Comment on the Brexit agreement: A nice mess!

Friday 25th December 2020

Comment on the Brexit agreement
A nice mess!

A comment by Ulrich Reitz

The trade agreement between the European Union and Great Britain is in place. The chaos that a disorderly Brexit would have brought with it is finally averted. The new start between Brussels and London will not be easy. On the contrary.

At least the symbolism is unsurpassed. At Christmas, the feast of joy, the European Union and Great Britain agreed on the long-awaited free trade agreement. The incalculable consequences that an unregulated, hard Brexit would have brought with it – they were averted shortly before. At least that.

Ironically, it was the rampant corona pandemic that fueled the willingness to accept a last-minute deal in London. Great Britain is feeling the consequences of the corona more severely than almost any other country in Europe. The British government around Prime Minister Boris Johnson would have just been missing another chaos with supply bottlenecks due to a disorderly Brexit.

Is everything going to be okay now? Doubts are justified. Even if the parliaments and governments of the European Union and Great Britain wave through the treaty, the interaction between the island and the continent will change considerably. Brussels and London have agreed on the lowest possible denominator. In the future, trading in particular will no longer run as smoothly as we are used to. You will see that in the coming weeks and months.

Great Britain is the European Union's second largest export market after the USA. No sales market is more important for the British than that of the EU. The fact that no tariffs and quantitative restrictions should apply to the movement of goods in the future helps to prevent all too big problems. But the bureaucracy is fueling it. There will be stricter goods controls that put a strain on oiled supply chains. The new rules of economic cooperation will force hundreds of millions of new forms to be issued and processed. What costs time and money and burdens companies – including Germans.

Up to half a million jobs in Germany have so far been dependent on the economic interaction with the island. Great Britain will lose its economic attractiveness. Investment decisions will probably be examined more critically – what costs jobs. Admittedly not nearly as many as would be the case with a no-deal. But the pressure is increasing.

The Christmas euphoria has vanished at some point. Disputes are inevitable. It is not without reason that the Brexit treaty provides for an arbitration routine. They will be needed.