British Prime Minister Kiel Starmer has announced a “groundbreaking deal” with the EU, which will establish itself in close cooperation with the BLOC.
Almost nine years after the UK voted to leave the European Union, the new agreement includes a new security and defense agreement, a new controversial fisheries agreement with fewer restrictions on UK food exporters and visitors.
The UK said resets with its biggest trading partners will reduce the deficit for farmers and make food cheaper. The transaction also improves energy security and adds about £9 billion ($12.1 billion) to the economy by 2040.
Priority sold the deal as a “win-win,” but the attack quickly emerged from the opposition Conservatives.
Nigel Farage, head of the UK Party of Rights Pro Brexit Reform, called the deal “suppression of the AB faction.”
What are the terms of the transaction?
As part of Monday’s defense and security agreement, the UK and the EU will tackle more closely in information sharing, maritime issues and cybersecurity.
What is important for the UK is committed to exploring ways that the UK can access the EU Procurement and Defence Fund.
British arms makers are now available to participate in the 150 billion euro ($16.9 billion) programme to Reirm Europe.
Meanwhile, both sides agree to work on a joint agrifood agreement to remove Brexit-era trade barriers, such as animal safety checks, documents and bans on certain products.
In 2023, UK food exports to the EU were worth £14 billion ($18.7 billion), accounting for 57% of the sector’s overseas sales. Monday’s agreement should raise that.
In exchange, the UK must accept European Court of Justice oversight in this area, following the EU Food Standards, a system known as “dynamic alignment.”
There have been talks about linking the UK and EU carbon markets (i.e., the tradeable prices of CO2 emissions) and joint electricity markets.
The deal paves the way for a return to the UK’s Erasmus Student Exchange Program and granting young people access to the EU through work and travel.
In a symbolic gesture to please tourists, Brits are allowed to use electronic gates at most EU airports, reducing cues in passport control.
Finally, the UK will grant access to EU fishermen for an additional 12 years to British waters, an 11-hour concession from the UK.
Does this correspond to Brexit backtracking?
Critics from the Conservative Party and Reform UK quickly condemned the deal as a betrayal of Brexit, claiming the trade deal was excessive.
The fisheries trade has caused a fierce disapproval, and opposition politicians have said it means handing over British fisheries to European fishermen for more than a decade.
Fisheries are an important issue in the UK, despite accounting for just 0.04% of GDP. And the Starmer’s deal appears to have rekindled the tensions that were last seen during Brexit negotiations.
“Providing 12-year access to British waters is three times longer than the government wanted,” conservative leader Kemi Badenok wrote in X.
Farage, a leader in reform, told Bloomberg that the priority job deal in fisheries “is the end of the industry.” The Scottish Federation of Fishermen called it a “horror show.”
Elsewhere, there have been complaints that the UK must submit to the jurisdiction of the European Court of Justice regarding agrifood policy.
On their part, the conservatives vowed to reverse all these changes if they returned to power.
Still, priorities stuck firmly to his election promise not to rejoin the single market in Europe (where goods and people can move freely) or the customs union (to eliminate tariffs on goods traded between EU countries).
How much did Brexit cost?
The UK’s decision to leave the EU will reduce trade flows by 15%, according to the Department of Finance’s Independent Forecaster, Budget Responsibility Office (OBR), which is the Treasury’s independent forecaster.
Additionally, OBR calculated for Brexit will reduce GDP by 4% over the long term. This amounts to costing the economy for £100 billion ($134 billion) a year.
First of all, Brexit had to do with setting up a significant trade barrier with Europe. In 2024, exports of UK goods to the EU were essentially 18% below the 2019 level.
The decision to leave the EU has caused business uncertainty. Business investments have softened due to lack of clarity about the UK’s future economic ties with the EU.
The National Institute for Economic and Social Research estimates that business investments in 2023 were 13% lower than the remaining scenarios.
Brexiteers has promised that by leaving the EU, Westminster will sign a global free trade agreement and break away from the strict EU regulatory regime.
“The argument was that doing business domestically and internationally would be simplified,” says Gaurav Ganguly, EMEA Head of Economic Research at Moody’s Analytics.
“And while the UK has signed several trade deals since 2020, Brexit has not unlocked the possibility that it was spoken. [by its advocates]. ”
In recent weeks, the UK has signed a trade agreement with India and the US. However, the UK’s average GDP growth rate was only 0.64% between 2020 and 2024.
Elsewhere, public support for Brexit has declined since 52-48% resigned from the vote in the 2016 referendum.
Earlier this year, a vote by Yougov discovered that only 30% of Britons think the UK is right to vote to leave the EU.
About 60% of people think Brexit has become terrible, including a third of voters. The majority also believes that leaving the EU has undermined the UK’s economy.
Are there any economic benefits from the new contract?
Since last year’s election, the Labour government has committed to improving the growth of anemia levels in the UK. We believe that lowering trade barriers with the EU are important to that goal.
Recognizing the damage caused by Brexit to UK trade, prioritized said that trades that remove food restrictions will give the UK economy a boost of £9 billion ($12 billion) by 2040.
In a government briefing, Downing Street said it would correct the 21% drop in exports and 7% drop in imports seen since Brexit.
That said, £9 billion ($12 billion) is just 0.2% of the UK’s national production. So this week’s contract agreement dismantled only a small portion of the trade barriers established after Brexit.
“Yesterday’s trading could unravel growth,” Ganguly told Al Jazeera. “However, the UK economy continues to struggle due to structural weaknesses, such as low productivity and limited financial space.”
The European Reform Centre, a London-based think tank, recently calculated that the UK and EU reset would increase UK GDP by 0.3% to 0.7%.
Ganguly said “there is no tendency to change my forecasts in the short term,” adding, “and it’s clear that yesterday’s agreement won’t completely reverse the economic hit from Brexit.”
The result is Ganguly In 2029, we expect GDP growth of around 1-2% between the present and the next election cycle to be modest.
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