The reality of Brexit
The EU trade deal is finally done, and Britain is now post-Brexit. What will that mean? Here's everything you need to know:
Why did Brexit occur?
Resentment of European Union bureaucracy, tensions over immigration, and a yearning for British independence. When British voters went to the polls in 2016 to decide whether to remain in the EU or split from it, the Vote Leave campaign led by Boris Johnson made big promises. Johnson, who is now prime minister, led rallies around the country in a red bus emblazoned with the slogan "We send the EU 350 million pounds a week, let's fund our NHS instead." This was a claim that the U.K. transferred $455 million to the EU every week and that all that money would be saved under Brexit and diverted to the struggling National Health Service. Vote Leave told voters that the U.K. would keep its tariff-free trade with the EU. The U.K. would no longer be subject to EU law and could "take back control" of immigration. Wages would be higher. Most important, the U.K. could sign new trade deals with other countries on its own terms. Brexit, in other words, would bring great benefits with minimal costs.
How much of that came true?
Only some. Instead of a "soft Brexit," which would have kept the U.K. in the EU's customs union and closely tied to Brussels, Johnson delivered a "hard Brexit" that is more of a divorce. The 1,200-page trade deal clinched just before the end of last year does provide for tariff-free trade in goods. But that comes with a big catch: Companies that import and export goods face a raft of new paperwork, including customs declarations and border checks, that will cost them millions of pounds a year. The deal, meanwhile, does not cover the services sector, which makes up 80 percent of Britain's economy and includes financial companies, tech and data companies, entertainment, tourism, and health care. What access that sector will have to the EU market won't be known until a separate agreement is made later this year. As for the financial savings, the true net amount that the U.K. paid to the EU was $208 million a week, less than half of what was claimed, and little of that money is going to the NHS, which remains strapped for cash. While the border between EU member Ireland and Northern Ireland will remain open, there will be customs checks.
Is the U.K. free of EU dictates?
To a degree. The U.K. is free to make its own laws as long as they don't undercut the trade deal with the EU. But that deal contains a key clause that says the U.K. gets tariff-free access only as long as both sides have a "level playing field." The EU wanted to make sure that the U.K. didn't gut its labor or environmental protections in order to be able to undersell EU farmers or manufacturers. Any disputes that arise between the two entities will be settled not by the European Court of Justice — which was seen by the Leave camp as a monstrous infringement on British sovereignty — but by an independent arbitration panel. The panel's oversight will still constrain the U.K.'s decisions.
What about the economy?
The U.K. Office for Budget Responsibility predicts that Brexit will cost Britain about 4 percentage points of its gross domestic product over the next 15 years. Unemployment, inflation, and public borrowing will all likely rise, and many of the immigrant workers who have long staffed the NHS and provided low-paid labor to business now feel like unwanted foreigners and may go home or find work elsewhere in Europe. "Britain has punched itself in the face," says Stanford economist Nicholas Bloom. "It imports goods and exports services, and it's lost the freedom of services." Johnson counters that the U.K. will strike new, more lucrative bilateral trade deals with non-EU countries, such as Canada and the U.S.
What have Britons lost?
The "freedom of movement" that enabled them to travel to, live, and work without paperwork in the rest of Europe. The 250,000 Britons who retired to sunny Spain or other EU countries must now apply for residency, while business travelers may need visas. In foreign policy, the U.K. has lost the clout that comes from being part of the third-largest economy in the world, after China and the U.S., and now stands alone as a relatively small nation of 66 million people.
What have they gained?
Sovereignty. The U.K. now has total say over whom it lets in as an immigrant, and it no longer has to bow to laws enacted in Brussels. "British laws will be made solely by the British Parliament," said Johnson, and will be "interpreted by British judges, sitting in the U.K. courts." Further gains, Johnson says, lie in the future. The newfound ability to "set our own standards, to innovate in the way that we want," he said, will allow the U.K. to become a world leader in the industries of the future, such as biosciences and artificial intelligence. European allies, though, still view the departure as a mistake. "Brexit," said French President Emmanuel Macron, "was the child of European malaise and lots of lies and false promises."
Scotland eyeing independence
Brexit could cause Northern Ireland and Scotland to split from London. In a February 2020 poll, 48 percent of Northern Irish said they'd support reunification with Ireland if it meant regaining EU membership, while 45 percent opposed it. The Scots are even more restless. In 2016, Scotland voted strongly to remain in the EU — 62 percent Remain to 38 percent Leave — and Brexit has only served to bolster support for Scottish independence. In a 2014 referendum, 55 percent of Scots opted to stay in the U.K., but now polls show an even larger minority want to go it alone and rejoin the EU. Given that the vast majority of Scottish trade is with the rest of Britain, not with the EU, such a leap might be more costly than many Scots imagine. Still, after Brexit was complete, the country's pro-independence First Minister Nicola Sturgeon tweeted, "Scotland will be back soon, Europe. Keep the light on."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.