Financial Times: there is agreement, but to end false illusions of Brexit

After four and a half painful years, we have reached the end of the start of Brexit. We have a deal. This is inevitably a detrimental arrangement for the UK economy compared to staying in the European Union (EU). But it’s much better than the stupidity of a no-deal Brexit. Above all, it maintains working relations with its close neighbors and the main economic partners of the United Kingdom.

No responsible government would give businesses a few days to adjust to the complexities of this new situation. Even less in the midst of a pandemic. It will remain a silly and unnecessary divorce. But the reality of Brexit may even bring some benefits.

The EU should have seen it now. He almost certainly would not have been able to accept his € 750 billion pandemic recovery fund had the UK been at the negotiating table. Now the EU will be able to move faster towards its common goals.

Too For the United Kingdom, Brexit will bring the great advantage of separating reality from false illusions.

Some of these delusions have already disappeared. Brexiters told the country that it would be easy to strike a great free trade deal with the EU because the UK had ‘all the cards’. In fact, it was quite difficult to achieve and the UK has had to make tough concessions since 2016, especially on the money it owes the EU, regarding the Irish border and the EU’s demands for a “level playing field”.

These illusions have been supported by others. Between them there was the idea that the UK and the EU would negotiate as’ equal sovereigns“Yes, the EU and the UK are also sovereign. But they are not quite as powerful. The UK economy is less than 20% of that of the EU. 46% of the UK’s merchandise exports went to the EU in 2019, while only 15% of the EU’s merchandise exports (excluding its internal trade) went to the UK.

The economic relationship between the EU and the UK is similar to that of Canada and the US. Jonathan Portes of King’s College London points to the trade deal imposed on Canada and Mexico by the United States, which is quite intrusive.

Despite this imbalance and the UK sovereignty fetishism, the UK got a good deal. The 1,246-page text of the agreement contains a limited and insignificant reference to the Court of Justice of the European Communities. Detailed agreement on the controversial “level playing field” issue is symmetrical.

Reality is asymmetric. This will continue to be the case in the many negotiations to come with the EU. When it comes to foreign powers and especially those that are more powerful, “regaining control” is certainly theoretical.

However, this motto is also a hoax in some other respects. In the areas of defense, education, housing, health, regional development, public investment and social protection, the UK already had a lot of control. But the Brits are about to miss out on valuable opportunities doing business or living, studying and working in the EU. They will not “take back control” of their life, they will lose it.

Even where he’s supposed to take back control, the reality may surprise all those who voted for Brexit. Consider immigration. In the 12 months ending in June 2016 (the month of the referendum), net immigration from the EU and non-European sources was 355,000 (not counting net British emigration). During the 12 months ending March 2020, net immigration was 374,000. Net immigration from the EU fell from 189,000 to 58,000. But immigration from the rest of the world – theoretically under British control – skyrocketed from 166,000 to 316,000.

In reality, the UK has retained relatively favorable (albeit significantly worse) access for manufacturing, where it is at a comparative disadvantage, while it accepted a much worse deal on services, in which it has a comparative advantage. In reality, fought more for the control of fishing, which generates 0.04% of the Gross domestic product (GDP) of the United Kingdom, than that of services, which generates most of the GDP.

Boris Johnson He vowed that the UK would “prosper enormously” even without a deal. But virtually all economists agree that the UK will be significantly poorer in the long run, even under this kind of arrangement, only if he had remained a member of the EU.

Even the survival of the UK is in doubt. Scotland and Northern Ireland can leave the UK, the first to join the EU, arguing that he also wants to “take back control”; and the second to join Ireland and therefore the EU as well. Then England could end up with a border with the EU in the Irish Sea and on the River Tweed.

Brexit is, in many ways, the British equivalent of Donald Trump’s promise to “make America great again.” A big difference is that, Unlike Trump’s tenure as President of the United States, Brexit is eternal. It seems almost certain that this will permanently damage the prosperity and influence of the country. But only now can we find out. It is time to observe and learn.