February 25, 2021

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Pars Express – Customs Agreement with Great Britain – Will it be quiet before the next storm? (Wolfgang Coupler)

The Free Trade Agreement between the British and the European Union has grown to about 2000 pages. So there are no customs duties, but EU standards are taken into account. In return, other obstacles will make trading more difficult in the future. Have to handle a lot of paperwork in the daily exchange of goods. According to initial estimates, the UK needs 50,000 customs officers for this – of course they are not currently available. The cost of the additional bureaucracy is estimated at $ 13 billion. These are all coming at an inopportune time: Great Britain is in the worst economic crisis since World War II. GDP fell by almost ten per cent last year, which may have been due to poor management at the beginning of the corona crisis. Since the 2016 Brexit referendum, the United Kingdom has risen from fifth to seventh among Germany’s most important trading partners, ahead of Poland.

Let’s celebrate Johnson.

Nevertheless, Democrat Prime Minister Boris Johnson celebrates the deal as a milestone. But it is a difficult Brexit. The UK will no longer be in the single market and customs union. The particularly painful thing is slowly becoming clear to the people on the island: the independence movement of EU citizens is coming to an end. Even star musician Elton John has now pointed to the state of the music industry, which is a barrier to international concerts due to Brexit and the upcoming visa requirement.

Important re-negotiations are yet to follow.

The biggest monetary issue in the deal, which has been negotiated for years, appears to be more rapid, which is soon to be realized in the UK economy. The traditionally strong service economy accounts for 80 per cent of the UK’s GDP – but the deal still lacks features. For example, British financial institutions are losing automatic access to the EU market. Negotiations are scheduled to take place here by the end of March, which will include new explosives.

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In the exchange of goods between countries, the European C.E. on British products. Eliminating the marking requirement and considering the new UKCA marking requirement can lead to difficulties. This will create confusion and disruptions in supply chains across Europe. Manufacturing facilities in the UK require parts from the European landscape.

The next issue is in Scotland.

The greatest enemies of Brexit are known as the Scots. Their referendum on leaving the state in 2014 was won by supporters of the stay. Scots’ reasonable criticism would initially focus on Northern Ireland being in the domestic market, but Scotland turned down the offer. The Scottish National Party is already aiming for another referendum. Prime Minister Johnson will never give his approval – so other concessions will have to be made.

Capital markets have been shut down and are currently focusing more on controlling the corona epidemic – but that will change once the crisis subsides. We need to see how the markets will react. Despite the fact that UK stocks measured by FTSE 100 have not made money in the last 20 years, there is still no reason to celebrate.

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