The headaches of negotiating Brexit
Grounded flights. Massive delays at border crossings. A shortage of parts for nuclear power plants. 75,000 lost finance jobs.
These are a handful of the dramatic economic consequences if Britain crashes out of the European Union in 2019 without agreeing a new relationship with the bloc. Negotiations have hit a roadblock but are due to resume next week.
The British government has assessed the damage that a "no deal" Brexit would have on 58 industries. Opposition lawmakers are heaping pressure on the government to publish the findings, but it has so far refused.
Here's a look at what experts say could happen in the days and weeks following a "no deal" Brexit:
No deal would mean that key trade, regulatory and legal agreements that underpin Britain's economy will be invalidated on March 29, 2019.
One immediate consequence: Thousands of flights in and out of Britain could be grounded.
That's because the U.K. is signatory to international aviation agreements via the EU that allow flights to operate in and out of the country.
Thomas van der Wijngaart, an airline specialist at law firm Clyde & Co., said that flights to all 27 EU members would be affected, along with 17 other countries including the U.S., Canada and Israel.
Aviation experts say that London and Brussels are under immense pressure to reach a deal.
"It is so unthinkably disruptive that some arrangement has to be put in place, but what arrangement we don't really know," said Jonathan Wober, chief financial analyst at CAPA – Centre for Aviation.
Airlines are taking precautionary measures.British budget carrier EasyJet(ESYJY) recently set up a separate business unit in Austria to make sure it can keep flying within the EU if there's no deal on Brexit.
For decades, trucks and ships carrying EU goods have entered and exited Britain with scarcely a second look from customs officers. But not anymore.
"No deal" means that Britain would lose free trade with Europe, and all trade deals and treaties that the EU has negotiated with other nations.
Instead, Britain would be forced to operate under World Trade Organization rules.
That would mean higher prices. Tariffs on dairy products from the EU would rise by 45%, while those on meat products would spike 37%, according to the U.K. Trade Policy Observatory and the Resolution Foundation.
Imports from outside the EU, such as Cuban cigars and South African wine, would also be affected.
A messy exit would result in chaos at border crossings, where new customs infrastructure would need to be installed.
Dover, the country's main port for trade, has warned that just two minutes of extra processing time per truck "would cause [lines] of over 17 miles."
If fresh foods were stuck at the border — say tomatoes from Spain — they could rot before they reach grocery shelves. The U.K. currently gets about 30% of its food from the EU.
"One of the main challenges beyond the paperwork is the logistics," said Philippe Binard, general delegate of European fresh food association Freshfel. "Maybe there will be a practical solution over time, or maybe not."
The pain would extend beyond physical goods: Consulting firm Oliver Wyman says that 75,000 finance jobs could be lost over the long term if there's no deal on Brexit.
Brits should prepare to pay more for energy too if a deal is not reached.
Electric power imported from the EU would be more expensive if it's no longer covered by free trade deals.
"No deal" also promises to make life difficult for the nuclear power industry, which supplies roughly 20% of the country's electricity.
If the U.K. loses access to the EU's nuclear safeguard system, operators would have trouble importing parts for their aging reactors. If plants are forced to shut down, the stability of the U.K. power grid could be at risk.
The country would need to quickly negotiate new nuclear agreements and establish domestic oversight to comply with international nuclear rules.
"Our concern is that there is a lot to do in a short period of time," said Tom Greatrex, head of the British Nuclear Industry Association. "It's hard to see there will be anything other than significant disruption."
Immigration and rights
Roughly 3 million people from other EU states live in the U.K. Meanwhile, 1 million Brits live in other EU nations. Under EU law, both groups currently enjoy the same rights when it comes to jobs, pensions and health insurance.
But a messy Brexit could instantly render both groups illegal residents.
If negotiations collapse, it would be up to each individual country to determine the rights of these expats.
Jonathan Portes, professor of economics and public policy at King's College London, said it's unlikely that Britain or EU countries would start deporting people in the absence of a deal.
But given the uncertainty surrounding their status, it might be more difficult for them to get a job or rent an apartment, he said.
"No deal" could mean drastic changes to the land border between Ireland (in the EU) and Northern Ireland (part of the U.K.).
The border is currently "invisible," with up to 30,000 people and 13,000 commercial vehicles freely crossing it each day.
Many companies have a presence on both sides of the border, and products often cross it several times before reaching consumers.
"With no transitional arrangements in place, and no future customs relationship agreed, we will see an immediate re-imposition of customs controls at the Northern Irish border," said Andrew Gilmore, deputy director of research at Ireland's Institute of International and European Affairs.
Gilmore said that customs checks would be "profoundly disruptive for business," and policing the border would be a major challenge.
Ports and airports would require significant extra staffing and storage infrastructure.
The reintroduction of controls would also present a major political headache. The 1998 peace accord that marked the end of 30 years of deadly violence is based on cross-border cooperation and the removal of visible barriers.
— James Frater contributed reporting.
[contf] [contfnew] [hhm]CNN[hhmc] [contfnewc] [contfnewc]
Post-Brexit trade: Is red tape chaos just ‘teething trouble’ as the UK government argues?
January has seen Brexit set in motion for real — but for many businesses, operations have ground to a standstill as they struggle to shift goods across new borders.
With the UK now outside the EU’s Single Market and Customs Union, importers and exporters on both sides of the English Channel say the new rules have brought a nightmare of red tape and extra costs.
Paperwork and border checks have led to seafood being left stranded in ports, and empty shelves in some supermarkets as deliveries failed to materialise.
Supplies from Great Britain to Northern Ireland have also been hit as the need to keep an open land border on the island of Ireland means the North is largely following EU rules.
The UK government has attributed much of the chaos to “teething problems”, arguing the longer term will bring great opportunities. But some trade experts say some of the new burdens on business are here to stay.
The nature and scale of the problem is illustrated by this selection of some of the hassles reported by traders:
- “My regular logistics partner has suspended their service completely from the EU to the UK until February. These guys operate in 31 countries & know how to move stock quickly, but the paperwork nightmare is just too much for them” — Daniel Lambert (Wines), wine import company, Bridgend, Wales. He wrote a 22-point Twitter thread detailing problems encountered.
- “It’s not good. This situation, for me it’s too much paperwork, too much wait, wait, all the time is wait. This is not good.” — UK-based Polish lorry driver Petar Loba, stuck in a queue near Dover.
- “A shipment that used to cost £95 (€107) and take five minutes to organise will now take an afternoon and cost £400 (€452)” — Richard Townsend of Bailey Paints, a small business which exports paint from Stroud in England to Ireland.
- “We can’t get deliveries you know. Companies are taking orders and then they’re ringing us back going, ‘we can’t deliver that until further notice’.” — Kieran Sloan of Sawers delicatessen in Belfast, on supply problems from Britain.
- “The first days were difficult, there were a great deal of delays. Some of our drivers had to wait a week on the British side to make export declarations… (There were) customers who’d declared nothing, those who’d made admin mistakes… queues to obtain documents in England.” — Benoît Lefebvre of French firm Sonotri, on transporting chemical products to England.
- “All the EU (countries) that used to buy a lot of our fish, they’ve kind of stopped because the fish that were getting transferred were going off, going bad. So we’ve lost our entire export market.” — Ben Vass, fisherman, Devon, England.
- “80% of our sales get shipped to the EU, so obviously now it’s all stopped. Our prices have dropped. All our fish is getting frozen.” — Nathan Daley, fisherman, Devon, England.
- “We have had to completely suspend the sending of all our consumer parcels to the EU. We had a bounce-back of every single parcel that we sent from 4th January onwards… It’s because you now need a health certificate even for a consumer parcel. The cost of a health certificate is £180 (€203) per consignment.” — Simon Spurrell, Cheshire Cheese Company.
- “A customer… had to pay over 50% of what his overall parcel was worth to get it out of customs and we had to send him a VAT invoice… It’s been horrible and it’s almost gotten to the point where we’ll have to probably stop trading with the EU, which is going to cost us thousands of pounds over the next three months.” — Joycelyn Mate of Afrocenchix, exporting afro hair products from the UK.
Why are traders suffering like this?
The Brexit trade deal struck on Christmas Eve was celebrated as a great success. It certainly brought huge relief, avoiding an even more chaotic no-deal scenario with just days to spare.
The agreement means trade can continue between the UK and the EU, free of tariffs (import taxes) and quotas.
Boris Johnson has claimed, wrongly, that there are no non-tariff barriers. The reality is — as seen by the above examples — is that the new trading regime has brought a mountain of extra bureaucracy and costs.
Firms now need to fill out customs declarations. The process involving codes and new IT systems can lead to significant delays. Slower procedures mean higher costs. There are also new regulatory checks for food, with meat, dairy and fish products needing health certificates.
There is a risk that supplies get stuck. Under the “groupage” system, multiple consignments often travel in one trailer. But all may need to be checked, and problems or mistakes can hold up the whole shipment.
There are also complications over “rules of origin” regulations, and VAT (Value Added Tax), as the UK is no longer part of the EU’s VAT area. EU exporters sending goods to the UK have to register with UK authorities and may have to pay UK import VAT. VAT and excise duties are also due on goods entering the EU from the UK.
Some changes have been unexpected. Ireland, for instance, has discovered that it has been sometimes hit by EU import duties. Despite the no-tariff Brexit deal, there is no exemption if goods pass through Britain on their way to or from the continent, as they are no longer considered to be of EU origin.
The European Commission warned last July of significant border disruption from the end of the transition period, regardless of whether a trade deal was agreed.
What have industry bodies been saying?
The UK’s Road Haulage Association says so worried are exporters over customs demands or the danger of getting stuck in port — not to mention the additional burden of COVID-19 tests for drivers — that many are not sending at all.
The RHA has reported that at least 40% of lorries bringing goods from the EU to Britain are returning to the continent empty, which has a “huge impact on the supply chain”.
The British Meat Processors Association has said the post-Brexit problems “are now causing a serious and sustained loss of trade with our biggest export partner”.
“If continental supermarkets are unable to have products delivered the way they need them to be, this trade will simply be lost as EU customers abandon UK suppliers and source product from European processors,” said Nick Allen, BMPA’s Chief Executive.
“Members are already being told by their EU customers that they’ll be looking to Spain and Ireland to buy products from now on.”
The fishing industry, whose produce is equally highly perishable, has echoed such complaints. The Scottish seafood industry in particular has been sounding the alarm.
EU vaccine delays dog effort to speed up COVID inoculations
AstraZeneca’s EU vaccine shipments will be delayed, the EU’s health commissioner said, in yet another obstacle to the bloc’s COVID-19 vaccination rollout.
“The EU Commission and Member States expressed deep dissatisfaction with this,” Stella Kyriakides tweeted on Friday after member states heard from AstraZeneca representatives.
The AstraZeneca/Oxford vaccine is expected to receive approval from the European Medicines Agency this week, and any delay or shortage of doses could be a significant speed bump as member states race to vaccinate their populations amid a worsening COVID-19 crisis.
The emergence of more transmissible variants of coronavirus has caused significant concern in Europe with the UK reporting record daily hospitalisations and deaths due to the virus mutations.
Johnson warned on Friday that early evidence showed the new variant could be more deadly as well.
Countries are racing against the clock to vaccinate as many people as possible before the variants spread further.
But Pfizer said just last week that fewer doses would be available in the EU in late January and early February due to quality tests at the manufacturing plant in Belgium.
Some EU countries have since had to cut vaccinations amid the delays, prompting criticism of the pharmaceutical companies behind the vaccines.
Domenico Arcuri, Italy’s coronavirus commissioner, said that vaccinations had been cut from 80,000 a day to 28,000 a day, Italian media reported. He said Italian authorities were considering taking legal action against Pfizer, AP reported.
Authorities in Germany’s most populous state said that due to delays in delivery of the Pfizer/BioNtech vaccine they would halt first vaccinations. North Rhine Westphalia had received 100,000 vaccine doses less than originally planned, the state said.
Germany’s health minister Jens Spahn said that “we are currently in a phase in which the worldwide demand for corona vaccines is very high.”
Member states agreed on Thursday that vaccine deliveries should be coordinated and distributed at the same time after the bloc’s most recent Steering Committee meeting, where vaccinations are discussed.
“We are determined to provide more predictability and stability to the delivery process, and we look forward to more vaccines and more doses coming on stream soon,” Commission President Ursula Von der Leyen said on Thursday.
She also called for more testing and increases in sequencing amid the more transmissible mutations of the virus.
It comes as the bloc urged member states to speed up vaccinations, setting an ambitious goal to vaccinate 70% of the EU population by summer 2021. By March, the EU commission says they hope that 80% of vulnerable individuals and healthcare workers can be vaccinated.
In order to speed things along, countries have in some cases delayed second doses as much as possible and begun pulling sixth doses from a vaccine dial instead of five, in accordance with the EU regulator’s recommendation.
Some EU member states secure vaccines outside of bloc
However, some EU states appeared to also go rogue recently in terms of vaccine procurement, a move EU officials said was unnecessary as the bloc had secured enough vaccines for the entire EU population.
Hungary’s foreign minister said the country had procured two million doses of the Russian coronavirus vaccine.
They are the only EU country to approve the vaccine, Sputnik V, which has not been approved by the European Medicines Agency.
Foreign minister Peter Szijjarto said the vaccines will arrive in three stages, with the first doses delivered within a month.
A Commission spokesperson told Euronews prior to Hungary’s announcement that “member states may have a separate negotiation if it’s about a vaccine that’s not covered by the portfolio if it’s with a company that we are not having negotiations with.”
Germany’s government, meanwhile, said in a statement to Euronews that it had bilateral negotiations with some pharmaceutical companies that would not impact the EU vaccine agreement.
It remains unclear, however, if vaccine doses secured bilaterally by the country would arrive before or after doses as part of EU contracts and whether those negotiations were outside the joint member state negotiations.
Economists revise eurozone growth for 2021 downwards amid second COVID wave
Positive growth forecasts for the eurozone economy have been cut by economists as the ongoing coronavirus pandemic look set to slow down its post-COVID-19 recovery, according to a European Central Bank (ECB) survey.
Economists polled in the ECB’s annual Survey of Professional Forecasters (SPF) published on Friday predicted real GDP growth would fall to 4.4 per cent this year amid further lockdowns and pandemic-related restrictions, down from 5.3 per cent in the previous quarter’s predictions.
Speaking to journalists on Thursday, the president of the ECB Christine Lagarde said the pandemic posed “downside risks” to the prospects for a rapid return to growth in the eurozone.
“The intensification of the pandemic poses risks to short-term economic prospects,” said Lagarde after the institution’s governing council left its monetary support programme for the coronavirus-hit economy unaltered.
Forecasts for 2020 fared better than previously predicted, rising to 3.7 per cent compared to forecasts of 2.6 per cent in the last survey published in October.
The long-term forecast showed the eurozone economy expanding by just 1.4 per cent in 2025.
Mentioning “serious risks” and “risks of deterioration” for the eurozone economy, the ECB chief nevertheless considered the latest forecasts by the Frankfurt institution to remain “largely valid”.
“The start of vaccination campaigns in the euro area is an important step in the resolution of the current health crisis. But the pandemic continues to pose serious risks to public health and to the economies of the eurozone and the world,” she said.
Lagarde had previously warned in an interview with the French newspaper Le Monde in October last year that Europe’s economic recovery risked “running out of steam” as a second wave of coronavirus gripped the continent.
“The second wave of the epidemic in Europe, particularly in France, and the new restrictive measures that accompany it add to uncertainty and weigh on the recovery,” she said.
Of particular concern, she said, was job losses due to the pandemic. The EU unemployment rate in October hovered around 7.6 per cent, one per cent higher than at the same time the previous year.
Australia2 years ago
Button and Diane Powellpark the school bus after three decades
Australia2 years ago
Button and Diane Powellpark the school bus after three decades
Tech10 months ago
Search engine startup asks users to be the customer, not the product
Europe4 months ago
Covid: Flights shut down as EU discusses UK virus threat
Health4 months ago
Spain ‘to register’ those who refuse to have Covid-19 vaccine
Europe3 months ago
Post-Brexit trade: Is red tape chaos just ‘teething trouble’ as the UK government argues?
Australia3 months ago
Covid: Brisbane to enter three-day lockdown over single infection
Arts3 years ago
How a chain-link mosque at the Vancouver Biennale became a community hub