Brexit deal has to 'take back control' says Penny Mordaunt
The EU and UK are still struggling to agree on a number of topics, but fishing and business competition rules remain the biggest dividers. The UK Government has said making a deal is “still possible” despite time being in “short supply”. The European Union has long held the belief Brexit will be a bigger problem for the 66million Brits leaving the Bloc than it will be for the EU’s 450million citizens waving goodbye to the UK.
This was further backed up by estimates from the International Monetary Fund which in the worst-case scenario; the EU would see 0.5 percent knocked off its long-term potential output while the UK would face losing up to three percent.
But the event of No Deal would leave the European Union in almost as much pain as it will Britain.
In addition, No Deal would prove to be a monumental test for the European Union in its ability to handle a crisis.
German Chancellor Angela Merkel and French President Emmanuel Macron will be left to manage the disintegration of Britain’s ties with the Union as two of the Bloc’s biggest trading partners.
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A no deal also means increased tariffs on £510billion worth of yearly goods flow, as well as potential delays from custom checks, when the transition period comes to an end in December.
The Republic of Ireland is particularly vulnerable as it will be exposed to new agricultural levies as an estimated 40 percent of its food exports come to the UK, its biggest trading partner.
A no deal Brexit could see Ireland lose six percent of its long term output.
Germany’s renowned automobile industry would also take a blow in the event a deal isn’t made.
The cost for Germany could be a staggering €8.2billion in annual exports, according to credit insurance firm Euler Hermes.
And France will be no exception to the pain felt in the event of no deal.
France, beyond fresh tariffs on wine and food exported to the UK, would face problems of its fishing fleets being denied access to British waters.
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While the trade at risk only amounts to about €650million (£590million), the livelihood of coastal towns and communities carry a lot of political weight – especially as President Macron has pledged to help them.
It would be deemed a huge political failure if jobs were lost as a result of a Brexit agreement they did not want.
The ripple effect of no deal would travel to the east of the continent, as far as Slovakia and Hungary.
Hungary and Slovakia’s exports to the UK account for 1.5 to three percent of the countries’ GDP (Gross Domestic Product).
None of these outcomes would help the UK to prosper in its new life post-Europe but will be a significant test for President Macron and Chancellor Merkel’s ability to unlock economic support in an effort to strengthen the Union.
Ireland is already in line to receive reallocated natural-disaster relief funds from the EU to help with Brexit, but the aid is microscopic in relation to the size of the problem.
Beyond money and trade, however, the EU will have to take logistical and political decisions to protect its single market from a Britain which will likely want to pull out all the stops and compete with its next-door neighbour.
More importantly, the problem of Northern Ireland still stands, with deregulation in Britain opening a back door into the single market via Northern Ireland if Prime Minister Boris Johnson decides not to check the flow of goods across the Irish Sea as previously agreed.
The EU would be forced to find a way of checking goods somehow while avoiding returning to a hard land border in Ireland.
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