New year, new Britain?

New year, new Britain?

 “We’ve left the European Union and markets are rapturous” – or at least as rapturous as they can be amid the “corona gloom”, said Philip Aldrick in The Times. And why not? Boris Johnson’s deal is “not merely better than no deal, but better than expected”. True, it is “thin” – “a free-trade agreement in goods with nothing on services”. 

But the PM got largely what he wanted on “regulatory sovereignty”. And there are other positives that might offset “Brexit’s bequest” of “£80bn of permanently lost GDP”. Getting shot of the EU’s “nonsensical” financial regulation is one; improved political accountability is another – the EU can no longer be a “fig leaf” for bad decisions. And if the Government can fulfil its pipe dream of joining the 11 Pacific Rim signatories of the Trans- Pacific Partnership, and succeed in luring in the US too, we will be part of the “largest trading bloc in the world”. That’s something even a Brexit sceptic might celebrate. 

Dream on, said The Economist. There are more holes in this deal than in a piece of Swiss cheese – which is apt when you consider that Britain’s relationship with the EU now closely resembles that of Switzerland, “which has spent years battling over details” – and continues to do so. Leaving the single market and customs union will certainly raise the cost of trading goods, “even if the rules are lightly enforced at first”. But the deal’s “biggest gap” is services, which comprise some 80% of Britain’s economy and nearly half its exports. Brexiters argue that since there is no true EU single market in services, that’s no great loss. “But being cut out will still hurt.” Professionals may find it harder to work in Europe, and new restrictions for EU citizens will hamper many UK firms. 

There are no clear rules as yet on the handling of data and, most seriously, financial services – the source of Britain’s “greatest comparative advantage”. These are not just loose ends. Like Switzerland, we face “more red tape and an eternity of negotiations” – as “the supplicant”. For many UK companies, the immediate challenge is surviving Covid. Having “already spent close to £300bn tackling the economic fallout”, Chancellor Rishi Sunak this week dished up a £4.6bn relief package for the retail and hospitality sectors, said Larry Elliott in The Guardian. Sadly, it won’t be enough to save many firms. There are reasons to be positive, said David Smith in The Sunday Times. We have “avoided the short-term chaos of no deal” and will eventually benefit from a rebounding global economy. Yet all those “absurdly hyperbolic” tabloid headlines about a post-Brexit “boom” were jarring. “Rarely, as we start a new year, has the gap between hope and reality been so wide.”