It took a lot of time to reach an agreement. Hopefully, the United Kingdom and the European Union agreed to a free trade deal. It happened just several days before the Brexit transition period ends. As a reminder, more than four years Britons voted to leave the EU.
It is worth noting that, the two sides were able to reach an agreement by resolving a difficult dispute over the EU’s continued access to British fishing waters. Accordion to Boris Johnson, the U.K. share of fish would increase from half of the catch today to two-thirds after more than five years. Interestingly, fish accounts for less than 1% of the British economy but played an outsize role in negotiations.
People should take into account that, the deal averts a worst-case divorce that would have hurt the EU economy, but the British economy even more. Importantly, without a deal, the country could have lost more than 8% of growth in per capita income over the next decade. Moreover, a no-deal Brexit also threatened to disrupt British ports as well as custom chaos at the turn of the year.
European Union and a new reality
It is worth noting that, the trade deal is what is known as a hard Brexit. As a result, British, as well as EU economies, will no longer enjoy the close regulatory alignment they’ve enjoyed for decades.
Nevertheless, the British Prime Minister insists that leaving the European Union will benefit the U.K. in the long run. According to Boris Johnson, it will allow Britain to negotiate independent free trade deals with other major economies.
As a reminder, the U.K. has spent most of this year in a transition period. The period ends in several days on December 31. Importantly, disruptions and backups at ports could follow as customs controls and new processes come into force at EU borders. Notably, to minimize delays, the government told U.K. truckers that they will have to obtain a permit to enter the country of Kent.
People should take into account that, the deal still requires approval by the British Parliament next week. Moreover, the European parliament is expected to approve the deal retroactively next month. Notably, it took a lot of time and effort to reach an agreement.
Moreover, it will take for companies and individuals to adapt to the new reality. Also, Brexit affected the country’s economy as well as its standing in the world. Hopefully, both sides realized the importance of a free trade deal.