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New rules on the relationship between the United Kingdom and the European Union came into force on Friday, following the end of a transition period since the end of British membership in the EU last January (Brexit).
One of the most important changes is that the automatic application of the four EU freedoms of movement of people, goods, capital and services in bilateral trade has been abolished, and the British government has established new immigration rules for newcomers from EU countries.
The UK withdrew from the EU on January 31, 2020, but during the 11-month transition period that began on the day of departure and ended at zero o’clock on Friday, much of the previous set of rules remained. in bilateral relations. However, with the end of the transitional period on Friday, the UK also ceased to be a member of the single internal market and the customs union of the European Union.
The exit was voted in 2016
As a prelude to Brexit, a referendum on British membership of the EU was held on June 23, 2016, with a narrow majority of 51.9% of the participants voting in favor of its departure. In the history of the European Union and its predecessors, there was no example of a full member leaving until the British withdrawal.
The UK spent 47 years and a month as a member of the European Community and then as its successor, a member of the European Union, on January 1, 1973, under the leadership of Sir Edward Heath, then Prime Minister of the Conservative Party. One of the main goals of the transition period, which ended on Friday, was to have time to agree on the fundamental rules for a future bilateral relationship. This was achieved after several unsuccessful rounds of negotiations, almost in the last minute, just before Christmas.
1246 page agreement
One of the main elements of the 1,246-page agreement is a free trade agreement, which will lead to 100% tariff liberalization as of Friday, that is trade in tariffs and quotas – in bilateral trade in goods between the UK and the EU. According to official statistics, the value of trade between the United Kingdom and the European Union was 668 billion pounds sterling (272 billion HUF) last year.
Fundamental changes
However, with the agreement, there have been a number of fundamental changes to the rules. These include the abolition of guaranteed access to the European Union’s single internal market for the service sector, which accounts for 80 percent of Britain’s annual gross domestic product (GDP).
This could be particularly sensitive for financial services companies in London’s financial sector, the City, which employs more than 300,000 people. Since the beginning of the Brexit process, these companies have feared losing their passport rights, that is, their specific service licenses for euro area markets, in the absence of a specific agreement on financial services. Within London’s total independent exports, the value of exports of financial services and other related services reaches 100 billion pounds a year (more than 40 billion guilders). This is half of London’s total exports as an independent economic entity.
London’s financial services sector could only maintain its current level of access to the Union’s single internal market if the EU granted it regulatory equivalence status. However, this will most likely depend on the UK services sector adhering heavily to the EU regulatory framework. The European Commission believes that London could reap the benefits of the EU services market without complying with access obligations.
They will also be negotiating in the coming months
The agreement on the bilateral relationship provides the opportunity to: the British government and the EU to negotiate access to the EU market for the financial services sector in the coming months.
However, London’s financial services companies have already made serious preparations in case they lose that access. Many companies have established branches in the main financial centers of the EU, especially in Frankfurt and Paris.
However, EY, a global business consulting and auditing firm, estimates that London-based financial services firms have relocated assets worth £ 1bn to EU countries since the 2016 referendum.
Immigration
One of the most important changes affecting EU citizens has been British immigration regulations. As of Friday, the UK has abolished the EU’s exercise of freedom of movement, which guarantees the free movement of people, and has introduced immigration rules for newcomers from EU and non-EU countries based on an equally valid scoring system. Under this regulation, UK authorities assess applications for establishment based primarily on applicants’ qualifications and knowledge of English.
Established legal status
EU citizens who arrived before Friday’s deadline and are already legally residing in the UK can still keep all their acquired rights. To do this, they must apply to the British authorities for an indefinite residence permit, an officially established legal status; The deadline for submission is June 30.
At the same time, settled status and even entry permits can be denied to those who have been sentenced in other countries to at least one year in prison for previous crimes.
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