Only a few years ago, Europe faced a major upheaval to the international economy with Brexit, i.e. the exit of the United Kingdom from the European Union. This event, like the war in Ukraine or the COVID-19 pandemic, has had significant consequences for the global economy, affecting the quality of our daily lives.
The new EU-UK legal and economic relationship
The most frequently raised question following the announcement of the UK’s decision to leave the European Union was – what will the relationship between the two parties look like going forward? Indeed, international cooperation with the European Union can take numerous forms, each characterised by different levels of economic facilitation. The UK ultimately decided to base this cooperation on the Trade and Cooperation Agreement (TCA). As this agreement has already been in force for a year, an initial assessment can be made as to the practical impact of TCA and whether leaving the EU was beneficial for the UK in any way.
Key conclusions
Although at present it is not possible to accurately predict all long-term consequences of Brexit, a number of conclusions can nevertheless be reached:
- The EU-UK partnership has always been different. Not only did the UK seek derogations from important obligations within the EU when it was a Member State, but it also expressed clear reservations about participating in the Union from the very beginning of discussions about joining the newly emerging organisations. Thus, it is likely that had the EU and UK paths not diverged, the UK would have continued to cooperate with the Union on a different basis than other Member States.
- At this point, Brexit can be seen as economically disadvantageous for the UK. As history shows, the very decision to leave the EU via the 2016 referendum caused global financial turmoil. In addition, it affected the certainty of economic cooperation between the EU and UK markets, causing numerous investors to refrain or even withdraw from investing in the UK.
- The TCA cannot fully replace the cooperation that the UK enjoyed as a EU Member State. Member State status entails a number of unique economic facilitations from which the UK is no longer able to benefit.
- Different branches of the economy are affected by Brexit to varying degrees and their assessment can also vary depending on the perspective taken. There are, however, quantifiable indicators that enable making fairly objective estimates. For example – according to expert analysis, Brexit has led to a sudden and sustained 25% decline in the UK’s imports from the EU, compared to the rest of the world[1].
- In addition to this, the UK must now face additional problems such as rising food prices, inflation, labour shortages, and also additional paperwork and sanitary controls at borders.
- It is also worth noting that government reports published so far have not shown any genuinely positive economic effects of the decision to leave the EU.
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This article is based on the master’s thesis “The Legal and Economic Relationship between the United Kingdom and the European Union. A Comprehensive Overview of Past and Future Cooperation” by Bartosz Brzyski.
This thesis juxtaposes the previous cooperation between the EU and UK with the new conditions for cooperation between them in the post-Brexit reality. It was written primarily from a legal perspective, yet also with reference to tangible economic effects. Such an assessment of individual phenomena enables giving a preliminary answer to the question of whether, at this point, the decision to leave the EU has been favourable or unfavourable for the UK.
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[1] R. Freeman, K. Manova, T. Prayer, T. Sampson, Brexit: the major trade disruption came after the UK-EU agreement took effect in 2021, London School of Economics and Political Science, 26 April 2022, https://blogs.lse.ac.uk/businessreview/2022/04/26/brexit-the-major-trade-disruption-came-after-the-uk-eu-agreement-took-effect-in-2021/ [access: 22 May 2022]