Brexit pains: Boris Johnson seals the United Kingdom's exit from the European Union

The British parliament votes by a large majority to clear Prime Minister Boris Johnson’s exit deal with European Union negotiators, but there is resentment in Scotland and Northern Ireland.

British Prime Minister Boris Johnson after signing the Trade and Cooperation Agreement between the United Kingdom and the European Union on December 30, 2020, at 10 Downing Street, London.

Four years after the historic “Brexit” referendum, the United Kingdom has finally managed a “soft exit” from the European Union. In June 2016, the U.K. voted by a thin margin to leave the E.U., and the issue left the country deeply polarised. Stanley Johnson, father of British Prime Minister Boris Johnson, has applied for a French passport, saying that he wants to remain a citizen of Europe. Prime Minister Johnson managed to cobble up a deal for a relatively smooth exit, virtually at the eleventh hour. As reported, there was a lot of “give and take” before the exit deal was signed on Christmas Eve.

The U.K., for instance, had to make concessions on fishing rights, which had become an emotive issue among a section of the population. Already, an organisation representing British trawler fleets has protested over the compromises. Before the final agreement was signed, at a time when the possibility of a “no deal” Brexit was being seriously contemplated, the British government said that naval ships were to be kept on standby to prevent the French from fishing in British waters.

The agreement was reached just a week before the December 31 deadline after more than 11 months of gruelling negotiations. The U.K. has now entered a transitional one-year phase. If the U.K. left without a deal, it would have had to negotiate with the E.U. on World Trade Organisation (WTO) terms with complex tariff clauses kicking in. The final deal is a free trade agreement that recognises Britain’s objective of leaving the single-market E.U. and a common customs union. The U.K. has been granted more trading rights within the E.U. than any other country. Importantly, the deal treats Northern Ireland, which is part of the U.K., as part of the E.U. Customs Union. A hard border once again dividing the Republic of Ireland and the North was unacceptable to the Irish people on both sides.

Johnson, given the intense pressure from within his own party and the opposition, had to settle for an amicably agreed deal with Brussels. The defeat of Donald Trump, Johnson’s ideological soulmate, in the United States presidential election in November put further pressure on the British government. Trump was the biggest backer of Brexit and had promised a very favourable trade deal for the U.K. after it exited the E.U. The Democrats, on the other hand, had wanted the U.K. to stay in the E.U. Former President Barack Obama had even called for a vote against Brexit. The President-elect, Joe Biden, shares similar views and is unlikely to extend any special favours to Johnson on the political or economic fronts anytime soon. When Johnson was the Mayor of London, he had made a racist remark against Obama and mocked Hillary Clinton when she was running for the presidency. Trump, with his “America First” policy, on the other hand, was hostile to the E.U.

The E.U. leadership under Ursula von der Leyen was also under pressure from the German and French governments to accommodate some of the British demands in order to avoid a messy, “no deal”, hard Brexit. German Chancellor Angela Merkel had hand-picked Ursula von der Leyen for the top E.U. job. She is also said to have the trust of French President Emmanuel Macron. Germany and France are the two most influential members of the E.U., and that was true even when the U.K. was part of the grouping. The European Commission President has emerged from the Brexit deal with an enhanced stature. The E.U.’s $913 billion pandemic rescue package for member states has come in for widespread praise and is being cited as an example of increased federalism within the grouping.

A large majority of the British parliament approved the “E.U.-U.K. Trade and Cooperation Agreement”. The opposition Labour party, while critical of many aspects of the deal, voted in favour as it preferred any deal to a hard exit, which Johnson was threatening to implement. Only the Scottish National Party (SNP) and the Liberal Democrats voted against. The deal was rushed through parliament with the members not being given the time to pore over the 1,246-page deal document and read the small print before debating the issue. Sections of the Conservative Party are already describing the deal as a “betrayal” and are alleging that the E.U.’s negotiating team in Brussels has outsmarted Johnson.

Many outstanding issues between the two sides, according to both European and British commentators, still remain unresolved. More talks, probably lasting years, will be needed to resolve all of them. There is a real possibility of rifts re-emerging between the two sides sooner than later. The exit document is silent on issues relating to foreign policy, security and defence. The U.K. has traditionally been the closest military and strategic ally of the U.S. Leading E.U. member states like Germany and France, while being part of the North Atlantic Treaty Organisation (NATO), the U.S.-led military alliance, have slowly been drifting away from Washington. This drift quickened during the Trump presidency.

Trump’s transactional politics has left an impact on the U.S.’ relations with the E.U. His insistence that E.U. members pay more for the privilege of being NATO members has riled Paris and Berlin. After the U.K. decided to leave, the E.U.’s determination to chart a more independent course in foreign affairs and defence matters has become more obvious. Macron and other European leaders have spoken out about the need for reinforcing “European sovereignty” and establishing “strategic autonomy”. Macron has also talked about a “sovereign” Europe operating “beside America and China”. In a speech delivered on New Year’s Eve, he said that the U.K. was still a friend and a neighbour even though the Brexit referendum was won on the basis of lies and false promises.

Amid a bitter trade war between the U.S. and China, the E.U. in December 2020 signed a new investment deal with China that will give European companies greater access to Chinese markets. Chinese companies will get reciprocal access to European markets. Both the Trump administration and Biden’s team have criticised the deal. China has overtaken the U.S. to become the E.U.’s biggest trading partner. Johnson, who was initially keen to attract Chinese investments after Brexit, chose to side with the U.S. after the Trump administration launched its new “cold war” against China in the middle of last year.

A European army?

The German and French leaderships have been expressing their keenness to establish a European army. The E.U. states agreed in December to set up a new defence research and development programme worth $10 billion to jointly develop military equipment and technology. The move came after the U.K. announced its biggest defence budget since the end of the Cold War. The U.K. is now the second largest defence spender in the western alliance after the U.S. Johnson, while announcing the hike, said the U.K. was “ending its era of retreat”.

The U.K. and the E.U. are yet to reach an agreement regarding access to each other’s financial services markets. The E.U. fears that the U.K. will now play by its own rules and try to gain the upper hand by abandoning European standards on workers’ rights, the environment and other regulations. Johnson’s stated ambition is to make London a “Singapore on the Thames” and retain its position as a global financial hub. The British economy is less than one-fifth the size of the E.U.’s, with the British service sector accounting for 80 per cent of the country’s economic activity. Though trading in goods will not be affected much after the formalisation of Brexit, the financial firms operating out of London will henceforth find it more difficult dealing with clients on the European continent.

Britain had run a surplus of $24 billion in 2019 on trade in financial services with the E.U. and a deficit of $129 billion in the trade in goods. Most economists believe that after the exit agreement, Britain will lose the advantages it currently has in the services trade, whereas the E.U. will retain its edge in the trading of goods. The non-tariff barriers on the import and export of goods will also impact adversely on the U.K. as there will be additional customs checks on both agricultural and manufactured goods. It is estimated that 20 million new customs declarations will have to be made every year. While announcing the deal, Johnson admitted that it did not offer as much access to British financial firms “as we would have liked”.

Unintended fallout

A serious unintended consequence of Brexit could be the disintegration of the U.K. The Scottish parliament has refused to give legislative consent to Johnson’s Brexit agreement. The Scots, who had overwhelmingly voted against Brexit, especially seem eager to move out of the British Union at the earliest. First Minister Nicola Sturgeon wants a new referendum on independence this year and has threatened to go to court if the Conservative government does not allow it. She has said Europe “should keep a light on” as Scotland will be “back soon” in the E.U. Indeed, ever since the U.K. decided to leave the E.U., Scotland’s ruling party has been demanding a second referendum on independence.

Scots voted narrowly against independence in a referendum in 2014. The British government had said then that the only way Scotland could stay in the E.U. was by voting against independence. Two years later, the British decided to exit the E.U., leaving the Scots high and dry.

Scottish nationalists are infuriated by the special concessions the British government has given Northern Ireland and Gibraltar—open borders between Northern Ireland and the Republic of Ireland and between Gibraltar (British overseas territory) and Spain. Scotland is demanding similar concessions. After the U.K. voted to leave the E.U., the Scottish government in December 2016 proposed to keep Scotland in the single market.

Brexit and Johnson’s handling of the pandemic crisis have strengthened the support for Scottish independence. Most opinion polls have shown that the majority of Scots are now in favour of independence. Elections to the Scottish parliament are to be held in May this year. The ruling SNP is expected to do very well. If it sweeps the election, a second referendum could be inevitable.

Northern Ireland, too, voted to stay in the E.U. in 2016. The people there also feel let down by the Brexit agreement. A recent opinion poll revealed that the majority in the North are in favour of unification with the South. Anyway, the demography of the North is changing with the Catholic population poised to become the majority in the near future. Irish Catholics are strongly in favour of one united Ireland. A clause in the Good Friday agreement signed a quarter of century ago, which brought an end to the violence in the North, allows for the holding of a referendum for a united Ireland. With the signing of the deal, Britain has entered uncharted waters.