A year later, what’s next for Brexit? | Business | Economic and financial news from a German point of view | DW

Food shortages, departures of foreign workers and empty gas stations. Britain has certainly had its fair share of setbacks since the Brexit transition period – intended to facilitate the UK’s departure from the European Union – ended a year ago.

A supply chain crisis, exacerbated by a shortage of truck drivers and other workers in EU countries, has resulted in empty supermarket shelves, long queues for fuel for several weeks in September, and even the slaughter and disposal of thousands of pigs.

New rules governing EU-UK trade took effect in January 2021, requiring four-page customs forms for all goods and health certificates for meat and dairy products. As a result, UK exports to the EU fell nearly 15% in the first 10 months of the year, according to EU statistics agency Eurostat, while UK agri-food exports fell further. of a quarter.

Brexit or COVID to blame?

It all happened as the country battled the new Delta variant of the coronavirus which sent the UK into its third national lockdown. While the government insisted that it was impossible to disentangle Brexit from the COVID effect, many economists disagreed.

“What we can say is that the notable loss of British trade with mainland Europe… said DW.

Brexit was supposed to end EU bureaucracy, but instead of allowing a bonfire of bureaucracy, the extra red tape increased export costs which hit many UK-based businesses hard and in the EU.

Small UK businesses, in particular, have said their sales to the EU have fallen off a cliff. Simon Spurrell, the co-founder of the Cheshire Cheese Company, told the Guardian newspaper recently that the post-Brexit trade deal was “the greatest disaster a government has ever negotiated”. Some EU retailers have stopped taking orders from the UK.

“It’s the small businesses that suffer from excessive red tape, not giants like Nissan,” said Begg, referring to the Japanese automaker which has renewed its commitment to UK production despite Brexit uncertainty.

Yes, more bureaucracy!

Red tape is expected to worsen from January, as the UK introduces new documents for imports from the EU, which must be lodged with authorities before goods are loaded onto trains or trucks to Britain. Plans have been delayed three times in the past year to avoid further hardship for businesses.

The resignation this month of its chief Brexit negotiator, Lord David Frost, added insult to injury for UK Prime Minister Boris Johnson. Some analysts have speculated that the departure was hastened by pressure on Johnson to take a softer approach to 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 on Northern Ireland, fisheries and financial services. The City of London financial center is a major contributor to the UK economy and has been “almost overlooked” in the Brexit negotiations, he told DW.

The City is trying to achieve what is called equivalence with the EU – where both parties agree to each other’s regulations. But the Institute of Government think tank thinks a permanent deal is currently unlikely.

Jake Green, of London law firm Ashurst, told the Financial news weekly that Brexit “was going to come true” for banks and other financial firms in 2022, adding that the past 12 months had “been a bit of a pass for everyone”.

The dispute between Britain and France over fishing rights in British and European waters is expected to persist, while the Northern Ireland Protocol – a move to avoid a hard border between British territory of Ireland North and EU member Republic of Ireland – will only be settled when London concedes that the European Court of Justice should rule on trade disputes.

“The optimal outcome for Northern Ireland would be for the border to become almost invisible,” Begg told DW. “There is a movement towards it, but it will never be 100% because logic says you have to have a border somewhere.”

British Foreign Secretary Liz Truss has taken over the Brexit negotiations in the UK. Truss is tasked with keeping Eurosceptics in Britain’s Conservative Party in power over the Brexit leadership, without further upsetting Brussels.

Describing how Johnson and Frost “managed to rub people the wrong way”, Begg said the British had “misunderstood Germany’s position on Brexit”, believing Berlin would intervene during the Brexit deadlock with the EU to avoid compromising a key export market for Germany. Car manufacturers.

“Angela Merkel has never been to their [the British government’s] rescue and I very much doubt the new Chancellor Olaf Scholz will do anything different. “

The concept of “World Britain” is disappointing

Few bright spots have emerged about global Britain – the promise that Brexit would allow the UK to boost trade with the rest of the world A free trade deal with the US remains elusive, especially since Donald Trump’s election defeat and closer trade ties with China are not on the table at this time due to political tensions over Hong Kong.

While Britain has made new deals with Japan, Australia and New Zealand, “it’s more about, ‘Who cares? “Said Begg, as the three countries account for a tiny share of UK exports. “Even though we double that part, they’re still tiny.”

The post-Brexit trade deal did not lead to some of the worst doomsday predictions, however. Instead of half a million job losses, Britain still suffers from a severe shortage of workers – after the UK ended free movement for EU nationals. Rather than an expected 18% drop in house prices, UK property values ​​have reached an all-time high this year, climbing more than 20% since the 2016 referendum.

UK residents will have to wait another eight years to see if they are each £ 4,300 (€ 5,117, $ 5,780) poorer by 2030, as expected, but the UK Office of Budget Responsibility (OBR) believes that Gross domestic product (GDP) has taken a hit 1.4% since the 2016 referendum, and in the longer term UK GDP will be 4% lower than if there had been no divorce.

Many believe Brexit can be reversed

Despite the gloomy headlines, political campaigns and a recent poll showing 60% of Britons now think Brexit went ‘badly’ or ‘worse than expected’, the chances of Britain joining the EU remain as unlikely as ever, Begg said.

“The whole Brexit saga has been so painful in UK domestic politics that I see no desire to join it any time soon.” From the EU side, “I can’t see this happening in a generation, let alone in the near future.”

LSE economist said Brexit had “caused enormous hardship and wasted incredible time [for EU states] when there were other pressing issues. “

Edited by: Kristie Pladson