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Under the agreement, the UK and the EU will start trading commodities duty free from 2021. But this does not apply to the service industry; finance companies will still face months of uncertainty.
The historic trade agreement between the UK and the European Union has avoided the unhappy situation and laid the foundation for a new relationship between the two.
Negotiators for the two sides finalized a 500-page trade deal on Christmas Eve. A week later, the UK will withdraw from the single market and the EU customs union. This agreement will allow the UK to complete Brexit.
This brings the twists and turns of the Brexit journey to the end of the British referendum for four years. During this process, British politics and its relationship with the EU have changed. However, British businesses still face risks, and the British government also faces long-term challenges that show Brexit is painful but worth it.
British Prime Minister Boris Johnson told a press conference Thursday that the deal “solves problems that have plagued us in politics for decades.” When asked about the concessions we had to make, Johnson replied: “They told us we couldn’t Enjoy your own cake. I wouldn’t say this is the ‘most delicious’ deal, but I think this is the deal this country needs. right now “.
“This is a long and winding road, but we have reached an agreement,” said Ursula von der Lein, president of the European Commission. “This is a fair and balanced agreement. It is the correct and responsible thing for both parties.”
The British Parliament will vote on this deal on December 30. The opposition Labor Party promised to support it, which means there is really no suspense on successful legislation. A spokesman for Germany, the rotating EU presidency, tweeted that the meeting of ambassadors of EU member states on Friday unanimously adopted a statement to the European Parliament indicating that the trade agreement between the UK and the EU will enter into temporarily effective as of January 1.
It will take another four months for the European Parliament to officially approve the trade deal. Support provided by member government representatives to the European Union at Friday’s meeting confirmed that no member state opposed the deal, thus eliminating the risk of chaos caused by Brexit in late December.
This agreement will greatly change the business framework between the UK and the EU, and the British Parliament will no longer be subject to many EU regulations. After December 31, the UK and the EU will trade in goods without tariffs or quotas, but this does not apply to the service industry or the financial services industry. The service industry represents approximately 80% of the British economy.
Commodity exporters must prepare for the prospect of resuming customs and border inspections later in the year, and British ports may be paralyzed. Just before this deal was reached, there were three days of chaos at the main border crossings between Britain and France, reminding people how quickly the border blockade can stifle international trade.
Finally finished
For Brexit designer Boris Johnson, Britain’s third prime minister since the 2016 Brexit referendum, this marks another milestone after he announced 12 months ago that he had obtained decisive authorization from voters and vowed to “complete Brexit.” One mile.
With voters divided, the new crown epidemic hit public finances and Scotland awaits independence, Johnson’s next challenge will be to show that Britain can still prosper after leaving the European Union.
Businesses will face border controls and investigations show they are not ready yet. At the same time, consumers in Northern Ireland are facing the prospect of a shortage of certain commodities as companies have to adjust their textual work to meet the new requirements.
Isolated Britain struggles to reopen trade routes
Dubious financial industry
After withdrawing from the EU single market, UK financial services companies will lose their licenses to provide services within the EU, and it remains to be seen whether the EU will allow them to enter. Even if the EU allows it, the license can be withdrawn at any time.
Dublin, Frankfurt, Amsterdam and Paris have already begun to weaken London’s dominance as a European financial center. Due to Brexit, various finance companies, from JPMorgan Chase to Goldman Sachs, have transferred approximately 7,500 employees and $ 1.6 trillion in assets outside of the UK.
Although the UK’s long-term economic momentum will suffer, the deal partially cushioned the direct economic costs of leaving the EU. Bloomberg Economic Research predicts that failure to reach a deal will reduce UK GDP by 1.5% in 2021. However, it is estimated that over the next ten years, the UK’s annual GDP growth rate it will remain 0.5% lower than staying in the EU.
The pound against the dollar is still below the level before the Brexit referendum. The FTSE 100 is one of the worst performing Western European benchmarks this year.
Bloomberg economists said. . .
“When it comes to the short-term outlook, the key question is how well the company is adjusting to changes in trade agreements since January 1. If there is no preparation, it can have a significant and short-term impact on the economy in the first quarter of 2021, exacerbating the new corona epidemic. Destruction. “
– Dan Hanson, Bloomberg Economist
For the EU, reaching an agreement means avoiding antagonism with vital diplomatic, economic and commercial neighbors, and also lays the groundwork for further cooperation in the future.
Unlike other similar trade agreements, this agreement will establish a framework for general standards in aviation, trade subsidies, labor and environmental rights, and law enforcement.
The scope of this agreement is wide, making negotiations extremely complicated: the European Union requires the UK to be in line with the European Union in terms of trade subsidy rules, the UK refuses and France demands a continuous access to British waters for fishing.
Source: financial industry websiteReturn to Sohu to see more
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