June 24, 2021

The invoice of a Brexit to the bravas | Economy

The invoice of a Brexit to the bravas | Economy

If common sense does not prevent it, the UK can leave the European Union (EU) without agreement on March 29. Many believe it is unlikely, but the same was said months ago and remains a possibility due to the tribal division that dominates British politics since the Brexit referendum in June 2016.

If that happens, from one day to the next the British economy will no longer be part of the single marketor and the European customs union and will be governed by the rules of the World Trade Organization (WTO). Exports must pay tariffs and be subject to border controls; many fresh products will face sanitary controls to enter the EU; the assembly lines of car manufacturers can be paralyzed in a matter of days due to the lack of components; Continental citizens will lose the right to move and work freely in the United Kingdom and vice versa; British financial companies will lose the passport that now allows them to act in all EU countries if they are recognized in one; the airplanes will not be able to fly between the United Kingdom and the EU and other 17 countries with agreements with her; the professionals will be in a legal limbo, without knowing if their titles continue to be valid; there is a fear of food and medicine shortages; the abhorrent physical border between Northern Ireland and the Republic of Ireland will be established … And, well, a thousand more cases.

Some of these things will never happen. For example, it is unthinkable that air traffic will be paralyzed. But others will happen with absolute certainty. Like the chaos in road transport. One of the key points of this transport, thermometer of Brexit by the brave, it's Dover. 17% of the goods arriving in the United Kingdom enter this border point. It may not seem like much, but that 17% is of strategic importance because dover ships do not arrive with containers, but the so-called roll off-roll on, boats full of wheeled vehicles (ie, trucks) that transport, for example, medicines or perishable materials, such as fruits and vegetables that come daily from Spain or the Netherlands. Or the components that make the constant round trip to nourish the automobile assembly lines, a sector of uncertain future due to Brexit.

99% of the 10,000 trucks that travel between Dover and Calais every day have their origin and / or destination in the EU and take two minutes to overcome the current border identity checks. According to the British Freight Transport Association, the port of Dover has calculated that two additional minutes of controls per vehicle (for goods) would generate 17-kilometer queues at the border.

Key dates

February 27 The House of Commons votes for the second time the final agreement on the Brexit, which was rejected on January 15 by 432 votes against 202. On that day the Parliament can arrogate the prohibition of a Brexit without agreement.

March 21 and 22 The European Council meets. Last opportunity for Theresa May to start concessions on the agreement. You may actually end up getting a deferment of Brexit for 3, 9 or 12 months.

March 25th. Day in which May wants the Commons to vote for the final time on the final agreement, on the eve of the theoretical date of the Brexit, with the threat of or approving the agreement or the UK will leave the EU without him on March 25.

March 29, 2019 It is possible that the Commons have been granted powers before to avoid the last option, although the British minister for Brexit, Stephen Barclay, said on Thursday that the United Kingdom will leave the EU this day with or without agreement.

The Brexit without agreement also generates human problems, such as the small tragedy of the British students, who will no longer be able to enjoy the intellectual and sensory delights of the Erasmu programs, how much it has helped young Europeans to get to know each other more closely. Or the dilemma faced by Spanish nurses working in the British public health system (more than 3,000, the largest community group after Ireland), for whom that job will no longer be counted as professional experience when they return to Spain. That is why hundreds have already announced to the National Health Service (NHS) that they are coming back. A huge problem for British hospitals, which now have 40,000 unfilled places. The setback has a remedy: a bilateral agreement between United Kingdom and Spain. An aspiration that is a constant: to equalize by negotiation what the United Kingdom will lose by leaving the EU.

The highest price

Paradoxes of life, British farmers are among the most arduous advocates of Brexit but they are one of the groups that will pay a higher price if the UK leaves without an agreement. The sector, which generates more than 110,000 million pounds a year (more than 125,500 million euros) and employs one in eight workers in the country, faces four types of problems: a de facto blockade of exports that can last between six and nine months, until the sanitary control mechanisms of the products are put in place; an increase in expenses due to the high rates that the agricultural sector suffers when it works with the rules of the World Trade Organization; a delay in the collection of direct aids that they now receive through the reviled EU Common Agricultural Policy (CAP), and a more than sure increase in labor costs when migrants from the continent are prohibited from entering the market of British work.

Fishing, in British hands

Leaving without an agreement would make the United Kingdom overnight master of its very rich fishing grounds, which it now shares with the EU. Something that worries many countries, with Spain and France at the head. It is estimated that 18,000 fishermen and 3,500 boats can be affected by the Brexit. If there is no agreement, more than 6,000 continental workers who now depend on the British fishing sector could go on strike.

The Spanish fleet in British waters (of Galician majority) exceeds 140 ships: 97 (70 with Spanish flag and 27 Spanish property but British flag) in the fishing grounds of Gran Sol (North Atlantic) and, the rest, in the Falkland Islands (South Atlantic), where operate 25 ships with Spanish flag and 19 with English flag.

The problem for the UK is that this recovered sovereignty may be more theoretical than real because it needs to reach agreements after the Brexit almost as much as the EU fleet. First, because its own fleet also operates in European waters: according to data from the European Fisheries Alliance, in 2015 the EU 27 fleet operating in the North Atlantic made a third of its catches in British waters, while the British achieved the 20% of theirs in community waters of the northeast Atlantic. And, second, because almost 70% of British fishing exports go to EU markets and, without a pact, it will be more difficult and much more expensive to access those markets.

All of the above can be overcome by adding other inconveniences, such as the possibility that a tariff disarmament (which now exists only with the Community producers) has to be extended for legal reasons to the products of third countries, or that any commercial agreements with States Together, they end up signing at the expense of allowing the entry of products that are now prohibited, such as chlorinated chickens or hormone veal.

Brexit a las bravas can plummet both food exports and imports, causing the ruin of many farmers and a shortage that will result in price rises that consumers will pay.

The meat industry has all the numbers to be among the most affected, because to export you must first obtain a certificate issued by the British Ministry of Agriculture which, in turn, must then be approved by the health authorities of Brussels. The logistical problems are also important: there are no inspection facilities at the Dover / Calais border, because now there is no need.

On paper, air traffic is another of the most affected sectors in the event that the United Kingdom leaves the European Union without any agreement. "It is theoretically possible that in a scenario of no agreement there will be no air traffic between the United Kingdom and the EU since March 29, 2019," admitted the former Chancellor of the British Exchequer, Philip Hammond. However, although possible, it is very unlikely that this will be reached. And that, for three reasons.

Unlikely air stop

One, the great weight of the British aeronautical industry (it is the largest market in the EU and the third in the world, second only to the United States and China). Another, that the paralysis would be chaotic for both parties. And, third, because, if there is political will, it is relatively easy to find legal formulas for the current agreements that guarantee air navigation to continue in force. That is impossible, for example, in merchandise traffic.

London has already announced that it would give European airlines permission to continue operating as before and expects reciprocity and the other countries also authorize the continued operation of British companies in their territories. And it has already begun to negotiate bilateral agreements with the 17 countries to which it flies through the community agreements. The first case was that of the United States, with whom it reached a bilateral agreement on November 28.

The City depends on the pragmatism of Brussels

If there is an economic sector in which the British Government is working hard to avoid its collapse if there is no agreement on the terms of the United Kingdom's exit from the European Union, that is the financial one. And with good reason: finance employs more than one million people and in 2017 they generated 6.5% of the national wealth. The British Treasury entered 27,300 million pounds in taxes on banking in the fiscal year 2016-2017, and the City of London Corporation estimates that the financial sector as a whole (including insurers) generates tax revenues of more than 70,000 million pounds, 11% of the national total.

London plays here with a very important advantage. Just as British manufacturing companies depend much more on Europe than on the contrary, in the financial sector it does not happen. The British peso is so large that the continental companies that now work with the City could suffer as much or more than the British firms if there is a Brexit without agreement.

That is why there is a widespread belief that the EU has as much interest in avoiding the collapse of the City of London as the British Government. In fact, at the end of last year Downing Street had to deny that a principle had already been reached in agreement with Brussels on the future framework of relations in the financial sector, an indication that the negotiating machinery is much more greasy when speaking of capital than in other economic activities.

That does not mean that the City does not take risks in case of slamming. In the current system, financial companies of the European Economic Area (EEA) enjoy a so-called passport by virtue of which all activity legalized in one country is automatically considered legal in all the others. That passport will be maintained at least until December 2020 if the UK leaves the EU with an agreement. By then it is assumed that a Free Trade Agreement between the parties had already been negotiated.

But if the United Kingdom leaves the EU without an agreement, the British financial sector will act abroad in accordance with the rules of the World Trade Organization (WTO). That is, he will lose his passport. And their financial entities must be legalized in each and every country where they want to work.

That could be chaotic. For this reason, the United Kingdom has already announced that it will authorize EEA firms to operate in its territory for a period of three years after Brexit and will also allow non-British companies to continue providing banking compensation services. (clearing) to British entities for three years. That is very important in itself, but 40% of exports of British financial services go to the EU and would be paralyzed if Brussels does not take reciprocal measures. The City is in the hands of Brussels pragmatism.


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