For Boris Johnson’s successor, Brexit is anything but done


(Bloomberg) — This is the fourth article in a six-part series on the political and economic landscape facing Britain’s new prime minister.

Boris Johnson began his resignation speech by proudly declaring he had ‘done Brexit’. He left it to his successor to define what that actually means.

Lines of lorries and holidaymakers stuck in Channel ports last week served as a reminder that many of the ramifications of leaving the European Union, long suppressed by the Covid pandemic, are only now beginning to be felt by voters and businesses in general.

Britain’s new prime minister will have to tackle not only these practicalities of Brexit, but also a relationship with the bloc frayed by Johnson’s repeated threats to rewrite parts of the deal he signed, and a electorate showing signs of remorse over the vote to leave six years ago.

With Rishi Sunak and Liz Truss vying for support from mostly Eurosceptic members of the ruling Conservative party, there are few signs that either wants to rekindle relations with the EU. Both blamed the delays at Dover on a shortage of French border staff. French officials have highlighted the additional passport checks required after Brexit.

“Under the watchful eye of members of the Conservative Party, there will be no divergence between Brexit as an ideological issue and Sunak or Truss,” said Sophie Stowers, UK researcher in a Changing Europe project at King’s. College of London.

Truss, a Remainer-turned-Brexiter, and Sunak, a longtime supporter of leaving the EU, have sought to woo party members by tackling some of their oldest bogeymen. Each has vowed to scrap rules and regulations derived from the EU and limit the role of the European Court of Human Rights in immigration cases.

But the two walk a balancing act. On the one hand, the Brexit rhetoric serves as a way to reinvigorate and reunite a party torn apart by Johnson’s ousting. On the other hand, the UK could miscalculate how far it can push the bloc without starting a trade war with its biggest and closest partner.

“They have to figure out which tradeoff is more important to them,” Stowers said.

Brexit is just one of the major challenges facing the next prime minister. This week, Bloomberg News looks at the cost of living crisis, public sector wages, the crisis facing the National Health Service and what happened to Johnson’s campaign promise to ‘level up’ deprived areas. from the country.

Brexit’s most pressing test for Johnson’s successor remains by far the most intractable: Northern Ireland. When Johnson struck the deal to leave the bloc in 2019, he agreed to keep the province in the EU’s single goods market to avoid imposing a hard border on the island of Ireland.

Unionists blame the protocol for disrupting trade and driving a wedge between them and the rest of the UK. Johnson has long called for the deal to be rewritten as UK businesses face checks on goods entering Northern Ireland and the province’s drug supply was at risk.

Read more: Why are the UK and EU heading for another Brexit crisis? : Questions and answers

Last month, the UK government introduced legislation – largely designed by Truss – allowing ministers to override parts of the deal unilaterally – a move that has prompted the EU to take legal action, raising the prospect of a trade war.

“Brexit is a project seen as unfinished,” said Anton Spisak, senior fellow at the Tony Blair Institute for Global Change, who previously worked on Britain’s Brexit negotiations. “Finishing it relies on processing Northern Ireland protocol.”

Other sticking points, such as the UK’s participation in the EU’s Horizon scientific research program and an agreement on access for financial services firms to the bloc “are on hold until this unique issue is resolved. resolved,” he added.

Spisak does not foresee a major change in leadership if Sunak or Truss becomes prime minister. But Truss’ determination to appeal to Brexit hardliners “is very badly viewed in Europe”, he said. “Sunak hasn’t been very engaged on Brexit, which means he has a better start when it comes to dealing with the EU and trying to resolve the Northern Ireland issue.”

Johnson’s successor will also have to deal with the economic effects of Brexit. The trade barriers caused by leaving the bloc have hurt importers and exporters and, despite the pound falling sharply since the 2016 vote, there is little evidence to suggest businesses have benefited from increased competitiveness.

Bloomberg Economics analysis shows the UK lagged the trade performance of other major nations before the pandemic and has not fully participated in the rebound in global trade since then.

Brexit-related uncertainty has also unsettled executives, with business investment stagnating since the 2016 vote. Sterling-denominated corporate bonds are seeing the longest streak of losses on record, while low-cost UK-listed companies UK compared to their EU counterparts has made them a target for takeovers.

Read more: Leaked and unloved, UK business is blocked by Boris Johnson

A wider labor shortage in the UK has also hit supply chains, with the government catching up to get more lorry drivers on the road after supermarket shelves emptied and some gas stations ran out of fuel last year. And more trade disruptions are ahead: comprehensive post-Brexit border controls on imports from the EU, such as health and food safety inspections, are set to be introduced at the end of the year next. The UK has delayed checks four times, after concluding they would have added £1billion in annual costs to businesses.

In the long term, the toughest challenge for Johnson’s successor may be to persuade the wider British electorate that Brexit is worth the disruption and economic upheaval. While Conservative Party members overwhelmingly support leaving the EU, YouGov polls show a majority of all voters think Brexit is going badly. The threat to Truss or Sunak is that voters will blame any prolonged economic pain on Brexit and, by extension, on the political leaders who backed it.

Read more in the series:

  • 150% energy price shock awaits next UK leader
  • Strike threats leave Britain’s next leader facing a winter of discontent
  • Britain’s next leader will have a broken healthcare system Johnson hasn’t fixed

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