The Brexit Deal: The Good, The Bad, And The EU

On Christmas Eve, Boris Johnson, with a certain pride not seen in a while, wished every Briton not only a Merry Christmas but also a Merry Brexit. There was a collective sigh of relief from Remainers and Leavers alike as the great Battle of Brexit was finally over and Johnson proudly proclaimed that “we have taken back our laws and our destiny”. There were times when it was uncertain, but somehow the UK secured a deal that did not leave the UK (or its fish) under EU regulation anymore. The nation’s freedom was seemingly restored – even if Britons’ personal liberties have yet to receive the same treatment, considering Yorkshire police have recently attempted to fine two women for drinking coffee on a walk. However, after the momentary triumph, the actual Brexit deal has been overshadowed by slightly more pressing matters such as the vaccine rollout and new COVID variant sweeping through the nation. Without much further news the agreement quietly passed through parliament with 521 votes for and 73 against on 30th December 2020. 

The biggest critic of the UK leaving the EU has always been the bloc itself; nothing was more satisfying than watching Macron angrily proclaim in his New Year’s speech that Brexit was a product of “lies and false promises.” The European Leaders’ fury that the UK got away with little punishment gives cause for the nation to believe that it might just have won. Yet, not all internal reception of the deal was positive. Tim Kabasi of the Guardian has stated that “the Brexit deal itself is nothing but thin gruel”, arguing it is harder for the UK to sell services to EU countries; it is more difficult for Britons to freely travel, work, and settle in EU countries; and goods and services face greater and longer checks. Notably, for Remainers such as Kabasi, the main problem is not the deal itself but the fact that it secures Brexit. Even Sir Keir Starmer has ruled out any extensive changes or further attempts at negotiations if Labour wins the next election. The message is clear: he could not negotiate a better deal. 

The deal itself is the better part of 1000 pages long and it is doubtful Boris Johnson himself has bothered to read every word, so here is a much more concise rundown of the ins and outs of the deal. Please note, as the past half decade has been spent debating over whether or not Brexit is beneficial for the UK (though coronavirus gave Britons a nice break by changing up the headlines), this article will not delve into such a discussion; instead, it will merely measure this deal against other previous options.

Shortly after the Brexit referendum Theresa May was the new Prime Minister, put in charge of negotiating a deal. Why the Conservative party thought it was a good idea to put Remoaners Remainers, in charge of Brexit, who knows? It was as ludicrous a move as making Nigel Farage head of the SNP would be. What ensued was a deal that no one, not even May or Phillip Hammond, liked. It gave the country all the negatives of Brexit, trapping the UK under EU control and regulation, yet not allowing the few benefits of being a full member state. It included a 40 euro billion financial settlement; no freedom of movement; the Backstop that went directly against the Good Friday agreement; and no physical border infrastructure, meaning the UK would remain in a single customs territory which could be extended or terminated only by mutual agreement. It crucially barred the UK from making trade deals with other countries – one of great reasons for Brexit in the first place – and forced Northern Ireland to remain aligned to EU rules with elements of the Brexit agreement. If May had succeeded in passing through her deal, there would also have been a political declaration that future ties between both parties should be as close as possible. Had it been a vote between Remain and a deal like this, most Brexiteers would have voted for Remain. In fact, it was such a terrible deal, that the UK would have inevitably rejoined the EU within the decade with fewer privileges that even before. As it was, the deal was mercifully rejected by both Conservatives and Labour (quite a few times), ultimately throwing May, Hammond, and many Remoaners  Remainers out of the cabinet. 

The second option, a no deal Brexit, posed a serious threat to the EU, and Boris Johnson is to be applauded for convincing European leaders that he was not bluffing when he said he was ready to leave the negotiations table. Ironically, it was May who first said that “no deal is better than a bad deal”, blind to the contradiction of her statement after she successfully negotiated the worst deal possible. No deal, although undeniably worse for the EU, would have landed the UK in hot water, forcing the government to scrabble for new deals elsewhere, whilst facing large tariffs from the bloc. There would have been no divorce fee and EU control would have ceased, but it would most certainly not have been an easy route. 

The third ‘option’ was to reverse the decision of a democratic vote. Many who were opposed to Brexit seemed to believe the decision to leave was a ridiculous anti-establishment declaration made by the uneducated. After the vote whose social media wasn’t rife with posts of disbelief asking “What have we done?!”, as if the UK had chosen to beset a global pandemic upon the world. It was people like these posters that repeated again and again that the vote had been unfair, Brexit and its voters were stupid, and a second referendum was a must. Lib Dem leader Jo Swindon was even kind enough to offer the Brexidiots a “straightforward” solution: to cancel Brexit without a referendum. It’s a wonder she lost her seat in the next General Election. Second referendum or not, the overturn or “do-over” of a democratic vote merely years after it occurred is an assault on democracy as much as the attacks on the US Capitol were. Holding vote after vote until one gets their way is as autocratic as refusing to hold a vote at all – a fact the likes of Nicola Sturgeon would do well to remember. As such, although worth mentioning, cancelling Brexit was not a viable. 

Having established the flaws of the other options, it is now time to analyse the deal itself. Britons will be very glad to hear their holidays will not be affected, which is just as well considering there might be quite a few who are desperate for a prolonged trip to the South of France to recover from Covid restrictions. However, a visa is required for those planning on staying more than 90 days in a 180 day period. This is nothing special and in line with most visa free travel agreements. Although a hassle for some who work abroad, especially seasonally, the UK will now have more control over who enters the nation. Disruption at the borders will be irritating, and Gove has stated that UK businesses should prepare for some “bumpy moments”, but after fighting a global pandemic, Brexit should be a walk in the park.

What was certainly not a walk in the park were the negotiations over the UK’s (or Scotland’s according to a misguided Nicola Sturgeon) fishing waters. Coronavirus may have wiped away Boris Johnson’s backbone when faced against Sage advisors, but at least he demonstrated he still had his sense of humour intact when he wore his fish tie to sign the deal. The EU initially wanted to maintain its current access whilst the U.K. wanted to see a 60 percent cut. Both sides compromised on a 25 percent cut in the share of fish caught by EU vessels in U.K. waters. After the transition period, there will be annual negotiations both on access and to decide on the volume of fish the other party can catch in each other’s waters. Barrie Deas, head of the National Federation of Fishermen’s Organisations, said the deal “will inevitably be seen by the fishing industry as a defeat” and accused the Government of sacrificing fishing “for other national objectives”. In reality, the fishing waters were a trumped up deal, but who didn’t feel some national pride when watching an exhausted Bojo stand up (albeit with limited success) to Macron? 

Other parts of the deal are fairly decent. Northern Ireland was a sticky point but ultimately it was the best decision to introduce new checks on goods entering Northern Ireland from the rest of UK. This avoids a hardened border between Northern Ireland and the Republic of Ireland that would have broken the Good Friday Agreement. Similarly, with Gibraltar, Spain and the UK have agreed to keep Gibraltar’s border open. The economy of Gibraltar depends significantly on easy transport of people and goods from Spain. The proposed treaty would allow the British Overseas Territory to join EU policies and programs such as the Schengen area. Though Northern Ireland and Gibraltar will be less aligned with the UK than before, these agreements cannot be easily improved upon. Any problems with them arise from Brexit, rather than the deal itself. 

In terms of energy, the deal is a win. Although the U.K. is no longer part of the single market, the agreement will ensure that energy continues to flow between the U.K. and EU through new trading arrangements over inter-connectors. The two sides also committed to cooperation on renewable energy and tackling climate change. 

For Security, the UK will share DNA, fingerprint and vehicle data with the EU to help law enforcement agencies and border forces identify criminals. The deal will also “streamline” extraditions from the UK to the EU, although they will be more difficult to make than previously. The National Crime Agency said it welcomes the deal, which will allow it to “retain access to the majority of EU law enforcement criminal justice tools that benefit law enforcement across Europe.” Another win. 

A section of the deal that has caused an uproar among students is the Erasmus scheme, but this is actually completely unfounded. The Erasmus scheme was disproportionately expensive for the UK, and cost the Treasury “hundreds of millions of pounds” every year because more European students wanted to travel to the UK than UK students wanted to travel to the EU (which is unsurprising considering how much better UK universities are than most European ones). Instead the government is setting up a superior alternative to the Erasmus Scheme, the Turing Scheme. This will received funding of £100m a year to enable up to 35,000 UK students, especially those from deprived backgrounds, to undertake work placements or study abroad at some of the best universities in the world, not just limited to EU universities, starting in September 2021. The scheme is a great example of the benefits the UK can draw from leaving the EU, and it is a shame that people seem to be falsely jumping at chances to attack the government rather than appreciating a fantastic opportunity that is being fulfilled. 

One significant problem with the deal, on the other hand, is the divorce fee. In January 2021, there was still £25 billion left to pay by 2057, with almost £1 billion of it being paid in the first five years. It gets worse: the UK will also continue to make contributions until 2027 toward the Horizon Europe research scheme, the Euratom nuclear research programme, and Copernicus, the earth monitoring project. Furthermore, the UK will no longer be able to participate in the EU Space Surveillance and Tracking programme – although it still has access to its data – and the nation will also remain to be involved with the ITER project to use magnetic fusion to develop a new type of power plant. Whilst it would leave these worthwhile projects running dry on funding otherwise, it is unfair that the UK still has to pay for programmes that it cannot take advantage off, especially when its current budget deficit is so high. Meanwhile, future payments will be calculated based on the size of the UK’s economy compared with the whole of the EU economy, so perhaps the UK will now actually be hoping the EU’s economy flourishes, as unlikely as that scenario may seem.

Trade is the largest component of the deal. Boris Johnson was far more persuasive than May when he stated that he would prefer no deal over a bad deal and was thus able to pressure the EU into minimising the extent to which they could punish the UK for leaving. There were £670 billion of goods traded between the UK and the EU in 2019 and a key element of the trade deal is that it does not include any tariffs on exports to the EU. However, the UK can now set its own trade policies with other countries such as the US, Australia, and New Zealand – countries that don’t have free trade deals with EU. Admittedly, it may be harder to strike a deal with the US now that Trump is finally out of office; Biden’s team have already warned that commerce agreements with the UK are not a top priority. However agreements have taken effect, are signed, or are being discussed with almost 70 countries, so for now Biden’s lack of open-mindedness to an immediate deal with the UK is not of huge concern – as long as his outlook eventually changes. 

UK farming exporters will be able to continue largely as before. The UK government has secured zero tariff and quota-free access to the single market, which is important considering more than 60% of UK’s agricultural food and drink production are exported to EU. However, this comes with the extra cost of additional paperwork and checks on British products entering the EU, although it would have been next to impossible to avoid this after Brexit. It was essential to negotiate a good Brexit deal for farmers given their support for leaving the EU, with only an estimated 31% voting to remain. 

The level playing field was one of the more controversial parts of the negotiations (apart from the fish, of course) as it lays out how the UK and EU would manage different standards on goods if the UK diverged from the regulatory alignment it currently has with member states. The UK objected to the EU’s suggestion that the bloc should be allowed to impose tariffs on British goods if the standards diverge. Thus, under the terms of the agreement, both sides can impose tariffs, but these tariffs must be agreed upon by an independent arbitration panel. This agreement is extremely important for British sovereignty, which Boris and his band of Brexiteers were keen to protect. 

It was of great importance the deal did not cause a huge amount of damage to the service sector. More than 40 percent of the UK’s exports to the EU are services, making it the UK’s largest export market. Furthermore, the sector makes up 80% of the nation’s currently fragile economy. Therefore, a bad deal for services would be a huge blow to the national GDP. The deal with professional services offers something equivalent to the EU-Canada agreement in terms of Mutual Recognition of Professional Qualifications (MRPQs), allowing workers such as doctors, engineers, and architects to work in states they are not qualified in. Although not perfect, this is certainly a deal that can be built upon. 

Financial services were also a contentious issue, especially as the UK has a clear competitive advantage over the EU. The agreement thus far is to reach a deal by March 2021 where the two sides might agree to recognise each other’s rules in an ‘equivalence’ that would allow the finance industry to trade across the UK and EU border. This ensures a smooth transition and vitally separates financial services from the bloc’s control: a clear win for the UK, though from a strong position. 

Whilst this is all very promising, Andrew Sheets, Head of Cross Asset strategy at Morgan Stanley, has argued that “removing the no-deal risk will raise average asset prices” but “it doesn’t fix the underlying economic challenges … you are facing a negative shock to services which are a large majority of the UK economy.” He is clearly no fan of Brexit, but will at least be happy that the UK avoided a no deal. Elsewhere, May is certainly not happy now that her successor has managed to win a negotiation that she failed to even aim at. The ex-PM criticised Boris for not meeting the UN target of 0.7% of income on international development and for threatening to override international law as part of the negotiations. Whilst these may be fair points, her new-founded morals take the backseat as the UK now needs to focus on rescuing itself from the catastrophic economic fallout of COVID-19 restrictions. Having said that, the country’s recovery (if lockdown ever ends) should come hand in hand with an increased focus on helping still-struggling countries.  

One important belief to counter is the assumption – made in particular by the EU – that for one side to win, the other has to lose. A good deal is beneficial to all parties, otherwise it is not worth having. Provisions for smooth transitions, continued trade without tariffs, and visa-free holidays are parts of the deal that both sides should be happy with. The Brexit deal may be imperfect (the size of the divorce fee comes to mind), but in reality, it is doubtful the government could have negotiated a better deal. The  EU was so intent on punishing the UK it must be said that, whatever your thoughts may be on Boris Johnson or Brexit, the deal the government struck certainly feels like a victory for the UK. And victory, it sure is sweet. 

Olivia Groom

The views expressed in the article are the author’s own and may not reflect the values of The Liberty Club

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