Brexit has changed the way the UK trades and works with the rest of the world, bringing new challenges like trade barriers and labor shortages. However, Northern Ireland stands out as a unique case due to the Northern Ireland Protocol. This agreement allows the region to stay connected to both the UK and the EU’s single market for goods, giving it special access to two large markets. While Northern Ireland benefits from this arrangement, the rest of the UK faces difficulties such as higher costs, trade delays, and challenges for small businesses. This shows how Brexit has created different outcomes for different parts of the UK. Understanding the consequences of Brexit is important for the rest of the EU for several reasons, as these lessons can influence future political and economic decisions, as well as relations between member states and the outside world. How Brexit has affected trade, investment, labor markets and political stability could help the EU countries to better prepare for similar scenarios and may even discourage other countries from considering an exit and instead strengthen cohesion within the Union.
Northern Ireland Protocol: A hybrid solution
Northern Ireland’s special position in the Brexit Agreement has received a lot of attention as a potentially beneficial solution, especially in contrast to the challenges the UK has faced following the EU withdrawal. While the UK opted for a more direct break from the EU market and customs union, Northern Ireland has gained a unique position that in some respects brings economic benefits to the region. This is due to the special protocol negotiated during Brexit, known as the Northern Ireland Protocol. It came into force in January 2021 and aims to resolve the difficult issue of how to manage the border between Northern Ireland (which is part of the United Kingdom) and Ireland (an EU member). To avoid a hard border on the island of Ireland – which could have jeopardized the 1998 peace agreement (the Good Friday Agreement) a solution was chosen in which Northern Ireland remains part of the United Kingdom’s customs territory and is also included within the EU’s internal market for goods. The Northern Ireland Protocol, which became part of the Brexit agreement, was created to deal with the sensitive issue of the border between Northern Ireland and Ireland. This hybrid arrangement means Northern Ireland can trade freely with both the EU and the UK. This is something that neither the rest of the UK nor any other region of the world can offer.
This unique position has created several potential advantages for Northern Ireland, especially in comparison to the rest of the United Kingdom. Northern Ireland is now the only area in the world that has free access to both the EU’s single market and the UK’s domestic market. This makes the region attractive for companies that want to take advantage of the benefits of trading in two major economic blocs. Exporting companies in Northern Ireland can sell goods to the EU without tariffs and bureaucratic hurdles, something that UK businesses outside Northern Ireland can no longer do. Imports and exports between Northern Ireland and the UK continue without major obstacles, although some administrative controls have been put in place. In February 2023, the UK and the EU signed a new agreement, called the Windsor Framework, which aims to reduce these tensions and make trade smoother. The Protocol has created new opportunities for investment in Northern Ireland. Several companies have begun to see the region as an ideal base for accessing both the UK and European markets. One of the most debated aspects of Brexit was the risk of a hard border being re-established between Northern Ireland and Ireland. This would not only have damaged the economy, but also threatened the delicate political balance of the region. The Protocol maintains the open border, which benefits both trade and social cohesion. In the first years after Brexit, Northern Ireland’s exports to the EU have shown a more stable development compared to the UK. For Northern Ireland, being a historically troubled region with conflicts between the catholic and protistan population playing out in decades, this protocol can help the region rebuild and develop in the aftermath of Brexit.
UK and Brexit effects
British economists talk about Brexit as self-harm in terms of prices, investment and trade. Negative effects are not only from the covid pandemic or the energy crisis but are also Brexit effects. When the UK voted to leave the EU in 2016 it seemed like a simple decision between leaving and staying. What they ended up with through many years of back and forth has been pretty much the hardest, least aligned version of Brexit that you could get. The UK is no longer part of the European single market, the customs union, and instead have now a bare bones free trade agreement. The cost of that have become clear over time but have been masked by the British government as effects of the covid pandemic as well as the war in Ukraine, which has weaken the global energy market and has helped drive inflation.
The negative effects of Brexit were evident from the beginning of the political Brexit campaign. Just when the vote to leave the EU was announced, the value of the pound went down about 10 percent against their trading partners. That made imports more expensive and more competitive than they already were due to inflation. Fee costs made small businesses in UK more expensive and made it harder to continue production in the UK, giving them no choice but to move their production to other countries within the EU to be able to stay competitive on the market. The UK labor market is also showing its Brexit effects. Areas like construction, social care, and service that had workers coming to the UK with the free movement policy now must also adapt to the post Brexit era. For many years, UK’s decision was considered the right choice since there hadn’t been any major shake ups in the markets. Brexit proponents refused to even discuss the idea that Brexit had affected the UK’s economic performance, while Brexit remainders wanted to instead pin everything on Brexit, and the truth is inevitably somewhere in between. In comparison with the performance of other advanced economies after the pandemic there was a trade recovery by all the other G7 countries while the UK fell behind in trade intensity. Before Brexit, smaller UK businesses were able to grow by gradually expanding their business into the European single market and now they can’t expand from the UK anymore when trade relationships fazed dismantled between UK and EU. This in short leads to a decrease in the number of business staying and growing in the UK and simultaneously, an increased number of growing EU businesses. Brexit has led to uncertainty, delays, less efficiency, and harder competition from EU countries. it’s important to underline that Brexit wasn’t all about the economy, it was also about stopping the free movement of people, controlling the UK fishing industry and taking back independence to the UK but the tradeoffs and the costs of that have shown to be problematic. It can be legitimate to discuss taking back control but the economic impact that came from the negotiations with the EU may have outweighed the benefits except for maybe in the region of Northern Ireland.
