Finance: Research, Policy and Anecdotes

Brexit – the final episode… for this season

Here we are.  While negotiators in Brussels are hunkering down to discuss the fishy details of a possible deal and we still do not know whether or not there will be a deal, the UK press keeps itself busy with a xenophobic hate campaign against German chancellor Merkel.  This simply repeats a well-known scheme of Brexiters: always blame someone else if things do not turn out as they promised and, if in doubt, blame foreigners. And if it is not Angela Merkel, anti-Macron pamphlets are waiting in the drawers to be published.  As disgusting as it is, as predictable it is. One interesting observation is that while under Teresa May, it was the Prime Minister herself and her ministers who used Nazi language to drive home the point that the EU was the enemy and EU citizens are no longer welcome in the UK, under Boris Johnson this is being outsourced again to the Tory press.

 

Independent of the trade deal, the implications of the de facto Brexit (after de jure Brexit on 31 January) are slowly sinking in: British citizens are now being treated like citizens from any non-EU country in terms of travel to and stay in the EU – while some anti-EU hate-campaigning newspapers refer to these as new rules and revenge, these rules have always been there and are now simply being implemented to UK citizens, as the UK exits the transition period and thus Single Market. There will be many more of these – small changes here and there – that will affect daily life of UK citizens (and residents as my family and me); more important will be the long-term negative changes for businesses on both sides. While there has been a strong focus on immediate disruptions in early January, it will be the long-term economic damage that will be more important.  While the Tories hope that this additional loss in economic growth and welfare will not be noted among the COVID-19 fall-out, the COVID economic crisis and Brexit might actually exacerbate each other. Nevertheless, I do not think it will be until the end of this decade that it will become clear even for non-experts what long-term damage Brexit has brought to the UK.

 

As the last episode of this Brexit season seems to be never-ending, there is lots to ‘look forward’ to in the next season, independent on how this season will end.  With a barebones deal, there will be calls on both sides (but especially on this side of the channel) to extend cooperation to other areas. At the same time, there will be lots of areas of “interpretation” of the agreement, especially when it comes to the implementation of the Northern Ireland protocol. There will infighting on the UK side of whether a better deal was there to be had but also on the EU side on the fishing deal.  If there is no deal, expect even more “action”: British gunboats attacking French fishing boats; French fishing boats blockading Calais; serious transportation delays and traffic jams, not for a few days, but for weeks, especially on the British sides. Suggestions that the British government will not return to the negotiating table are as credible as Boris Johnson’s announcement a few weeks ago that “Christmas will not (I repeat: WILL NOT) be cancelled”.

 

Finally, what are the long-term perspective for the Brexit soap opera? This being increasingly one of the least popular political shows ever, expect it to go on for years if not decades. But one idea can be discarded easily – a quick return of the UK into the EU: this will not only require both major parties in the UK to agree (i.e., Labour and the English Nationalist Party) but – even more of a constraint I would argue – 27 EU member states to agree. And if anyone thought that the current free trade negotiations were difficult, the EU membership negotiators later this century on the UK side will simply laugh about the naivete of our generation.