Just as fears of a no-deal Brexit were reaching their peak, news came from Brussels yesterday that a deal is finally reached.
Last Thursday Boris Johnson, the prime minister of the UK, had a semi-formal meeting with Leo Varadkar in the Thornton Manor. Although no one really expected this would lead to any kind of breakthrough, the results were rather surprising. When the two came out of the private meeting room with a smile, declaring that they see “a pathway to a deal”, the exchange rate of pound sterling gained more than 2% against the US dollar on that very day. One week later, the EU passed the new Brexit deal.
Yesterday was definitely a day to remember in both the UK and the EU’s history, but after the cheerful moment, we need to stop and think about what could happen next, and what the implications are.
Firstly, the deal is not final. It did pass a difficult hurdle – coming to an agreement with the EU. However, the hard journey through the British parliament has just begun. Boris Johnson has two days to seek allies before the unusual “Super Saturday” session in the House of Commons. Although Boris believes the deal is of the best interest for both parties and is quite confident about the results of the voting, analysts hold different opinions. Sporting Index, a lottery company who successfully predicted the results of previous Brexit votes, have sent out an email estimating the “Yes” vote would be 313 while Boris needs 320 to pass the deal in the British parliament.
In one scenario, the deal will be passed in the British Parliament this Saturday. This will mean no hard border between Ireland and Northern Ireland, and the rights of EU citizens in the UK will be protected (as will those of UK citizens living in the EU). The UK will leave the customs union as a whole, while Northern Ireland will still remain an “entry point”. For most of us life will remain the same, except we might notice that grocery shopping seems a bit more expensive. Establishing the UK to EU “entry point” on the island is set to make Ireland more of a focus area between the two, which will give rise to both opportunities and challenges. Dublin had already seen big names such as Travelers Insurance Company moving its European business to Ireland to avoid risks associated with Brexit. If the deal is passed and Brexit is official, more London-based international companies will start seeking new bases in the EU, and Ireland is no doubt one of the most appealing options.
If the deal is not passed by the House of Commons, the Benn Act will require the PM to seek an extension of the Brexit date from the EU. For businesses in the UK, this will amount to another period of uncertainty and continuous economic stagnation. For the past three years, uncertainty has caused numerous British companies and investors to suffer, and has seen the bankruptcy of long-standing companies such as Thomas Cook. The Benn Act may appear to be inconsequential for the EU from a political perspective – or even beneficial. However, given the significance of the UK in the global market, the ramifications of further uncertainty for businesses operating there may result in harm for industry in the EU.