A UK think tank director this week has told Danish business chiefs that the controversial backstop clause which has plagued the progress of Theresa May’s Brexit deal provides a platform for the future relationship between London and Brussels at least for the short term.
“The backstop, despite its problems, delivers quite a lot,” Open Europe director Stephen Booth said. “Europe has actually paid a heavy price for its solidarity with Ireland. The UK secured some major concessions.”
“If the UK were to go into the backstop, that would see a customs union for the whole of the UK ensuring friction is kept to a minimum,” he said. “It’s a template. Learn to love the backstop.”
Booth, speaking at a Nordea-sponsored event at the British Embassy in Denmark, pointed out that while the backstop would not allow the UK to make its own trade deals, it explicitly commits the EU to respecting the integrity of the UK single market and actually provides a lot of the elements that the Brexit camp would have wanted.
“The backstop does not compel us to copy future EU rules and it does allow the UK to have independence on financial services,” he said. “The UK will have to mirror EU commercial deals and it can piggy-back on trade policy.”
Booth conceded that the backstop was a political problem particularly with regards to Northern Ireland but from a business point of view, had much to offer. He said the other major political issue was that there was no time limit to the arrangement which for some politicians was difficult to stomach as it might mean being trapped in a relationship with the EU indefinitely.
Booth was relatively optimistic on the UK’s future, albeit accepting that there would be short-term cost to the economy. He suggested that by 2030, the UK could be in a relatively good position outlining Open Europe was positioned at the positive end of worst-and best-case GDP scenarios ranging from minus 1.6% growth to plus 2.2%.
“Long term, the demographics of Europe are appalling,” he said. “Europe is facing welfare costs, pensions and so on while economically, the UK is a decent long-term bet.”
“The UK has aging issues as well but is in a better position than the rest,” he said. “Immigration was an issue in the referendum for sure, but all the evidence is that the UK can integrate new people.”
“The idea the UK has suddenly become hostile to immigrants is simply not the case.”
The information provided within this website is intended for background information only. The views and other information provided herein are the current views of Nordea Markets as of the date of publication and are subject to change without notice. The information provided within this website is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.
The information provided within this website is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided within this website has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.
Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.
The information provided within this website may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.