In an unexpected political triumph, British Prime Minister and Conservative Party leader Boris Johnson has formalized at last the end of Britain’s long and troubled membership in the European Union. On Christmas Eve, Johnson concluded a deal with Michel Barnier, the EU’s chief negotiator, that will provide the necessary legal infrastructure for continued cross-border commerce. The deal will avoid the chaos that would otherwise have threatened that commerce as of January 1, when the Brexit transitional period officially ends.
The deal comes too late for the European Parliament to seal it with a ratification. Britain’s Parliament ratified on December 30, though, and the new modus vivendi will take effect as a provisional matter awaiting EP action.
The negotiations were necessary because of a referendum held in Britain on June 23, 2016. The margin of victory was small; the “Leave” option, representing the view that the Brussels based bureaucracy of the EU is an unwarranted intrusion on British sovereignty, won 51.89% of the vote.
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Although Johnson and Barnier between them have avoided various worst-case scenarios, there will be some costs for the revivified independence of the Brits. As one important example: until now, a financial services firm authorized by the regulator of the UK as a member state to undertake a given activity has been able to apply for a “passport” that would allow it to conduct the same business throughout the EU without the need for further authorization. Firms that could do a deal in London could do the same sort of deal out of a Paris or Bonn office. Now by virtue of Brexit these financial “passports” are revoked, and the historic London banks may lose some of their dominant position as they will have to make new arrangements, regulator by regulator, country by country, throughout Europe.