Quo vadis, Britannia?

For most of the countries which were part of the Europe of 12, the European project was a one-way ticket. Not so for the British, who never felt comfortable in a marriage of convenience whose troubles led to the fall of four prime ministers: Thatcher, Major, Cameron and May. 

The weight of nostalgia for the empire in the collective British subconscious led a majority of Her Gracious Majesty's subject departure from the EU as someone who leaves a partner, in the conviction that such a nation can no longer survive, but can lead the world in the 21st century on its own as it did in the 19th century thanks to its exceptional qualities, this time reincarnating the British Empire with the pillars of the Commonwealth. Unlike Spain, which plunged into a frigid sea of existential doubt when it ceased to be a colonial power in 1989, Great Britain has never fully assumed the reduction to its minimum of its former status in the League of Nations, in which the British psyche fits badly as a team player.  

Nostalgia and suggestive projects of common life on the fringe, the timer of the departure from Europe has little left to set off the alarm that will signal the British distance from the continent. And this means crossing the threshold of unnerving rhetoric and patriotic idealism, to enter the world of prosaic material reality. And much must be changed so that the process of the United Kingdom's exit from the European Union does not begin with what in Game Theory is called a negative-sum game, that is, a situation in which all the contenders lose, either deliberately or by accident. If it is by accident, our country has a lot to lose in a scenario of acrimonious break-up, although the European Commission's recovery plan will largely dilute the impact of Brexit. On the other hand, contrary to its expectations, and without access to the European recovery plan, the price to be paid by the British industry in the short term would border on the existential: UK products destined for the EU will be subject to tariffs ranging from 10% for the automobile industry to 8% for the footwear industry.  

Some UK producers will become uncompetitive if they suffer from these tariffs, especially when their final prices fall compared to EU producers, possibly making their production unviable. 

On the other hand, UK products requiring certification to enter the EU market will need to be validated within the EU, as the UK's own certifications will be insufficient, further increasing production costs. If there is no customs cooperation between the UK and the EU, there will be no mutual recognition of the Authorised Economic Operator scheme. As a result, products will take longer to pass through customs controls, harming perishable goods and creating disruption to the island's supply chains. 

UK agricultural exports will be subject to potentially even higher tariffs, such as 42% for dairy products, making these exports much less competitive. In addition, there will be additional comprehensive controls on agricultural exports, which will further increase costs, to which it must be added those arising from the absence of veterinary equivalence for meat products. UK service providers will not be entitled to sell certain services throughout the EU, especially directly from the UK. In many cases they will be forced to set up new offices on EU territory.

The vast majority of UK workers will not be entitled to work across the EU, for example, as tourism representatives for UK travel companies. UK transport companies will not be able to transport cargo within the EU and, in the short term, could only transport from the UK to a destination and return from the EU.  

Tariffs on goods, and restrictions on services, will also apply to countries with which the EU has a current trade agreement that the UK cannot replicate. Following a unilateral exit, there will be no agreement with the EU on data adequacy or equivalence of financial services. This leads to additional costs for all UK companies trading data between the UK and the EU. 

The chauvinist scandals give what they give, and the UK Government will have to move to take consequential decisions, such as maintaining or reducing its own tariffs. This will not be an easy decision: lower tariffs may help consumers, but at the cost of harming UK producers and those developing countries that currently get specific privileges such as zero tariffs. 

Over 50% of UK trade will be affected by these changes. Less than 10% of EU trade will be affected by these changes. Costs in the UK will increase, costs in the EU are unlikely to do so. The problems listed are normally solved by a free trade agreement. But this takes time, between 5 and 7 years, during which time all these problems would remain, affecting the UK's competitiveness. The UK Government will need to address trade issues diplomatically with the EU, a process that usually takes several years. Single Market conciliation tools, such as SOLVIT, will not be available to UK operators, so disputes will be slower, more complex and more costly to resolve.

On the other hand, should the UK seek to gain competitiveness by removing EU regulations to facilitate an agreement with the US, it would be difficult to negotiate a trade agreement with the EU at the same time. The incompatibilities of standards between the US and the EU are well known, which would cause problems that would make it even more complicated to reach a trade agreement with the EU.  

And without such an agreement, British food exports will no longer come from a country with a national body with EU-certified health control facilities. Without customs controls, food imported into the UK from non-EU countries could end up in the European food chain, were it not for the fact that the UK is subject to a strict food certification system: overnight, this ecosystem of European standards, agencies and courts would no longer apply in the UK, so the EU has a legal obligation to apply third country certification requirements to Britain.  

This is actually only one side of the problem. Not only does the UK import 50% of its food, but its food production is based on supply chains which operate on a just-in-time basis, that is, thanks to the constant and free movement of food and food products from the European Union in 10 000 containers every day. Thanks to the efficiency of this system, Great Britain has not needed any inspection posts for products of animal origin, and therefore today it lacks both the infrastructure required for sanitary verification in its customs, and the necessary technical personnel, especially veterinarians: 95% of those working in the United Kingdom are EU citizens. And, of course, it does not have sufficient cold storage capacity either for imports or exports.  

This, coupled with the limitations of the country's port infrastructure, augurs well for bottlenecks in the transport of sensitive goods, which would have a rapid domino effect on retail supplies. As this is a perfectly predictable scenario, some English politicians are speculating on the possibility of unilaterally waiving controls and procedures for goods entering the UK, under the name of "mutual recognition".  

Although these politicians present this possibility as a show of recovered sovereignty, the truth is that a policy of open doors to unsupervised food imports is a call to food fraud that implies the lack of protection for British consumers, and by extension for EU consumers, so the European Union would be forced to further strengthen the control of food imports under British rules of origin. The same would be true if Britain were to choose to increase food imports from the US, given that America has lower quality standards than the EU in key areas such as pesticide residue levels in fruit, hormone injections in beef and chlorine washing of poultry, the use of antibiotics in agriculture and genetic modification. Opening one door closes another. 

If all this were not worrying enough, there would still be 22% tariffs on food products to be added to the equation in the event of a lack of agreement. As a desperate countermeasure, the British Government could decide to unilaterally lower these tariff rates. However, the World Trade Organisation requires the application of so-called most-favoured-nation rules to avoid arbitrary discrimination, so by being forced to apply the reduced tariffs to one country to all the others, the UK would encourage a flooding of the UK market with cheaper agricultural products from outside the European Union, against which British farmers and breeders are unlikely to compete. 

The consequences for other sectors, such as industry, services, medicine or aviation, are similar, and for similar reasons. The chaos that a combined disruption, caused by a disorganised separation is unprecedented. As we said, the impact on the Spanish economy will not be negligible. This will be particularly onerous if a minimum framework for unimpeded trade between the UK and the EU does not materialise, adding economic costs that would make the value chains made possible by the Single Market unviable, and whose disappearance would force the UK authorities to adopt an industrial strategy of their own that would quickly lead to direct, conflicting market competition with the EU in many sectors of activity - we should be particularly concerned about the automotive sector, as we have seen with Nissan - that have so far been seamlessly integrated into the EU economy.