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BNP Paribas: Resilience Amid Turmoil
U.K. and European Union agree on historic post-Brexit trade deal
Four years and six months on from the referendum that defined an era of British politics, the U.K. and European Union have agreed to a historic new trade deal on Thursday to define their relationship after Brexit.
The U.K. will complete its final exit from the 27-member bloc on Jan. 1. A no-deal Brexit could have caused a market shock, hurting some investors and impacting both U.K. and European consumers and companies.
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“We have finally found an agreement. It was a long and winding road, but we have got a good deal to show for it,” European Commission President Ursula von der Leyen said.
British Prime Minister Boris Johnson said that the U.K. “will be your friend, your ally, your supporter, and indeed never let it be forgotten, your number one market.”
He added that the deal, which comes into force on January 1, was the biggest trade deal signed by either side, covering trade worth £668bn in 2019 and guaranteeing tariff-free trade on most goods. Johnson said the deal will allow U.K. companies “to do even more business with our European friends.”
A key sticking point of the negotiations had been EU fishing rights in U.K. waters, but Johnson said that Britain will have “full control” of its waters for the first time since 1973.
Essential reading: A Brexit Trade Deal Has Finally Been Struck. Here’s What It Means for Markets and Investors.
The announcement on Thursday afternoon came later than expected, after what Ireland’s foreign minister Simon Coveney said was a “last-minute hitch” relating to language over fishing rights.
Johnson and von der Leyen had been in close contact over the past three days in a bid to strike a deal in time for ratification before the end of the year deadline.
Von der Leyen said that “competition in our single market will be fair, and remain so. The EU rules and standards will be respected. We have effective tools to react if fair competition is distorted and impacts our trade.”
The U.K. left the EU on Jan. 31 but the two sides had to reach a deal over their future trading relationship before the transition period ends at the end of this year. A post-Brexit deal drew a line under nine months of protracted negotiations and multiple missed deadlines. EU member states will now have to ratify around 2,000 pages of legal text.
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Britain and European Union strike last-minute post-Brexit trade deal
LONDON — With just days until the deadline, the United Kingdom and European Union agreed to a post-Brexit trade deal Thursday, signaling the end of a four-year saga that engulfed British politics and exposed a deep cultural divide that shows no signs of healing.
“I’m very pleased to tell you this afternoon that we have completed our biggest trade deal yet,” Prime Minister Boris Johnson said at a televised press conference, championing the agreement that he said would be worth 660 billion pounds a year (about $890 billion).
The deal “achieves something that the people of this country instinctively knew was doable but which they were told was impossible,” he said. “We’ve taken back control of our laws and our destiny.”
Still, Johnson added: “Although we have left the European Union, this country will remain culturally, emotionally, historically, strategically, geographically attached to Europe.”
Ursula von der Leyen, president of the European Commission, the E.U.’s executive branch, said at a separate news conference: “It was a long and winding road but we have got a good deal to show for it.”
She said rather than joy she merely felt “satisfaction and relief,” telling the British that “parting is such sweet sorrow” and urging the rest of Europe, “it is time to leave Brexit behind.”
Many experts welcomed the deal as a compromise and a good outcome for both sides — particularly given the alternative. It came just days before a deadline of Dec. 31 — after which the U.K. would have left E.U. rules without an agreement at all.
This “no-deal Brexit” is widely regarded as a nightmare scenario that would seriously hurt economies and cause logistical chaos on both sides.
Johnson’s deal will not avoid friction. It is what experts call a “hard Brexit” free trade agreement. It focuses largely on quotas and tariffs but will likely not avoid regulatory checks on goods at the border, something that experts have warned could cause disruption at ports, meaning price rises and even shortages.
The U.K. voted to leave the E.U. in 2016 and after years of tortuous politicking finally exited on Jan. 31 this year. Until Dec. 31 it is in a “transition period” with the remaining 27 E.U. countries, keeping the same rules while trying to negotiate a deal.
Negotiators have been shuttling between London and Brussels for months. For most of that time it seemed as though they would be unable to break the deadlock, which centered around how to stop Britain gaining an unfair advantage on its newly estranged neighbors, and fishing rights — an economically tiny but nonetheless symbolic sector of the British economy.
The full text of the agreement — said to contain some 2,000 pages — had not been published as of early Thursday evening.As well as removing tariffs and quotas, the deal will ensure future cooperation on science, law enforcement and financial markets, a U.K. government spokesperson said in a statement.
David Henig, U.K. director at the European Centre For International Political Economy, a think tank, described it as “a good deal for both sides.”
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Now that it’s been agreed by negotiators, the deal will need to be approved by E.U. leaders, who have been consulted constantly throughout the trade talks, and British lawmakers in the House of Commons, where Johnson holds a strong majority and the opposition Labour Party is not expected to stand in his way.
The initial Brexit vote was decided 52 percent to 48 but polls now consistently show that more people than not believe it was a mistake.
Brexit does still have millions of supporters. They see it as a way to break free from Europe’s shared rules, allowing Britain to strike its own trade deals and control its borders — usually a euphemism for tighter controls on immigration.
Johnson was one of the chief architects of the pro-Brexit campaign in 2016, and securing a deal makes good his long-running promise to “get Brexit done.” After years of pitched battles with anti-Brexit “Remainers,” Nigel Farage, another hardcore Brexit leader and ally of President Donald Trump, declared Thursday: “The war is over.”
But independent economists are almost united in agreeing any form of Brexit will damage the U.K. economically, an unavoidable consequence of leaving the world’s largest political and economic club — not to mention its largest trading partner.
Feb. 1, 202001:24
This year Covid-19 triggered the worst British recession in 300 years; the pain wrought by Brexit is forecast to be even worse, according to the government’s Office for Budget Responsibility.
The British government’s own estimates say even an ambitious trade deal between the U.K. and United States would not be enough to offset this damage.
Meanwhile political critics worry that in a world where Washington, Beijing and Brussels are vying for hegemonic influence, Britain leaving the E.U. will reduce it to a midranking outsider.
Then there’s the impact on the unity of the U.K. itself. The Brexit agreement means that there will be a controversial trade border between Northern Ireland, which is part of the U.K., and the rest of the country.
This means it will be easier for Northern Ireland to do trade with the Irish Republic, which is a separate country, at a time when some polls suggest growing support for Irish reunification.
Similarly, Brexit has coincided with growing support for an independent Scotland, where most people voted to stay in the E.U. but were outnumbered by the sheer weight of English voters.
“There is no deal that will ever make up for what Brexit takes away from us,” Scottish First Minister Nicola Sturgeon, who leads Scotland’s devolved government, wrote on Twitter. She said it was time for Scotland to “chart our own future as an independent, European nation.”
Remarks by Chief Negotiator Michel Barnier at the press conference on the outcome of the EU-UK negotiations
European Commission Speech Brussels, 24 Dec 2020 Thank you Madam President, Dear Ursula,
The clock is no longer ticking.
After four years of collective effort and EU unity.
To preserve peace and stabil…
European Council President Charles Michel On The Agreement On The Future EU-UK Relationship
The announcement that the negotiators have reached an agreement is a major step forward to establish a close relationship between the EU and the UK.
We thank the President of the Commission Ursula von der Leyen and Chief Negotiator Michel Barnier for their tireless efforts.
Charles Michel, President of the European Council:
“For our citizens and businesses a comprehensive agreement with our neighbour, friend and ally is the best outcome. Over the past years the EU has shown unity and determination in its negotiations with the UK. We will continue to uphold the same unity.”
“These have been very challenging negotiations but the process is not over. Now is the time for the Council and the European Parliament to analyse the agreement reached at negotiators’ level, before they give their green lights.”
Sassoli: EU-UK deal brings clarity for EU citizens and workers | News | European Parliament
, https://www.europarl.europa.eu/news/en/press-room/20201223IPR94601/
Timeline of events in Britain’s exit from the European Union
LONDON — A timeline of key events related to Britain’s decision to leave the European Union:
Jan. 23, 2013: British Prime Minister David Cameron promises a referendum on Britain’s membership in the EU if the Conservative Party wins the next general election. He does so to try to garner support among euroskeptics within his own party.
May. 7, 2015: British voters elect a majority Conservative government. Cameron confirms in his victory speech that there will be an “in/out” referendum on European Union membership.
Feb. 20, 2016: Cameron announces that he has negotiated a deal with EU leaders that gives Britain “special status.” He confirms that he will campaign for Britain to remain in the 28-nation bloc. The referendum date is set for June.
Feb. 21: Cameron is struck with a severe blow when one of his closest Conservative allies, the media-savvy Boris Johnson, joins the “leave” campaign.
June 16: One week before the referendum, Labour Party lawmaker and “remain” campaigner Jo Cox is killed by extremist Thomas Mair, who shouted “Britain First” before shooting and stabbing her.
June 23: Britain votes 52% to 48% to leave the European Union.
June 24: Cameron says he will resign in light of the results because Britain needs “fresh leadership” to take the country in a new direction.
July 13: Following a Conservative Party leadership contest, Home Secretary Theresa May becomes prime minister.
March 29, 2017: The British government formally triggers Article 50 of the EU’s Lisbon Treaty, setting in motion a two-year process for Britain to leave the bloc on March 29, 2019.
June 8: A general election called by May to bolster her party’s representation in Parliament to help with the Brexit negotiations backfires. Her Conservative Party loses its majority and continues in a weakened state as a minority government.
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p id=”ap_link_Brexit_Brexit“>July 7, 2018: May and her Cabinet endorse the so-called “Chequers Plan” worked out at a fractious session at the prime minister’s country retreat. The plan leads to the resignations of Brexit Secretary David Davis, Foreign Secretary Boris Johnson and others who favor a more definitive break with EU.
Nov. 25: EU leaders approve a withdrawal deal reached with Britain after months of difficult negotiations. May urges the British Parliament to back the agreement.
Dec. 10: May delays the planned Brexit vote in Parliament one day before it is set to be held because it faces certain defeat. She seeks further concessions from the EU.
Dec. 12: Conservative lawmakers who back a clean break from the EU trigger a no-confidence vote in May over her handling of Brexit. She wins by 200 votes to 117, making her safe from another such challenge for a year.
Jan. 15, 2019: The Brexit deal comes back to Parliament, where it is overwhelmingly defeated on a 432-202 vote. The House of Commons will end up rejecting May’s agreement three times.
March 21 EU agrees to extended the Brexit deadline, just over a week before Britain’s scheduled departure on March 29
April 11: Britain and the EU agree for a second time to extend the withdrawal deadline to keep Brexit from happening without a deal in place. The new deadline is Oct. 31.
June 7: May steps down as Conservative Party leader over the stalled Brexit agreement.
July 23: Boris Johnson elected new Conservative Party leader
July 24: Johnson takes office as prime minister, insisting the U.K. with leave the EU on Oct. 31, with or without a deal.
Aug. 28: Johnson says he will temporarily shut down Parliament until mid-October, giving opponents less time to thwart a no-deal Brexit.
Sept. 3: Rebel Conservative Party lawmakers vote against the government in protest of Johnson’s strategy. They are expelled from the party.
Sept. 5: Johnson asserts he would rather be “dead in a ditch” than ask for another Brexit extension.
Sept. 9: A parliamentary measure that prevents the U.K. from leaving the EU without a deal becomes law.
Sept. 24: U.K. Supreme Court rules government’s suspension of Parliament was unlawful.
Oct. 10: Johnson and Irish leader Leo Varadkar meet and announce “pathway to a possible deal.″
Oct. 17: U.K. and EU announce they’ve struck a deal after the .K. makes concessions over Northern Ireland.
Oct. 19: Parliament sits on a Saturday and demands to see legislation before approving the deal.
Oct. 22: Johnson puts Brexit legislation on pause .
Oct. 28: Johnson asks the EU to delay Brexit again. The new deadline is Jan. 31.
Oct. 29 Parliament votes for a national election at the request of Johnson’, who hopes it will break the Brexit stalemate.
Dec. 12: Johnson wins a large majority in the general election, giving him the power to push through Brexit legislation.
Jan. 23, 2020: EU Withdrawal Bill becomes law.
Jan. 29: European Parliament approves the Brexit divorce deal.
Jan. 31: U.K. officially leaves the EU at 11 p.m., entering an 11-month transition period put in place for the two sides to negotiate a deal on their future relations.
Dec. 7: After months of U.K.-EU negotiations, Johnson and European Commission President Ursula von der Leyen say significant differences still stand in the way of a free trade deal.
Dec. 9 Johnson and von der Leyen hold a dinner meeting in Brussels to see whether the differences can be bridged. They don’t make a breakthrough but announce negotiations will continue for four more days, setting a Dec. 13 deadline for a final deal or no-deal decision.
Dec, 13: Von der Leyen and Johnson say negotiations will continue, vowing to go the “extra mile” to get a deal.
Dec, 24: The U.K. and EU announce they have struck a provisional agreement, just over a week before the year-end deadline.
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Follow AP’s full coverage of Brexit and British politics at: https://apnews.com/hub/Brexit
Brexit deal reached between UK and European Union ahead of crucial deadline
More than 1,600 days after the United Kingdom voted to leave the European Union, a final trade deal has been agreed to that will avoid border and economic chaos on New Year’s Day.
Key points:
- Some 1,664 days since the 2016 Brexit referendum, a final trade deal has been agreed to by the UK an the European Union
- The deal will ensure tariff and quota free trade between the two that makes up half of nearly $1bn in yearly commerce
- The deal still needs approval from the UK parliament and the 27 EU member states
The deal brings an end to a four-year divorce period since the 2016 Brexit referendum, and signals the end of the UK’s membership of the European bloc it had been a part of since 1973.
The 500-page agreement will mean there are no quotas or tariffs on the goods trade than makes up half of the annual commerce between the UK and EU, worth more than $1 trillion.
European Commission President Ursula von der Leyen told a press conference in Brussels the deal was “fair” and “balanced”.
“It was a long and winding road,” she said.
“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.”
British Prime Minister Boris Johnson tweeted a picture of himself inside Downing Street, raising both arms in a thumbs-up gesture of triumph, with the words “The deal is done”.
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“We have taken back control of our destiny,” he said during a press conference at Downing Street.
“People said it was impossible, but we have taken back control.
“We will be an independent coastal state.
“We will be able to decide how and where to stimulate new jobs.”
Deal delayed to the very end
A deal had seemed imminent for almost a day, until haggling over just how much fish EU boats should be able to catch in British waters delayed the announcement of one of the most important trade deals in recent European history.
Although the UK officially left the EU on January 31 this year, it has been in a transition period to negotiate a free trade deal for when Britain leaves the EU’s single market and customs union at midnight on December 31.
The 11-month transition period was to allow for negotiations on a free trade deal with the EU and its 27 member nations.
On Thursday afternoon, just a week out from the deadline, an agreement was finally reached on how future trade will look between Britain and its largest economic partner.
The UK parliament will be recalled on December 30 to vote on the deal, which will likely pass with support from the opposition Labour party, while EU ambassadors from all 27 member states will meet on Christmas Day to review it.
Mr Johnson could still face a backlash from members of his own Conservative Party, with MPs from the Euro-skeptic European Research Group likely to closely examine the deal and take issue with any perceived concessions from the UK side on disputed areas such as fishing rights and business competition.
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Brexit trade deal reached between UK and European Union with just days to spare
“Deal is done,” read a statement from Downing Street. “Everything that the British public was promised during the 2016 referendum and in the general election last year is delivered by this deal.”
Talks had been deadlocked for months after the two sides were unable to reach agreement in areas such as fishing quotas, how the UK would use state aid to support British businesses post-Brexit, and legal oversight of any deal struck.
It is unlikely that the deal will be formally ratified before the Brexit transition ends, given that it still needs to go through a series of legal hoops.
EU leaders, the European parliament, and the UK government will all need to now approve the agreement on their own.
The legal text of the agreement will first be translated, reviewed and approved by all 27 EU member states.
Once all member states give their sign off, it will then go back to the European Parliament, where Members of European Parliament (MEPs) will vote to ratify the deal.
But the European Parliament has said that it is too late to hold an emergency voting session before the transition period ends on December 31.
Instead, they plan to apply the EU-UK agreement “provisionally,” with MEPs reconvening formally to ratify the deal in the New Year.
Meanwhile, there will also probably be a vote in the British parliament to legalize the deal.
Even though trade deals do not require parliamentary approval, it is expected that UK lawmakers will likely be brought back from their Christmas break to debate and approve it.
It can take up to 48 hours to bring Parliament back into session, however it’s been known to move very quickly when it needs to.
While the deal marks a significant milestone in the four and a half years since the UK voted to leave the EU, it is unlikely to end the years of toxic political debate in the UK.
Euroskeptic lawmakers are already organizing efforts to ensure that a deal does not leave room for the UK to drift back into the EU’s orbit. Pro-Europeans, meanwhile, will be hopeful that at some point in the future, the UK, perhaps under new leadership, will be able to strengthen ties with Brussels.
This is a developing story…
What does this deal with the European Union mean for the UK economy?
To estimate the economic value of this eleventh-hour free trade deal between the UK government and the European Union, we need to consider what would have happened in its absence.
Whatever the prime minister says, a failure to reach a free trade deal with the European Union would not have been “more than satisfactory” for UK businesses.
Make no mistake: a Brexit deal matters a lot for the UK economy in the immediate term.
It means a host of UK industries – from farmers to fishermen to car manufacturers – will not face tariffs, some punitively high, on their copious exports to the European Union from the end of the month.
Yes, disruption is still coming on 31 December, as hauliers have been arguing for months, when we, in effect, leave the customs union and single market.
From that instant, the UK will officially be a “third country” to the EU – and that status brings checks and paperwork for traders at the border, just as surely as Santa brings presents when he sets out on his sleigh on Christmas Eve.
But with a free trade deal, the UK and continental authorities are much more likely to cooperate on smoothing out these new frictions.
That means less likelihood of even larger queues of lorries in Kent, heading into the Channel Tunnel and the ferries, than we have seen this week because of the French ban on accompanied freight. And that means less chance of continental hauliers avoiding Britain and disruption, as a result, to the supply of foods and medicines into the UK.
Such a currency collapse would have pushed up UK import prices, just as the slump in sterling on the night of the referendum did.
A deal will also spare British shoppers from substantial jumps in the prices of groceries from Europe that they could have otherwise expected if the UK had imposed its new tariff regime on all those tens of billions of pounds of imports from the EU.
The relief and goodwill resulting from a free trade deal mean cooperation on vexed and important questions on data transfers and financial regulations – vital for our cross-border services firms – is also much more likely.
How much monetary damage would a no-deal Brexit have added up to?
The Office for Budget Responsibility estimated a no-deal outcome would have knocked 2 per cent off UK GDP growth in 2021, or around £40bn.
That would have significantly deepened the likely recession resulting from a return to lockdown.
Unemployment, according to the best guess of the OBR, would have spiked higher (by around 300,000) than it is already set too. Public borrowing would be up by a further £12bn.
A free trade deal really does matter.
Constitutional damage has been avoided too. A free trade deal does not mean the future of the United Kingdom is secure – but it’s sobering to contemplate what a no-deal Brexit would have meant for the union, for the long-term place of Scotland and Northern Ireland in it.
Yet a free trade deal with the EU, it is vital to remember, does not mean economic pain has been avoided in the longer term.
This is very far from the status quo. What we are getting is what four years ago would have been classified as a granite-hard Brexit – and this will hit the UK economy hard in the medium and long term.
Leaving the EU’s single market and the customs union, according to every credible piece of analysis, creates significantly higher trade barriers with the EU, easily our largest trading partner, and reduces trade far more than otherwise.
This new arrangement will make it harder for our services firms – a big and growing part of our exports – to trade with the EU.
Modelling suggests lower growth as a result, with the average of studies indicating a hit to GDP of around 4 per cent.
In today’s money that’s a hit to our national economic activity of around £80bn, or around £1,200 for every person alive in the UK.
So as British businesses and households breathe a sigh of relief at an economic no-deal disaster averted it’s also important to note how success has been defined inexorably downwards over the past two years.
This is – it bears repeating – the thinnest free trade deal with the European Union that would have been imaginable on the morning after the Brexit referendum on 24 June 2016.
And it will do serious long-term damage to the UK economy relative to other forms of Brexit that might have been adopted.
If it feels like a victory that’s really an indication of how recklessly close to the cliff edge politicians dragged the economy and our living standards with it.
