Brexit: Miles to go

The harder part of the negotiations begins

The global media’s obsession with a crisis in that redundant and dysfunctional institution called the British royal family has obscured a far more consequential development for that country and the future of Europe. On the day the headlines reverberated with two marginal royals declaring independence from the House of Windsor, the newly elected House of Commons approved, almost unnoticed, Boris Johnson’s version of the Brexit withdrawal deal. Bar unanticipated objections from the House of Lords, the United Kingdom will leave the European Union (EU) on January 31. Now, the more challenging part of the negotiations begins — the nitty gritty of the UK’s future relationship with the EU. Apart from new trade arrangements, these talks will include agreements on security and data sharing; aviation standards; supplies of electricity; and regulation of medicines. Under the timetable, all of this has to be agreed upon by December 31. In February, EU ministers will meet in Brussels to agree to a negotiating agenda, implying that EU-UK talks will begin early March. In June, another summit is expected to decide to finalise the new trade relationship by 2020-end and November is the last possible date for this agreement. Considering that it has taken three and a half years and two governments just to get an agreement on the terms on which the EU and UK will part, a nine-month timetable to finalise a far more consequential deal looks unrealistic. Given the implications for its own future, the EU is unlikely to be inclined to hasten matters either. 

During this transition period, the UK will exist in limbo: EU laws will continue to apply to the UK; citizens and businesses will experience no change; the UK will lose its voting rights in Brussels but will be free to negotiate trade deals with other countries. This is hardly helpful for businesses. According to Bloomberg Economics, Brexit has cost the UK $170 billion and economic growth has halved to 1 per cent. Continuing uncertainty is unlikely to reverse this trend, especially with global growth expected to stay sluggish. Accelerating the economy is not the only issue confronting Prime Minister Boris Johnson as he gets down to governing after securing a commanding 80-seat majority in Parliament. Stiff political challenges too lie ahead, not least of which is ensuring the unity of the UK. 

If the negotiations with the EU are postponed past the December 31 deadline — and the rules allow only one postponement — the UK will see for the first time in centuries a border between Britain and Northern Ireland, which will remain in the EU regulatory system just like its southern neighbour, the Republic of Ireland. Apart from the complex procedures and paperwork this will entail for corporations with operations in both Northern Ireland and the rest of the UK, the withdrawal deal offers encouragement to long dormant impulses for Irish union — which, ironically, UK entry into the EU had suppressed. The centrifugal forces are already in evidence, especially in Scotland, a staunch Remainer bloc, where a nationalist party made major gains in December’s elections. The prospects of multiple independence referendums in both these territories remain high, therefore, unless Mr Johnson is able to achieve a deal on time and to everyone’s satisfaction. The stakes for the UK just got immeasurably higher.