Brexit: Not such a good deal after all

A Brexit deal was clinched at the last minute, but it turns out now that it is not all it was meant to be. And while prime minister Boris Johnson was congratulating himself and his government for this outstanding achievement (I am being sarcastic here!), he forgot to tell us about some of the minor but nevertheless consequential details hidden in the small print.

In particular financial services have not been covered by the new agreement with the EU. This means that passporting rights have been withdrawn, which has the effect that British banks are no longer to offer their services even to Brits residing outside the United Kingdom. I know a number of British expats who live in Spain who have in recent months been advised by the UK banks that they should look for other banking arrangements as their accounts back home would be closed shortly.

But also investors suffer: since the beginning of January European equities are no longer listed on the London Stock Exchange, a loss of approximately €6.3 billion worth of trades every day. It will be only scant consolation that the Treasury plans to allow the trading of Swiss equities in the City of London, although the expected daily trading volumes of approx. €1.3 billion will make up for only a fraction of the lost EU equities business.

And how about the shareholders of airlines? An obscure EU rule states that airlines which provide flights between two EU destinations must be controlled by shareholders which are domiciled within the union. Tough luck for all the shareholders of Ryanair and EasyJet, which, as from the beginning of January, have seen their voting rights withdrawn. EasyJet, which was founded in the UK, has at the moment 53% of non-EU shareholders and it is the last ones to purchase their shares which will now have to forfeit their right to vote.

Then trade: there won’t now be any duties to be paid for British goods entering the EU, however, the amount of paperwork to be completed and which has to accompany each shipment now is staggering. DPD, the parcel delivery company, has just announced that it will temporarily suspend deliveries from the UK to the EU (including Ireland) as roughly 20% of parcels are being sent with incorrect or incomplete paperwork. And the British Road Haulage Association, an industry lobby group, says that a number of EU hauliers are not taking bookings for transports to the UK at the moment.

You might already have guessed, not all items sold from the UK into the EU are exempt of duties: Textiles which have been manufactured for example in Bangladesh and then sold on to the UK can only be imported tax free into the EU if they are further processed or have value added in Great-Britain. U.K. exports of apparel and textiles amounted to some £9.1 billion in 2016, 74% of it towards the European Union.

And spare a thought for the poor traveler from Britain who arrived at the Dutch border only to have his ham sandwiches seized, since importing meat from the U.K. into the EU without the appropriate paperwork is no longer allowed. The customs officers even denied his request that he may keep only the bread and sent him with a smirk and ‘welcome to Brexit, sir’ on his way.