Editorial | Britain braces to face new trade challenges in life beyond the EU

Britons have finally got what they voted for in a referendum in 2016, although what has been agreed represents an even harder exit from the single market and customs union than many leave supporters had anticipated. Prime Minister Boris Johnson now has the toughest of tasks, battling the Covid-19 pandemic, while trying to strike fresh agreements with his country’s biggest trading partner and forging bilateral pacts.

The deal agreed last Thursday and expected to be signed off on by the EU and British lawmakers today preserves zero-tariff and zero-quota access. But there is little mention of financial services, Britain’s key export industry and a major source of revenue for the City of London. Scotland, which voted to stay in the EU, is once again bristling that it is being forced to accept arrangements it perceives as negatively impacting its economy and there is again pressure for an independence ballot.

Johnson’s strategy throughout talks was to ensure Britain was treated as a sovereign equal to the EU and its independence was respected. He achieved that, although it has come at the expense of market access and understandably so; the main reason for being a member of the EU was trade, not sovereignty. An immediate impact will be apparent when the accord takes effect on Friday, ending free movement to the EU for British passport-holders and introducing customs and regulatory checks for goods. The end of decades of unrestricted trade and travel is also bound to affect lives and jobs.

There are far-reaching changes, businesses having been warned about the new bureaucratic requirements that will lead to delays at arrival points. There will be teething problems and firms will have to calculate new timetables so that supply chains can move smoothly. People crossing the English Channel will need to ensure they have at least six months on their passports, that mobile phone roaming charges are not overbearing and to consider travel insurance.

Economists predict the expected loss of trade and jobs will mean Britain will be more quickly overtaken by India in the ranking of biggest economies, perhaps as early as 2025. The British government estimates gross domestic product will be down by 4 per cent on what it otherwise would have been by 2035 and that national income per person will drop by 5 per cent. The world’s economies are interconnected and Johnson needs to keep that in mind as he negotiates a future for his country beyond the EU.