Britain in 2021: The Post-Brexit Economy

On December 31st, at 11:00 PM GMT, the United Kingdom’s transition period came to an end. With it, so did Britain’s continued access to the EU single market and abidance to the bloc’s rules. As the adage goes, when one door closes, another one opens. To the gleefulness of Conservatives, the country now finds itself in a position to forge its new path unshackled by the constraints of the EU. However, this freedom cuts both ways; in the short-term, and especially 2021, Britain will have to contend with one economic downturn after another; the results of decades of gradual integration with the mainland. The full extent of the damage remains to be seen, but we can already make some educated predictions based on what we know.

And what we do know is that lorries from Calais are facing notable slowdowns. Border guards have blamed incorrect paperwork; unsurprising considering we are only a couple of weeks removed from Brexit is unsurprising. It is worth remembering however that we still find ourselves close to the holiday period; the lorry influx will inevitably ramp up over the coming weeks. This will inevitably create pile ups at the frontier, especially if the paperwork issue is not rectified soon, which will contribute to delays and general detriment for British businesses that rely on these imports. Similar issues have arisen with transports from Ireland, with truckers travelling to Belfast citing confusion regarding customs declarations. In order to alleviate this issue, Westminster should get in contact with relevant exporters and courier services to reassert the new trade regime. The EU will remain Britain’s largest trading partner for at least few more years, so addressing these concerns is of crucial importance to Britain’s economy.

How long the isles will continue to rely on the mainland will largely depend on their ability to negotiate profitable trade deals with new partners in the coming decade. The UK made its first proper step into the post-Brexit unknown on October 22nd, when it secured a free trade deal with Japan. New market opportunities are obviously welcome, but when one looks at the finer details, it is clear the arrangement is significantly less grand than what Westminster might have hoped for. Indeed, save for a little tinkering of trade rules, the FTA very much mirrors the EU-Japan deal. This is a problem because the UK’s trade with the island nation was largely insignificant before the new arrangement was signed; If the intention was to squeeze all the juice the East had to offer, Westminster should have put in a little more effort into the negotiations. Thus, if Britain wishes to make Brexit worthwhile in the long run, it will have to not only court stronger actors but do so more effectively.

The United States is obviously the preferred target in this regard. Despite the country’s relative economic stagnation in recent times, it is still undoubtedly the leading economic world power, one Britain already greatly relies on for commerce. Whilst a free trade deal was all but guaranteed under the Trump administration however, Westminster will have to tread more carefully when dealing with Mr. Biden. Mr. Johnson might have averted disaster by salvaging a last-minute accord with the EU, but the President-elect still clearly regards Brexit rather coldly. A deal will come, but Britain cannot shy away from its commitments to the bloc, especially on the question of Northern Ireland, something Mr. Biden clearly holds close to heart. No matter the case, the UK is unlikely to receive the preferential treatment President Trump would likely have reserved for it, which calls for a contingency plan.

The UK is likely to find more success in its ongoing negotiations with Australia and New Zealand. For one, the countries share notable historical and cultural ties that are likely to make for a chummy relationship. On top of that, Britain’s timing is fortuitous, as the recent falling out between Oceania and China has created a political and trade vacuum that Westminster would be more than happy to fill. Whilst these nations by themselves are unlikely to yield substantial gain, they do allow the UK to have a foot inthe  door to begin negotiating accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This is crucial, as it would grant Britain access to not only developed North American economies, but also numerous emerging markets in South-East Asia.

Ultimately, it is clear 2021 will, and in fact already has been rough for Britain and its foreign commerce. Delays at the border and underwhelming trade deals have already reared their ugly head, and have done little to stimulate its stagnating economy. Things might get rosier yet by year’s end, especially if the country can obtain agreements with both the US and former commonwealth nations, the latter of whom will likely help the UK penetrate Pacific markets. With that in mind, Britain will have to tread carefully over what will undoubtedly be one of its most difficult years in decades.

Featured photo by Richard Hoare. Available on geography under Creative Commons Attribution 2.0 Generic license

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