Brexit Deal Done, Britain Now Scrambles to See How It Will Work

Agreeing to let goods cross the border without onerous tariffs ensured that the most vital supplies — namely, food and medicine — were accessible across Europe. A deal on goods was also easier to strike; given intricate country-by-country financial regulations, like how much money banks must hold, most trade agreements skirt the service industries.

But Brexit was not most trade agreements: It was erecting barriers, not taking them down, within a European market that is unusually well connected.

After Jan. 1, the sale of services, once assured, will hang on patchwork decisions by European regulators about whether Britain’s new financial regulations are close enough to their own to be trusted. While London’s expertise is difficult to match, putting its financial and service firms in a strong position to weather the storm, some obstacles are inevitable. Already, Britons living in Europe who have bank accounts in Britain have been told their accounts will be closed.

“Imagine if you took the U.K. and you moved it into Canada, or Australia,” said Davide Serra, the chief executive of Algebris Investments, an asset management firm with offices across Europe. “That’s what this does for services. The U.K. has become a third country.”

In announcing the trade deal this week, Prime Minister Boris Johnson of Britain acknowledged it offered “not as much” access for financial firms “as we would have liked.” But he was not as straightforward about the difficulties facing even British retailers under the deal, analysts said.

In promising that there were “no non-tariff barriers” to selling goods after Brexit, he ignored the tens of millions of customs declarations, health assessments and other checks that businesses will now be responsible for.

Article source: https://www.nytimes.com/2020/12/25/world/europe/brexit-britain-european-union.html