UK post-Brexit: The beginning after the end | Analyst Picks| RiskMap 2021
UK post-Brexit: The beginning after the endAlexandra Kellert | Analyst
With the post-Brexit transition period over, 2021 sees the United Kingdom fully outside the EU’s structures. Disruption at border points as new processes take effect will be short-lived, but questions about what kind of business destination the UK wants to be will persist. Will London position itself as a low-regulation, low-tax centre for investment, or will it prioritise legislation to protect British businesses? Initial signs suggest the government will attempt a balancing act between the two. Despite the economic impact of COVID-19, it will try to keep taxes low – though perhaps with tighter enforcement – but will also continue to increase screening of foreign investment in a growing number of sectors.
The year ahead offers the UK two opportunities to posture as a global leader. It will host a G7 meeting and the postponed UN climate change summit (COP26). Prime Minister Boris Johnson will use both occasions to push a post-Brexit “Global Britain” and is positioning the UK as a leader on green policies. On the legislative front, Johnson faces fractious backbenches: while he sees a green agenda as providing opportunities for deprived regions, MPs from those areas will favour quick results over green ambitions. Many are worried that Johnson is moving away from the Brexit-led policies that won the 2019 election for him in working class communities and back towards the more liberal agenda. An attempt from within the Conservative Party to remove Johnson as leader is more likely now that the Brexit transition period is over and an EU deal done. If his public approval ratings fail to recover and his post-Brexit and post-pandemic plans fall short, he could face a vote of no confidence within the parliamentary Conservative Party. However, until there is an obvious candidate to replace Johnson, he would be unlikely to lose.
Johnson’s next big headache is likely to come from an increasingly divided Union. Elections for the Scottish parliament may put Johnson in a difficult position – a strong win by the incumbent Scottish National Party would see a new independence referendum firmly back on the agenda. Blocking a vote would look like Johnson denying “the will of the people”; agreeing to one could break up Britain.
There will be no easy choices in 2021 and businesses will have to put up with yet another year of political and regulatory tumult. This will affect everything from whether they can deploy personnel abroad to the levels of tax that they pay and even whether the UK will continue to represent a single market for goods and services.