By Suyashi Smridhi
During the 11-month transition period, EU-UK trade and travel have remained the same, as it existed prior to Brexit in January 2020.
Even as the United Kingdom (UK) signed a free-trade agreement with the city-state of Singapore on Thursday, its trade deals with the European Union (EU) post-Brexit is yet to be finalized.
The trade deals between EU and UK are set to formally end with Britain’s 11-month transition period ending on December 31, 2020. Britain has already exited from EU in January 2020. During the transition period, UK remained in its existing deals with EU, which included the customs union and single market.
This meant that UK-EU trade, ease of travel between EU and UK, and UK citizens’ rights to live and work in EU remained the same while theUK tries to negotiate for a deal with EU before December 31.
UK’s Prime Minister Boris Johnson lashed out against EU’s demands of UK following all EU’s future laws or face immediate punishment. He also disagrees with EU over giving up control over British fishing waters.
In 2019, Britain’s annual trade with Singapore was valued at 13.5 billion dollars. This is a fraction of one trillion dollars annual trade between the UK and EU.
What is Brexit?
As the name suggests, Brexit was Britain’s exit from the European Union and the European Atomic Energy Communities, a crisis which has now extended to a period of almost five years.
In 2016, the UK organized a referendum asking its citizens whether they want to be a part of EU or not. 52 percent voted for leaving and the then Prime Minister David Cameron resigned over the matter.
The newly appointed Theresa May notified EU about Britain’s intention to leave on March 29, 2017. However, the general elections led to a hung parliament, which resulted in a deadlock over Brexit. This led to three extensions of the Article 50 process.
After many up and downs, the Withdrawal Agreement Bill was passed under the leadership of Boris Johnson, who was elected as the UK Prime Minister in 2019.
Since then, both the UK and EU have been trying to negotiate a deal acceptable to both.
Impact of Brexit
On Sunday, both EU and the UK are set to meet again to negotiate a deal. The Economic Times predicts that in case of a no-deal Brexit, there are going to be huge economic costs and an increased chaos in mutual trade.
An UNCTAD (United Nations Conference on Trade and Development) report says that EU is set to lose approximately 34.5 billion dollars on exports from the UK.
According to economic analysts from Stanford University, who released a survey in 2019, Brexit’s uncertainty had reduced investment by 6 per cent and employment by 1.5 per cent.
In 2017, Nobel prize-winning economist Paul Krugman told the Independent that unlike trade economists hypothesis that the UK could boost its GDP by 4 per cent, the reality was that it could actually lose its GDP by 2 per cent.
Predicted gains (in million dollars) if there is a No-deal Brexit, UNCTAD, 2019
Who is set to gain from No-deal Brexit?
According to the 2019 UNCTAD report, China and the United States were set to gain the most from a no-deal Brexit.
Besides that, imports from countries like Thailand, South Africa, India, Brazil, the Russian Federation, Vietnam and New Zealand was also set to increase.