Our analysis of the UK-EU trade deal

The UK and EU finally signed a draft trade and future relationship agreement in late December 2020. Our analysis of this deal is as follows.

The UK economy is 80% services. The UK has a competitive advantage in services that has resulted in the UK having a trade surplus in services to the EU. That's where we make our money. The Leave side argument on services would be "we need them more than they need us." The EU however has a competitive advantage in goods (where the EU has a trade surplus to the UK). The Leavers' argument here would be "they need us more than we need them." Following those facts, the UK needed a deal based on services, the EU needed a deal based on goods. However, the deal agreed in December 2020 is effectively for goods only (it includes some token concessions to the services sector but not much) and so this is a deal for EU exporters, and offers the UK almost nothing. It maintains EU competitiveness, while harming UK competitiveness. The EU got the deal they wanted, we didn't.

To sell services requires agreements on mutual recognition of professional qualifications (which the deal partly addresses) but also free movement and mutually agreed frameworks. The rules for these frameworks will not change at a European level now that the UK has left the bloc - we will have to beg for access to these markets for our former economic powerhouses such as banks, insurance companies and investment brokers where once they were welcome without question and where we once had a large role in defining the rules of engagement.

And even the fishermen aren't happy. This deal is a very pale imitation of full EU membership which will limit opportunities for UK workers and residents. The deal can be reviewed in 2024 and it is quite plainly not the final word on the matter - we have not "taken back control" and we have not "got Brexit done". Even this timetable for review is based on the five yearly cycle of EU budgets and Presidency of the the European Council - in other words reappraisal of the deal is at the convenience of the EU, not the UK's. Overall, this deal is exactly what you would expect from the negotiations between two partners of vastly unequal sizes (the EU negotiates as a united whole and is some six times larger than the UK): the larger party has got practically everything it wants and has conceded some token scraps to mollify the smaller party. It is a template for the future of the UK as an "independent trading nation" - not "taking back control" or "sovereignty" and something that will not make up for the loss of ready access to the large, wealthy market our our doorstep.