Brexit: the EU trade deal brokered at Christmas gives a relief to business but it means “freedom” comes with a cost

Brexit: the EU trade deal brokered at Christmas gives a relief to business but it means “freedom” comes with a cost

Boris Johnson can rightfully claim to have kept all his promises since becoming the leader of the Conservative Party. Well up to a point. Firstly he won a general election, has ‘got Brexit done’ and negotiated a trade deal with the EU having said goodbye to as he puts it ‘our friends in Europe.’

So far so good. Putting aside the promised £350m a week for the NHS and his questionable handling of the Covid-19 crisis the signing of the trade deal has been cautiously welcomed by many in business.

Trade groups respond

Stephen Phipson, CEO at Make UK said: "Businesses must now manage their way through one of the biggest changes to trade ever seen, which takes effect in just 48 hours. There will be new customs paperwork, arrangements at the border and significant additional red tape.

"Government should move quickly to finalise data adequacy arrangements and work with both UK business and our EU partners to address a wide range of issues such as rules of origin, recognition of professional qualifications and chemical registration systems where the new arrangements are likely to be most challenging."

The Federation of Small Businesses’ Mike Cherry said: “The work of looking through the detail of the agreement to map out exactly what it means for the small firms that make-up 99% of our business community now begins. As well as going through the terms of access to each other’s markets, we are keen to see the Small Business Chapter that we have championed and encouraged both sides to include.

“What we need from here is tangible, targeted support, including £3,000 transition vouchers that small firms can spend on the training and advice required to navigate a new trading relationship with our biggest export market.” 

The CBI’s Tony Danker said: “Firms will immediately study the details, when they can, to understand the implications for their companies, customers and clients but immediate guidance from government is required across all sectors. Above all, we need urgent confirmation of grace periods to smooth the cliff edge on everything from data to rules of origin and we need to ensure we keep goods moving across borders.”

Criticisms of the deal

Sam Lowe a senior research fellow at the Centre for European Reform and former Government economic advisor said: “The new EU-UK trade and cooperation agreement will make trading goods and services between the two partners more difficult. While the trade agreement delivers duty- and quota-free trade (so long as exports meet stringent local content requirements), it does little to facilitate trade in services, and the UK did not manage to substantially reduce the need for more post-Brexit controls and bureaucracy.”

He said the government had prioritised regaining the ability to set its own laws over retaining the economic benefits of EU membership and against this metric, the negotiations can be deemed a partial success.

He added: “But it did not avoid signing up to strict conditionality. Great Britain now has the ability to diverge from EU rules in future – but doing so could lead to it losing the benefits of the trade agreement, and tariffs being reimposed, for example. Freedom, but not cost-free.”

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