GT Voice: Long-awaited EU-UK trade deal to boost economic stability

Source: Global Times Published: 2020/12/24 20:58:39

Vehicles drive past an underground station in London, Britain on Dec. 23, 2020. British Health Secretary Matt Hancock on Wednesday announced that more areas of the East and South East of England will be put into Tier Four restrictions, the highest level, while revealing that two cases of another new variant of the novel coronavirus have been identified in Britain. (Xinhua/Han Yan)

Britain and the European Union agreed to a new Brexit trading arrangements on Christmas Eve, CNBC reported. The deal is a Christmas gift not only for the British economy but also for the COVID-19-battered global financial market.

As countries around the world continue to struggle with the spread of the coronavirus and the ensuing economic turbulence, markets are looking for less chaos after the expiration of the Brexit transition on December 31.

The trade agreement still has to be ratified by the UK and EU parliaments in the coming days, according to CNBC.

The British government's last-ditch effort to secure a post-Brexit deal is highly commendable, especially when the UK economy is suffering increasing pressure from a new wave of surging coronavirus infection cases and renewed lockdown measures. 

To a certain extent, a slew of bad news surrounding a mutated faster-spreading COVID variant - ranging from tougher lockdowns to truck logjam at the ports - underlines the urgency of the British government to seek a stable pivot in the current turmoil, and striking a Brexit deal seems exactly such a signal of certainty and predictability.

There is no denying that a no-deal Brexit would lead to a dramatic change in the life and employment prospects of the Britons. Since the UK relies heavily on the EU supply chain for cars, pharmaceuticals and food, if it leaves the EU without a trade deal, Britain will have to trade under WTO rules, which may dramatically drive up food prices in the UK, with dairy products prices expected to see a 35 percent rise. 

According to the Office for Budget Responsibility, the UK economy is forecasted to suffer economic damage equivalent to the loss of 2 percent of GDP next year, and real GDP will be 1.5 percent lower in five years than its current central GDP assumption, if there is no trade arrangement between the EU and Britain.

If anything, the emergency of a fast-spreading coronavirus variant has added to rising economic pressure facing all Britons. So far, more than 40 countries and regions have suspended flights from the UK or imposed stricter entry protocols on arrivals from the UK, exacerbating the economic shock to a country that is already struggling to combat the virus with limited resources.

Under such circumstances, the urgency for London to reach a post-Brexit trade deal with Brussels has increased, which could at least put the country in a safety net in terms of the future supply of daily food and necessities for its people.

Meanwhile, global markets also expect the UK, as a major developed economy, to ride out the current difficulties rather than becoming a new source of uncertainty and risk.

Posted in: GT VOICE

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