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The Economist January 1st 2022
Britain
Brexit
Happy now?
How a year outside the eu’s legal and trading arrangements has changed Britain—and Britons
O
n december 24th 2020 Boris Johnson hailed a trade and cooperation agree ment (tca) with the European Union. Elev en months had passed since Britain for mally left the European Union, and just a week remained before it would be ejected from the customs union and single mar ket. The prime minister painted the deal in glowing terms. There would be no tariff or nontariff trade barriers between Britain and the bloc. Britain could set standards for the benefi t of its own businesses, rather than abiding by compromises bashed out between the eu’s members. Exporters might even do more business than previ ously with their European neighbours, Mr Johnson gushed, adding that European countries should be pleased to have a “con tented” Britain on their doorstep. Was he right? The pandemic has mud died trade and demographic data: lock downs aff ected the movement of both goods and people. And in Northern Ire land, which in eff ect remained in the sin gle market and customs union to avoid a
hard border on the island of Ireland, politi cians are arguing over whether to rewrite the deal with the eu or tear it up entirely. But it is possible to off er a preliminary judgment on how Brexit is panning out. In some ways, as badly as critics expect ed. Promises of more trade and of regula tions fi netuned to suit British companies never seemed realistic, given the friction free nature of the single market and its reg ulatory dominance worldwide. And in deed, the evidence suggests both were oversold. The Offi ce for Budget Responsi bility, a government watchdog, expects Brexit to sap Britain’s productivity by around 4% in the long run. But dire predic → Also in this section — Bagehot is away — Read more at: Economist.com/Britain
tions of goods shortages and a hollowed out City of London did not come to pass. And in a surprising twist, a new consensus is emerging over one of the most conten tious aspects of Brexit: immigration policy. Even though most Britons still characterise themselves as Remainers or Leavers, some of the heat has gone out of the argument. The economic hit is clearest in trade in goods with the bloc, which is now subject to a host of new conditions. These include sanitary checks, import and export decla rations, and rules of origin, which set out when products are eligible for tariff free entry. According to John Springford of the Centre for European Reform, a thinktank, Britain’s total combined imports and ex ports have been depressed by 1116% rela tive to its peers since the beginning of 2021 (see chart 1 on next page). Imports have been hit hardest—surprisingly, because Britain postponed customs checks until January 2022, whereas the eu did not. One reason may be that eu exporters are more willing to forgo the hassle of sending goods to Britain’s much smaller market (al though a survey by the British Federation of Small Businesses, an industry group, found that 17% of exporting businesses had stopped exporting to the eu, at least temporarily). The British government has also spent heavily on helping exporters navigate the diffi culties that Brexit created. Since 2018, £84m ($113m) has gone on sup porting customs agents who help clients
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