfinished business’
The post-Brexit trade deal left a lot of “unfinished business”, according to Begg, including about Northern Ireland, fisheries and financial services. The City of London’s financial hub is a major contributor to the UK economy and was “almost neglected” in the Brexit negotiations, he told DW.
The city is trying to achieve what is known as equivalence with the EU, with both sides accepting each other’s rules. But think tank the Institute of Government thinks a permanent deal is currently unlikely.
Jake Green, of London law firm Ashurst, told Financial News weekly that Brexit would “get real” for banks and other financial firms in 2022, adding that the past 12 months have “been a bit of a crossroads for everyone”. “
The dispute between Britain and France over fishing rights in UK and EU waters is expected to continue as the Northern Ireland Protocol – a measure to create a hard border between the British territory of Northern Ireland and the EU membership, the Republic of Ireland – to be settled only if London admits that the European Court of Justice must rule on trade disputes.
“The optimal outcome for Northern Ireland would be if the border became almost invisible,” Begg told DW. “There’s a movement in that direction, but it’s never going to be 100% because logic says you have to have a boundary somewhere.”
British Foreign Secretary Liz Truss has added Brexit negotiations to her portfolio following Lord David Frost’s resignation
British Foreign Secretary Liz Truss has led Britain’s Brexit negotiations. Truss has been tasked with sidestepping Eurosceptics within the ruling British Conservative Party over the direction of Brexit, while not further opposing Brussels.
Begg described how Johnson and Frost “kept people on the wrong track”, Begg said the British “misunderstood Germany’s position on Brexit”, assuming Berlin would intervene during the Brexit deadlock with the EU to prevent a major export market for German car manufacturers.
Angela Merkel never drove to them [the British government’s] rescue and I very much doubt that the new Chancellor Olaf Scholz will do anything else.”
‘Global Britain’ concept disappoints
Few positives have emerged about Global Britain – the promise that Brexit would allow the UK to boost its trade with the rest of the world A free trade deal with the United States remains elusive, especially since Donald Trump’s election defeat and closer trade ties with China are off the table for now due to political tensions over Hong Kong.
While Britain has signed new deals with Japan, Australia and New Zealand, “it’s more of a ‘Who cares?'” Begg said, as the three countries account for a small proportion of UK exports. “Even if we double that share, they’re still small.”
However, the post-Brexit trade deal has not led to some of the worst doomsday forecasts. Instead of losing half a million jobs, Britain still has a serious shortage of workers – after the UK ended free movement for EU nationals. Instead of a predicted 18% drop in property prices, UK property values hit an all-time high this year, rising more than 20% since the 2016 referendum.
UK residents will have to wait another eight years to see if they will each be £4,300 (€5,117, $5,780) poorer by 2030, as predicted, but the UK’s Office of Budget Responsibility (OBR) thinks gross domestic product ( GDP) hit 1.4% since the 2016 referendum, and in the longer term UK GDP will be 4% lower than it would have been had there been no divorce.
Many believe Brexit can be undone
Despite dismal headlines, political campaigning and a recent poll showing that 60% of Britons now think Brexit went “bad” or “worse than expected”, the chances of Britain rejoining the EU remain equally unlikely. as always, Begg said.
“The whole Brexit saga has been so painful in British domestic politics that I see no desire to rejoin any time soon.” From the EU side: “I don’t see it happening in a generation, let alone in the near future.”
The LSE economist said Brexit has “caused huge problems and wasted an incredible amount of time”. [for EU states] when there were other pressing problems.”