InvestorQ : With the BREXIT deal being already signed, what are the pros and cons you see in the BREXI deal?
diksha shah made post

With the BREXIT deal being already signed, what are the pros and cons you see in the BREXI deal?

Archita Jajjoo answered.
7 months ago

For a long time, the UK prime minister has enjoyed close to the wind and he did that again during the week. In fact, exactly a week before the BREXIT would kick in, UK and the EU managed to sign a BREXIT trade deal for goods. This deal certainly saves the global markets from the tumult and turbulence that would have come as a result of a sudden exit.

It must be remembered that the BREXIT is purely a deal for physical goods and not for services or any other aspects. What BREXIT trade deal does is to restore the status quo with respect to the special status as a trading partner that the UK and the EU enjoyed in the old arrangement. Free trade without tariffs and quotas will continue as before.

This is significant because the UK-EU trade is worth £670 billion and it could have had larger repercussions if the deal had not been signed on time. The relief in currency markets was evident from the manner in which the GBP strengthened versus the dollar. However, this is not to dispute that there are genuine gaps in the deal that will prove a thorn.

If you look at the trade deal and is likely impact on goods trade, then it needs to be remembered that trade restrictions in the form of customs clearances and other formalities will kick in from Jan-21. Goods moving to and from the UK and EU will have to go through a number of customs clearances. That is unavoidable, and it has the potential to slow down the free flow of goods both ways.

There are other challenges too. For example, there is a huge trade in food items and live stock that takes place between the UK and the EU. Effective Jan-21, all food items and livestock will have to go via multiple levels of health checks as well as local certifications. All this will surely add to the challenges and add to the delays and also to the costs.