Brexit - the deal is done! Who won?
More than four years after the Brexit referendum, and almost one year after the UK left the EU on 31 January 2020 (for the remainder of 2020 still benefitting from continued membership in the single market and customs union and British citizens allowed to roam the EU freely), a Brexit trade deal has been struck. Importantly, the deal guarantees “zero tariff and zero quota” trade on goods but introduces significant, and most likely disruptive, border checks to enforce for example regulatory standards. Importantly also, the freedom to roam the EU freely will end for most UK nationals. They will predictably not be pleased. Not pleased at all.
Even though the trade agreement is more than 1,000 pages long, numerous open issues (such as financial and other services) remain, and of course the deal still has yet to be formally agreed on by the UK parliament (expected before the end of the year) as well as by the European parliament (expected by mid-January 2021). Sign-off can be expected though on both sides, as the alternative — a no-deal Brexit — was always a credible threat point that both sides knew had to be avoided at all cost. Leaving the EU without a deal would have left Britain to trade with its single largest export market on WTO terms, subjecting the movement of goods and services to tariffs and other barriers. UK companies would have lost tariff-free, quota-free access to 450 million consumers that buy nearly half of Britain’s exports and a market that provides a similar share of its imports. (In contrast, for the EU, the UK is much less important, accounting for 4% of the bloc’s exports in 2019 and 6% of imports, according to German research group, the Ifo Institute.)
To no one’s surprise, Johnson (via a spokesperson and a tweet showing him with both thumbs up) celebrated the deal with his usual bluster: “We have taken back control of our money, borders, laws, trade, and our fishing waters. The deal is fantastic news for families and businesses in every part of the UK.” And, “We have got Brexit done and we can now take full advantage of the fantastic opportunities available to us as an independent trading nation, striking trade deals with other partners around the world.” Meanwhile, however, British goods to be sold in the EU will have to comply with its regulatory standards, as have those of other non-member states. So much for having taken back complete control of laws and destiny, and “every jot and tittle of our regulation in a way that is complete and unfettered.”
The government’s own independent forecaster, the Office for Budget Responsibility, was not persuaded by the alleged fantastic opportunities and expected this kind of Brexit to shave 4% off GDP in the medium term. And that was before its 25 November 2020 Economic and Fiscal Outlook update in which it predicted that Real GDP in 2020 (percentage change on previous period) would decline somewhere between 10.6 and 12 percent, and that on top of the consequences of the coronavirus outbreak on public health and families’ wellbeing, and the huge increase in budget deficit and public debt brought about the policy measures put in place to support individuals and businesses.
Ursula von der Leyen, the European Commission president (who towards the end got involved directly), welcomed the agreement in a more subdued manner: “It was a long and winding road, but we have got a good deal to show for it. It is fair. It is a balanced deal. And it is the right and responsible thing to do for both sides. At the end of a successful negotiation I normally feel joy. But today I only feel quiet satisfaction and, frankly speaking, relief.” She also said: “Of course, this whole debate has always been about sovereignty. But we should cut through the sound bites and ask ourselves what sovereignty actually means in the 21st century.” This strikes me as her diplomatic way of saying what she thinks of Johnson. Not much.
So who won?
IMHO, both the UK and the EU lost (and citizens who now have their freedom of movement restricted), the UK more than the EU.
The winners seem to be, ironically, Johnson (who desperately needed some such win given his widely panned pandemic response) and von der Leyen who came into the job with questionable credentials but seems to deserve considerable credit for the success of these torturous negotiations and is now among Germany’s most popular politicians. (This might even have implications for the Merkel successorship which is currently contested within the CDU by three uninspiring male candidates.) It helped that Germany held the presidency of the Council of the EU for the second half of 2020 which presumably facilitated the coordination between Berlin (Merkel), Paris (Macron who recommended von der Leyen for her job), and Bruxelles.
Further readings: This POLITICO piece on the deal and this one on what Vote Leave promised and got. Here is the full text of the EU-UK Brexit trade agreement. And here is a good discussion of the fishing quota provisions. In German only, unfortunately. Apparently, Brit fishermen are less enthused than there Continental counterparts.
Also of note (2 January 2021 update), both the parliaments in Edinburgh and Belfast have rejected BoJo’s Brexit trade deal. While these votes (in Scotland 92–30) have only symbolic character, they indicate the difficulties ahead and in particular the increased likelihood of another independence vote in Scotland. (This one likely to succeed.) Of course, BoJo will try to prevent it.