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EU-UK ties prove too important to lose as Brexit trade deal is sealed


Among European leaders on Thursday evening there was little sign of the open rejoicing that could be heard in Downing Street, as capitals digested the historic EU-UK trade deal forged following nine months of negotiations.

Micheál Martin, Irish premier, put it bluntly, saying that there was no such thing as a good Brexit for his country but that the outcome was the “least bad version” possible under the circumstances. European Commission president Ursula von der Leyen, who earlier announced the deal, spoke of a “difficult day for some” as she expressed relief at the conclusion of talks.

The muted response reflected a recognition that the EU had lost one of its most influential and economically significant members, as the government of UK prime minister Boris Johnson acted on the 2016 referendum result by replacing deep integration with the EU with a far more limited relationship.

EU leaders did not want Brexit in the first place, with Thierry Breton, EU internal market commissioner, even calling it “a tragedy”. But once the UK’s departure was a fait accompli, leaders including French president Emmanuel Macron were anxious to maintain close commercial and security ties with their neighbour over the Channel and the North Sea. 

A bitter divorce resulting in a no-deal outcome would have hit the UK economy harder than the EU as a whole, given Britain’s significant economic ties to the EU single market, which consumes 46 per cent of its goods exports. But it would have carried a heavy cost for the EU as well, in both economic and political terms.

“Even outside the EU, the UK will continue to be an important partner for Germany and the EU,” Angela Merkel, German chancellor, said on Thursday evening. “I am very confident we have a good result here.”

For much of the year there has been only patchy leader-level focus on the Brexit deal talks, as member states focused instead on the dire threat to their economies and health of citizens posed by the coronavirus pandemic. 

George Buckley, economist at Nomura, said the economic implications of the pandemic had been “dwarfing everything” for the EU, including the outcome of the Brexit talks.

But that by no means suggests that member states were indifferent to the fate of the negotiations. Some of the most concerned countries have been coastal states that are also deeply involved in the fisheries talks, reflecting their close geographical proximity to the UK. 

Chart showing the share of goods going to the UK from different EU countries in 2020. The overall value for EU27 is around 6%

Those include Ireland, which sends more than a tenth of its goods exports to the UK, as well as the Netherlands, Belgium and France.

For such close neighbours to fail to agree a trade deal would have sent a disastrous political message, Mr Buckley added.

During the talks there was one key EU condition for a deal: ensuring that tariff-free access to the EU’s valuable single market would only be granted if the UK promised not to undercut European businesses, for example through more relaxed attitudes to state aid or environmental regulations.

This points to the importance of what will remain a very close EU-UK economic relationship as countries try to recover from the coronavirus pandemic and relaunch growth in the years ahead.

France is a good example. While the country provides only 13 per cent of UK imports, well behind the shares of Germany, China and the US, the UK represents by far France’s biggest trade surplus with another nation — €12.5bn last year. 

Only 21 miles apart, France and the UK are deeply intertwined in terms of trade and investments. A two-day French closure of the border this week to prevent the spread of a new, infectious coronavirus variant left thousands of European drivers and their loads stranded in southern England, emptying some British supermarket shelves of green vegetables.

It also stopped production at a Toyota plant in Valenciennes in northern France because of a lack of parts and disrupted exports of British seafood normally supplied to French family feasts over the Christmas holidays.

When France last year tested its post-Brexit border systems on a ferry-load of lorries arriving at the Channel port of Caen from Portsmouth, officials emphasised the importance of the trade links by choosing two trucks carrying Airbus wing parts made in the UK for special checks. 

The trade deal will not eliminate the need for new customs and health controls at the new UK-EU border. But it will avert tariff barriers and quotas and make some procedures smoother. 

Alongside the economic and political impact, a bitter, no-deal Brexit would have called into question years of hard work on strengthening defence and security ties between the UK and its Nato allies in Europe. 

France and the UK have western Europe’s most powerful military forces. Both are nuclear powers as well as permanent members of the UN Security Council and their businesses co-operate in various defence industries. 

The two countries, allies for more than a century, recently underlined the importance of their bilateral relationship with the formal operational launch of a combined joint expeditionary force capable of deploying 10,000 troops to tackle international crises.

As French leaders have frequently told their British counterparts, the UK may be leaving the EU but it cannot leave Europe. “Geography,” Mr Macron once told Mr Johnson, “is stubborn”.



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