Essay Example on Brexit Deal: Johnson Aims for UK Control, Flexibility at Cost

Johnson's deal seeks to give the UK more control over its global trade policies and regulations at the expense of smooth access to the European Union market, which has about 450 million persons. The deal also focuses on divergence from EU policies, flexibility in trade signing trade agreements, and the presence of custom checks at the Northern Irish border (Giles, 2019). Unlike his predecessor, he wants flexibility, which often comes at a cost. Economic studies about Brexit reveal that Johnson's deal would negatively impact the country's growth. Boris Johnson's Brexit deal will make the UK suffer by crippling economic growth, erecting trade barriers for firms operating in the region, and reducing the national Gross domestic income per capita more than other EU members.

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The Johnsons deal will increase trade barriers across borders between the EU and the UK. Johnson's deal seeks to have more control over its trade policies and regulatory affairs (The UK in a Changing Europe, 2019). The situation would lead to increased friction in trading goods, which may arise from full customs controls in major trade routes such as between Calais and Dover. Noticeably, in the past three years, companies have reduced their investments in the UK due to the Brexit uncertainty (Giles, 2019). In case the country goes through with the hard Brexit, most international companies are likely to shift their operations to other EU regions.

Boris Johnson's deal will reduce the country's GDP per capita income by 7 percent. A study conducted by the UK in a Changing Europe (2019) estimates that increased trade barriers between UK and the EU would reduce the national per capita by 2.5% in the next 10 years compared to other nations in the economic bloc. The loss would be equivalent to an average income loss of EUR2000 per person annually (The UK in a Changing Europe, 2019). Adding inflation due to increased trade barriers could a 6.4% GDP per capita decrease under the deal (The UK in a Changing Europe, 2019). Comparatively, Theresa May's deal would cause a 4.9% decrease in GDP per capita (The UK in a Changing Europe, 2019). A similar study by the Guardian concluded that the deal would reduce UK's gross domestic product per capita within a range of 2.3% and 7% in ten years compared to other countries in the EU (Menon & Porte, 2019). Noticeably, the deal surpasses the loss posed by Theresa May's deal that was approximated to be between 1.9% to 5.5% within the same period (Menon & Porte, 2019)

On the other hand, in case Johnson unsuccessful in passing the bill through parliament before the extended January 1, 2020, Brexit deadline, the country is likely to exit the EU without a deal (Giles, 2019). As a result, the UK's GDP will face a 3.5%-8.7% decrease over the same period (The UK in a Changing Europe, 2019). The situation has mounted more pressure on the Prime Minister who expects to gain support from Labour MPs. Currently Johnson is pushing for a December election that would give him the necessary support to pass the bill through parliament.

Hard Brexit threatens to shrink the labor market for its citizens who work within the EU. Johnson's deal seeks to diverge from the EU's labor and environmental standards by introducing a restrictive migration policy (Giles, 2019). In this case, the country focuses on reducing the number of unskilled EU workers and increase the immigration of skilled labor outside the EU. The situation would trigger reactions from other EU members who would reduce their intake on skilled and unskilled UK laborers. For example, by 2030, Germany estimates that it will have a labor shortage of about 2 million employees; however, opportunities will not be available for UK's young workers (Riley, 2019). The situation would lead to increased unemployment rate and a decrease in GDP income per capita.

Moreover, a hard Brexit would have a colossal negative impact on London City. The city has been the entry into the EU market, which has allowed the country to attract foreign companies such as Japanese carmakers and giant American banks (Riley, 2019). London estimates a mass exodus of financial institutions from the city if the hard Brexit deal is passed in parliament. The phenomenon could lead to a loss of about 5000 jobs (Giles, 2019). Moreover, London's real estate economy would collapse since most businesses are shifting to other EU regions. Housing prices have reduced significantly in the past two years and London's reputation as a business bastion is injured completely.

Additionally, Johnson aims at diverting from the EU's worker's rights, environmental regulations, and food standards. Although the country would be free to engage in trade deals with countries outside the EU, its citizens stand to suffer the most (Riley, 2019). Manufactures in the country would be forced to produce goods twice; one for the EU market and the other for markets outside the bloc. The scenario makes it difficult for companies to operate in the UK due to increased production costs.

Conclusion

Overall, if Johnson is successful in securing a deal before the EU time-lapse, the UK should brace itself for harsh economic times ahead. Johnson's deal will make the UK suffer by reducing the GDP income per capita, increasing trade barriers, shrinking the labor market, and reduce economic growth. Studies reveal that a hard Brexit would slow the economy by about 7% compared to other EU members in the next 10 years. Notably, the deal is worse compared to that of Theresa May, which advocated for a close connection with the EU.

References

Giles, C. (2019). How Boris Johnson's hard Brexit would hit the UK economy. Financial Times. Retrieved from https://www.ft.com/content/a6f991ba-eda8-11e9-bfa4-b25f11f42901

Menon, A. & Porte, J. (2019). Boris Johnson's Brexit deal would make people worse off than Theresa May's. The Guardian. Retrieved from https://www.theguardian.com/commentisfree/2019/oct/13/boris-johnson-brexit-deal-theresa-may-trade

Riley, C. (2019). New Brexit deal is still bad for business and the UK economy. CNN Business. Retrieved from https://edition.cnn.com/2019/10/17/business/uk-economy-brexit-deal/index.html

The UK in a Changing Europe. (2019). The economic impact of Boris Johnson's Brexit proposals. King's College London.