Analysis: Far from being free of the EU, Johnson now faces the economic reality of his political demands
In the words of one official in Brussels involved in the Brexit negotiations, the last year “accelerated the grieving process” over the UK’s departure from the EU.
This is not to say the bloc’s institutions will be celebrating the country’s passing from the single market and customs union, 48 years to the day after its accession to the then European Communities on 1 January 1973. It remains a devastating loss to the EU, from which the full repercussions are yet to be seen even four and a half years after the referendum.
The success or otherwise of the British experiment will play into European domestic debates for many years to come, not least the French presidential election in 2022. Yet, among even the most anglophile of officials and diplomats, of which there remain many in the EU quarter of Belgium’s capital, there is not only acceptance of the country’s exit but some unashamed relief.
There was initial resistance from some capitals to the concept of joint borrowing on the financial markets as part of an effort to build up the EU’s €750bn Covid economic recovery fund, more than half of which will be distributed as grants rather than loans.
The Netherlands, Sweden, Austria and Denmark – called “the frugals” – were forced to show their true colours after decades of hiding behind British awkwardness about such great leaps towards convergence.
The link made between payments from Brussels and adherence to the rule of law among the member states – particularly relevant to Poland and Hungary – would have further posed a problem in Whitehall, where encroachment into domestic affairs has long been anathema.
It is questionable whether, in the face of inevitable British scepticism, the concept of the recovery fund would have been allowed to fly at all. The final deal was hard-fought and messy, but how much more tortured would it have been with British involvement?
Brexit, then, has been made tolerable by events. Now that it is done, there is nothing sentimental about Brussels’ approach to the future.
If it was a coincidence then it was a happy one that at the same meeting at which EU ambassadors gave the green light to the post-Brexit trade and security deal this week, they also signalled approval of an investment pact with China.
While it has its critics, the deal eases barriers to EU companies hoping to invest in China by lifting joint-venture requirements as well as caps on foreign equity in the automotive industry, private healthcare, ancillary services for air transport and cloud computing. China has also committed to “continued and sustained efforts” to ratify International Labour Organization conventions against the use of forced labour.
The French government has framed the development as the EU correcting an imbalance in the openness of the two economies, a flexing of muscle not possible for any one member state or medium-sized island nation alone. While Boris Johnson has talked of a “global Britain”, Ursula von der Leyen has been putting into action her pledge to lead a “geopolitical European commission”.
None of this is to traduce the Brexiter vision of a nimble Britain, able to negotiate trade deals around the world that better play to the country’s strengths in services, and financial ones in particular. But it is yet to be seen in practice – and officials in Brussels question both whether Whitehall has the bandwidth for what is to come and the sincerity of Johnson’s claim that his deal finally settles the European question in his party and the wider country. There are far too many pointers to the opposite being true.
Just look at the impending flashpoints and the potential for European obsessions to be stirred. Great Britain now has the ability to diverge from EU environmental, social and labour regulatory standards in the future – but in doing so it opens itself up to tariffs on exports into its biggest market. The UK may close its waters to European fishing fleets in five and a half years, but again the trade deal foresees consequences in terms of a closure of the European market to British exporters. Politically inspired demands will again rub up against their economic consequences.
The deal foresees a possible renegotiation of all its terms in four years’ time if regulatory divergence and tariffs create an imbalance. That would follow a likely general election in 2024. Johnson has already claimed Sir Keir Starmer would rip up the deal to put the UK under the yoke of Brussels as a Labour prime minister. Keep Brexit done, is the mantra. The campaign lines can already be seen.
Meanwhile, under the withdrawal agreement, Northern Ireland’s assembly will vote in four years on whether the region should stay in the EU’s single market. It is a debate that will be easily framed as a choice between the EU and Britain. The Irish government has already said it will fund participation of the Erasmus+ student exchange programme for Northern Irish students after the British government opted not to pay for continued membership.
Perhaps most significantly of all, the question of EU membership will be central to the next great political debate in the UK: Scottish independence. As the first minister, Nicola Sturgeon, never tires of saying, no part of Scotland backed Brexit. But Johnson’s deal – outside the single market and the customs union – means as a matter of EU law that an independent Scotland, newly acceded to the EU, would need to erect a full-fat customs border with England.
Johnson has his trade deal, and there should be cause for relief in that. But rather than take the question of the UK’s relationship with Europe out of British political debate, the terms of the deal plonk it right at the centre in a way unthinkable even a decade ago. And there isn’t any obvious way back.
