EIIW Policy Brief

31.01.2020|18:30 Uhr

Negotiating positions of the UK and the EU after BREXIT Day - 31 January 2020: Challenges for Prime Minister Johnson

EIIW Policy Brief

Summary: The United Kingdom's withdrawal from the European Union after 47 years on 31 January, 2020, will have negative economic effects in a number of areas for the UK, but also for the EU. In addition to the tariff burdens in the event of unsuccessful negotiations on concluding a trade agreement by the end of 2020 - a no deal would then be the outcome (trade on the basis of WTO rules or the new import tariff table for the UK, which the May government had already presented) - market adjustment effects must also be taken into account; British and EU27 companies will have to consider price reductions in EU-UK trade in order to maintain their previous market shares despite new tariff burdens. In addition, direct investment effects are important in the medium term: if there is no access to the internal market for British firms from 2021, considerable economic losses are to be expected for the UK. In addition, Prime Minister Johnson’s strategic position at the end of January 2020 has deteriorated due to the fact that a resignation of US President Trump (a BREXIT proponent) is conceivable in the context of the impeachment procedure while should he continue in office, his re-election seems rather unlikely - a new incumbent in 2021 from the Democratic Party would certainly mean a return of US support for EU integration and would mean a certain degree of foreign policy isolation for the UK. A good UK negotiating position vis-à-vis the EU would therefore not be possible, and the economic costs of BREXIT will be high for the UK. For more, download the full Policy Brief