HOW COVID-19 IMPACTS ON THE UK AFTER BREXIT

On January 31, 2020, just 10 months after its previously expected withdrawal, the United Kingdom entered the European Union. For a big geopolitical change, that is pretty fast. The aftershocks may be at least as significant as the main case, as with any tectonic change.

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And today, the U.K. It must determine when and how the implementation phase, officially due to expire at the end of 2020, can be extended. It was already ambitious to sign a whole international trade agreement in less than a year; COVID-19 introduces another reason for delay on top of what was already a difficult political mission.

It was important for policy makers to give their full attention to battling the virus. However, the U.K. It continues to insist that in June, the new deadline for establishing those steps would not be requested or approved by an extension. As a result, after the somewhat rare moments of the pandemic, European politics is back to its normal brinkmanship.

The EU would have to distinguish its financial markets from its long-standing reliance on London, which in turn means a renewed emphasis on how much convergence of the capital markets can be anticipated or sought.

Finally, COVID-19 economic disruptions and the resulting geographical instability would throw a pall on it all. Many scientists predict that even after the current lockdowns are lifted, there will be potential outbreaks, and they may be fundamentally destructive to the degree that they coincide with the end of the Brexit transition era. For now, supply chains have been robust, but the implementation of a new border or customs management mechanism could change that.

The Future Relationship

This places either a last-minute continuation of the Brexit mechanism on track, a fig leaf of a compromise that leaves much of the specifics to be sorted out later or a mix of the two.

In market and policy commentary, a two-year extension has been listed. This stand has been improved by the pandemic. The Scottish National Party's U.K., for example, The speaker of Parliament said the U.K. The economy could lose 2 million jobs and shrink by 35%, needing a move to counter the recession and to take advantage of stronger relations with the EU-27.

The European approach to diplomatic talks is to claim victory until there is consensus on the form of a potential agreement, not until it is eventually completed with the specifics of that agreement.

Extensions in Finance

In certain parts of financial markets, where operating stability was a priority, extensions were also pre-arranged.

In the U.K. For financial services companies, two forms of adjustment periods have been set in place by the time the new passporting regime comes to an end at the end of the key Brexit transition phase, officially forecast at the end of 2020.

Established arrangements will automatically be covered by the Financial Services Contracts Regime, which applies for a period of 15 years for liability contracts and five years for all other contracts, in the case of European companies intending to end their British company following Brexit.

For businesses wishing to continue doing business in the UK Following the absence of an EU passport, the U.K. A provisional approval system has now been created to apply at the completion of the overall transfer process. Before Brexit, the FCA invited businesses to inform them of their intentions to use this provisional approval window and said it would consider whether and how to reopen the notification window later.

EU Far From United

The EU-27 are facing a difficult recovery after the economic shutdown necessitated by the coronavirus.

Inside the area, the pandemic is exacerbating variations. Fiscally sound nations, such as Germany, have been able to flood their markets with assistance and growth money, while countries like Italy, who have already been financially taxed, are unable to pay for the required economic rehabilitation.

The EU-27 would need to find shared interests and work closely in order to reach a trade agreement with the UK. They are being pushed further apart by global pressures right now.

The recent improvement in COVID-19 cases would need to proceed for Brexit talks to advance, this is a trend that cannot be relied on. It would be important for both the UK and the EU-27 to offer priority to getting their own economies back on track. As demoralizing as it may be to further stretch the process, it is doubtful that rushing will bring the kind of result everyone needs.

#Europe #UK #Brexit #Covid19

References

https://voxeu.org/article/covid-19-and-brexit-contrasting-sectoral-impacts-uk

https://voxeu.org/article/covid-19-and-brexit-contrasting-sectoral-impacts-uk

https://www.mckinsey.com/business-functions/organization/our-insights/agile-resilience-in-the-uk-lessons-from-covid-19-for-the-next-normal

Van Anh Nguyen