Despite the agreement, Britain will feel the negative consequences of Brexit

Despite the agreement, Britain will feel the negative consequences of Brexit

The trade agreement between the European Union (EU) and the United Kingdom announced on Christmas Eve brought relief after complicated negotiations and relieved companies and consumers on both sides of the fear of hard brexit without an agreement. However, according to experts, it will take years for the British financial market to recover from the wounds caused by Brexit. Some also point out that Brexit is much harder than many could have imagined a few years ago. According to Bloomberg commentator Theresa Raphael, the compromise has brought relief, but it is the most regressive trade agreement between modern democracies. "Instead of fostering collaboration and lowering barriers, it has taken up most areas where businesses and consumers carry out transactions." Allianz Global portfolio manager Mike Riddell claims that Britain "still has almost no business deal". According to him, negotiations with the EU are far from over. "Despite the market relief caused by the agreement, the current reality is that the British central bank and others would have considered it a very hard brexit a few years ago. You may question previous economic models and central bank forecasts, but even the biggest optimists would agree. that such an agreement will cause a significant negative shock to the British economy in the medium term, "Riddell said. The current agreement does not cover services, and Britain seems to be farther away from the Union than was thought in 2016. Foreign direct investment (FDI) has fallen sharply this year. The main reason was a new coronavirus pandemic. The consulting company EY estimates a decrease in the number of FDI projects by 30% to 45%. Some experts are optimistic and claim that next year, thanks to a trade agreement, there will be a significant recovery in foreign investment. Others, however, dampen optimism. According to Morgan Stanley strategist Andrew Sheets, a distinction must be made between short-term and long-term prospects. Removing the risks associated with a possible break-up without an agreement will increase average asset prices, but "will not solve the basic economic problems." According to him, the British economy will face a negative shock that will affect its most important area, services.