Government relaxes trade rules between GB and NI…
This week, the British government moved unilaterally to relax trade rules between Great Britain and Northern Ireland. As part of the Northern Ireland Protocol, signed between London and Brussels to ensure a common arrangement for the future of Northern Ireland after the UK’s departure from the EU, both parties agreed on a grace period during which procedures and customs checks, required as Northern Ireland remains a part of the EU Single Market, are not fully applied.
The grace period has meant that some business sectors including food suppliers and supermarkets have been exempt from providing export health certificates when sending goods of animal origin to Northern Ireland, an exemption that would legally cease to apply at the end of March.
But on Wednesday 3rd March, the UK’s Northern Ireland Secretary Brandon Lewis announced the government’s plans to extend the grace period until October 2021.
This decision marks the second time that Boris Johnson breaches international commitments with the EU, the first being the Internal Market Bill, in which the government went against the provisions of Theresa May’s Withdrawal Agreement.
… but the EU says ‘non’
Brussels frowned at the UK’s decision. European Commission Vice President Maroš Šefčovič said the move was “a very negative surprise” and “a violation of the relevant substantive provisions” of the Brexit deal. He added that the EU would use the legal tools at its disposal to ensure the legal commitments were respected. Under the Northern Irish Protocol, the EU can launch infringement proceedings against the UK which could lead to a case at the European Court of Justice.
Meanwhile, the European Parliament, which has not yet ratified the Brexit deal, is waiting for the dust to settle. Political groups have chosen to postpone the setting of a date for the ratification of the EU-UK trade deal, warning that the deal will not be ratified should the UK continue to diverge from its legal commitments.
ECJ rules that UK breached air pollution rules
Speaking of courts, on 4th March, the European Court of Justice (ECJ) ruled that the UK had breached the EU’s air pollution limits for years and ordered the country to comply with EU legislation.
Despite having left the Bloc, this case was initiated while the UK was an EU Member State, so the country is bound to comply with the ECJ ruling. The Court found that the UK had “systematically and persistently” breached EU limits for nitrogen dioxide (NO2) in 16 areas, including London, Manchester, the urban area of Teesside in northeast England, and Glasgow from 2010 to 2017.
Overall, the ECJ said Britain failed to take measures to keep breaches of pollution limits as short as possible, and ordered the country to reduce NO2 pollution to below the EU limit. Failure to do so could see the European Commission take further legal action with the imposition of financial penalties.
Impact of Brexit hidden in COVID Budget
The British chancellor, Rishi Sunak, presented his second budget this week as Britain prepares to begin the easing of lockdown restrictions. Hidden in between the economic shock of the Coronavirus pandemic, which has led the UK economy to shrink by 10% in 2020, is the impact of Brexit in the UK’s coffers.
The UK’s Office for Budget Responsibility (OBR) estimates that productivity growth will be slashed by 4% in the long run compared to staying in the EU, as trade in services takes a hit, while trade in goods led to a 0.5% hit to GDP growth in the first quarter of 2021 due to Brexit disruption.
All eyes will now turn to the continent, where Member States’ (or Germany’s) economic recovery will be measured against that of the UK’s.
Trillions in financial services assets left City since Brexit referendum
According to a report by consulting firm EY, 43% of financial services firms have moved or plan to move some UK operations and staff to Europe, with Dublin and Luxemburg bring the most popular destinations for relocations.
Since the referendum, financial services firms have moved over £1.2 trillion of UK assets to the EU. Over a quarter of firms stressed that Brexit has led to a hit in profits and called for a more cooperative UK-EU framework for the sector. It remains to be seen how the UK government will rebrand London as an attractive destination for the sector.
The Whitehouse team are experts in the impact of Brexit, providing political consultancy and public affairs advice to a wide range of clients across the Member States of the European Union and the United Kingdom. More information about our Brexit experience can be found here. If you have any questions, please contact our Chair, Chris Whitehouse, at email@example.com