What now for British economy with UK-EU trade deal reached?

What now for British economy with UK-EU trade deal reached?

SeattlePI.com

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LONDON (AP) — The last-minute trade deal between the U.K. and the European Union means businesses will be spared new tariffs and border disruption at the start of the new year - an economic shock that would have compounded the employment and financial troubles inflicted by the pandemic.

News of the agreement Thursday brought sighs of relief from the offices of corporate bosses and politicians, as well as from consumers anticipating produce shortages and transport workers facing the potential of long backups at border crossings.

Bank of England Governor Andrew Bailey recently warned that a failure to secure a U.K.-E.U. trade deal would have a greater long-term impact on the British economy than the long-term impact of the coronavirus pandemic, which has led to the country's deepest recession in more than three centuries.

The deal still must win approval from the British and EU parliaments. Here’s a look at the changes to come and their likely implications.

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WHAT IS THE U.K. LEAVING ON JAN. 1?

Though the U.K. left the EU on Jan. 31, it is following the bloc’s rules until the end of this year as part of a transition period to the new economic relationship. The problem was, what comes after that?

The U.K. is leaving the European single market, which after its departure will encompass around 450 million people. At its heart, the single market aims to make trade as simple as possible, regardless of where a business is located within the European Economic Area, which in addition to the 27 EU member states includes non-EU nations including Iceland and Norway. The rules governing trade are the same across the single market and are based on the free movement of goods, services, capital and people.

The U.K. is also leaving the customs union, which eliminated tariffs...

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