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Despite The UK's New Trade Deal, Britain Will Still Suffer From Brexit

Armand Yazdani

Posted on January 9, 2021 19:27

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Although the United Kingdom was able to evade immediate tariffs and form a trade agreement with the EU, Brexit will still hurt Britain's economy.

With the United Kingdom’s departure from the European Union now complete, many worry over the country’s economy and fear job loss. Following a transition period which expired Dec. 31, negotiations between the UK and EU officially ended, with the UK losing access to the EU’s single market. Prime Minister Boris Johnson said the end of negotiations was “an amazing moment,” allowing Britain to conduct matters “differently and better.” Other proponents of Brexit cite the UK’s ability to be exempt from EU laws and pursue more non-EU trade deals. However, leaving the EU will lower the UK’s prominence and ultimately dampen its economy. 


Brexit will not only affect the lives of tourists and migrants to the UK but also the country’s workforce. Under new restrictions, visitors to EU countries will be only able to visit member states for 90 days maximum in a 180-day period. The Brexit agreement stipulates that Britons exceeding that number would have to apply for a long-term immigration visa. And Britain’s workforce could be impacted considerably. According to a report by the Centre for Retail Research, 200,000 jobs will be at risk in the UK in 2021. And about 180,000 jobs were lost in 2020 as a result of retailers struggling to increase sales and maintain rent. The service industry in particular will be hurt by Brexit if professional licenses and qualifications are no longer being recognized automatically. Given that services are the UK’s comparative advantage with 80% of service industries comprising the UK’s economic output in 2019, less smoothness in the service sector could significantly hurt the UK’s economy. 


Although it’s true the UK will enjoy a tariff-free deal with the EU, other factors could still lead to more job loss and economic strain. The fact that Britain left the EU’s single market alone could increase consumer prices. Moreover, the deal never completely ruled out tariffs. That is, if the UK’s standards fell very short of the EU’s standards, the EU could impose tariffs. And the deal fails to focus on finance, of which the UK enjoys a surplus, which could limit the country’s potential in that industry. Now that the UK left the EU’s custom union, there will also be a new set of customs formalities and regulatory checks, increasing costs for British companies. Additionally, the UK will only control 25% of the EU’s catch in the UK’s politically significant fish waters. This agreement is by no means a perfect economic outcome for Britain. 


Despite the fact that the UK benefits from this deal with the EU, Brexit altogether will still damage the country’s economy. New formalities in addition to restraints on freedom of movement and regulations on the UK’s waters will ultimately hurt the UK more than benefit it. At the end of the day, independence from the EU only means isolation. 

Armand Yazdani

Posted on January 9, 2021 19:27

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