When it comes to contentious issues it doesn’t get much more contentious than Brexit. It’s a word that meant nothing a decade ago but has become a part of the daily discourse in the UK over the past 5 years as we’ve tried and failed to negotiate our exit from the EU on good terms.
But what many people have been wondering out loud in the days and weeks since the new UK-EU trade agreement took effect at the start of the year is what direct impact this new free trade deal will have regarding the UK trading with Europe. The answer, I’m afraid, is almost exclusively negative.
The current state of the economy
As things stand, we’re by no means in fighting shape right now as a result of the COVID-19 pandemic. Roughly 49% of our current trade is done with the EU and while that trade hasn’t exactly disappeared overnight, stats show it is dwindling rapidly.
Will the trade of goods be impacted?
All existing EU trade agreements were automatically rolled into WTO terms at the end of 2020. This means we are already starting to see the impact, with large tariffs being placed on everything from food and medicine to musical equipment and vehicle parts.
Aside from these new tariffs, there’s the difference in product standard laws to consider. Because, with the UK no longer needing to follow EU standards, there are going to be more checks in place for UK products that might not automatically meet EU standards.
Trade deals so far
Given the current major global impact of COVID, trade deals with the UK have not exactly been at the top of the priority list for many countries. We might have created a working vaccine but right now it would appear the rest of the world wants nothing to do with it.
There are a few beacons of hope to cling to though. The UK signed a trade deal with Japan back in October last year and while Japanese trade only represents 2% of overall UK trade, it’s at least a start. In January, the government also applied to join a free trade area with 11 nations in the Asia Pacific, including Australia, New Zealand and Canada. There are talks currently happening with other nations such as the US, but the less said about them, the better.
The long term solution?
Of course, there’s no telling what the future could bring and whether or not this great experiment could end up being a good thing in the long term. But for now, traders might want to start expanding their horizons. Trading in Forex, for example, is a growing practice that is only getting more exciting as the ramifications of Brexit continue to reveal themselves. If COVID has taught us anything, it’s that the future is online and Forex is about as future proof a digital revenue stream as you could hope for.
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