Latest news with #SPSAgreement
The Guardian
19-05-2025
- Business
- The Guardian
Labour will hope EU deal is final piece of jigsaw to boost economy
Monday's EU-UK reset deal will not instantly produce the growth Labour sorely needs to fulfil its promise to voters, but ministers hope it marks another incremental step on the road to a more optimistic economic future. Three aspects of the agreement have been particularly welcomed by business, and form the core of the economic package – although many details remain to be negotiated. The first is the long-hoped-for agreement to create a common sanitary and phytosanitary (SPS) area, under which cumbersome checks on food and agriculture products will be lifted, in return for the UK aligning with EU standards in these areas. Boris Johnson, presenting his trade and cooperation agreement (TCA) with the EU on Christmas Eve 2020, wrongly claimed there would be 'no non-tariff barriers to trade'. In practice, these barriers – including veterinary checks – have been hugely damaging, and a SPS deal is aimed at dismantling some of them, for this key sector. The British Chambers of Commerce, which has long drawn attention to the frustrations suffered by UK exporters, called the prospect of an SPS agreement 'a huge boost' that would 'cut costs, reduce waste and increase sales'. In a clearer statement of the hit to exports from Brexit than the ever-cautious Labour has usually allowed itself, the press release accompanying the deal mentions 'the 21% drop in exports and 7% drop in imports seen since Brexit'. Enthusiasts for a closer economic relationship hope that this approach – aligning on rules in exchange for more frictionless market access – could be a model for other sectors in future. The second aspect of the deal that carries economic weight is an agreement to cooperate more closely on energy policy, including aligning the EU and UK emissions trading schemes. The agreement should, the government says, 'create the conditions for goods originating in our jurisdictions to benefit from mutual exemptions from the respective EU and UK carbon border adjustment mechanisms (CBAM)'. In practice, the UK government claims that will mean the steel industry escapes £25m a year in levies that the EU would otherwise have imposed, via the CBAM – a policy aimed at ensuring heavily polluting products cannot enter the EU and undercut domestically produced equivalents that have paid to offset their emissions. Third, the UK hopes the agreement to negotiate over the possibility of defence industry cooperation will mean UK firms being able to bid for projects procured via the planned EU Security Action For Europe (SAFE) fund, which will allow member states to borrow to pay for weapons. The language on this in the EU-UK agreement is scant: the two sides agree to cooperate on 'security and defence initiatives, including on defence industry', and they commit to 'swiftly explore any possibilities for mutually beneficial enhanced cooperation created by the SAFE instrument'. But ministers clearly believe this could open the way for UK defence companies such as BAE Systems to profit, as defence spending ramps up on both sides of the Channel. The fury about fishing rights, which held up the final agreement, has little to do with economics and everything to do with the political symbolism of the sector. Research by the Resolution Foundation found that fisheries had actually been one of the industries worst affected by Johnson's Brexit deal, with output perhaps 30% lower than it might otherwise have been. Given how rapidly fish needs to get to market, Labour argues that eliminating cumbersome food checks under the SPS deal will benefit the sector more than allowing EU boats access to UK waters for another 12 years. (It may also have the positive political side-effect of preventing regular rows about fish from spilling out into the headlines.) Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion While the UK can point to clear economic wins from the deal, economists believe its direct impact on GDP growth is likely to be small, given the government's clear determination not to rejoin the single market or customs union, to avoid having to sign up to the free movement of people. Nevertheless, the government claims the reset will 'help make food cheaper, slash red tape, open up access to the EU market and add nearly £9bn to the UK economy by 2040'. That's a modest but worthwhile boost of about 0.3% to GDP, over the next 15 years. John Springford of the Centre for European Reform, whose analysis suggests the UK economy is approximately 5% smaller than it would otherwise have been as a result of Brexit, suggests that it still looks relatively generous. He recently forecast that a generous youth mobility scheme might increase the size of the economy by 0.45% over the next decade, while an SPS agreement would add less than 0.1%, for example – making 0.3% look a stretch. However, Labour hopes the economy will gain something more nebulous, which it is harder to plug into a model: a growing acknowledgment from the business sector that the UK is an appealing investment proposition. Before coming to power, Rachel Reeves and Keir Starmer hoped the credibility of a steadier hand on the tiller than the Tories would win over investors, whose confidence they see as key to the UK's recovery. Instead, Labour swept into power on a wave of dire warnings about the state of the economy, blindsided businesses with tax rises, and saw GDP continue to flatline. Now, they hope the triumvirate of the India-UK trade deal, the US tariff agreement with Donald Trump and the EU reset will burnish their reputation as calm and competent stewards of the economy, helping to generate a glimmer of optimism, in a highly uncertain world.
Irish Times
19-05-2025
- Business
- Irish Times
Planned EU-UK deal a ‘good day for Northern Ireland' with barriers likely come down
The announcement of a commitment by the EU and UK to work towards a deal which would remove most checks on agri-food products moving between Britain and the North has been hailed as 'a good day for Northern Ireland.' Speaking following the announcement by the UK prime minister, Keir Starmer , and the president of the European Commission, Ursula von der Leyen , on Monday, the Tánaiste, Simon Harris , said it was 'very important that the unique circumstances of Northern Ireland be taken into account, and that has been done. 'A broad-based SPS [sanitary and phyto-sanitary] agreement would bring significant benefits for Northern Ireland business and consumers, and for the efficient operation of the Windsor Framework,' he said. The commitment regarding SPS checks was part of a wide-ranging agreement announced following an EU-UK summit, and includes increased co-operation in areas including food, fishing, defence and passport checks. READ MORE According to the text of the agreement on a 'renewed agenda' for EU-UK co-operation, London and Brussels have committed to 'work towards establishing a Common Sanitary and Phytosanitary Agreement' which would result in dynamic alignment on SPS products between the EU and UK. 'This would result in the vast majority of movements of animals, animal products, plants and plant products between Great Britain and the European Union being undertaken without the certificates or controls that are currently required by the rules,' the agreement stated. [ Brexit 'reset' to give Irish fishing boats access to British waters Opens in new window ] This would also apply to Northern Ireland through the 'interplay of the Windsor Framework and the SPS Agreement, so long as the SPS Agreement is fully implemented' and will 'provide for Northern Ireland maintaining its privileged unique dual access to both the European Union Single Market and the United Kingdom internal market,' it said. It is not clear how it will take to reach this agreement, but it will require detailed negotiation of the legal text and an implementation process, and therefore could take some time. The Windsor Framework – which governs post-Brexit trade in Northern Ireland - remains in place, and its rules on SPS goods will continue to operate in the meantime. The North will also remain part of the EU customs union, with customs declarations still required for goods shipped from GB to Northern Ireland. The need for checks on agrifood products moving between Britain and Northern Ireland – which remains inside the EU single market for goods – has been one of the most economically arduous and politically contentious consequences of Brexit for the North. Unionists were opposed to the creation of an effective Border in the Irish Sea between Northern Ireland and the rest of the UK, while economically, physical checks and additional red tape increased costs for businesses and made it harder to import some products. Reacting to the announcement, the CEO of the NI Chamber, Suzanne Wylie, said it was 'a step in the right direction. 'It is welcome that the reset includes a pathway to an agrifood (SPS) deal and the linking emissions trading schemes,' she said. 'However, local businesses will take time to analyse the detail as and when it emerges.' She also added that the agreement 'will not solve all the challenges our members face' and said the NI Chamber 'would like to see greater aspiration to tackle regulatory divergence more broadly, and to reduce the customs burden under the Windsor Framework. 'We acknowledge that this is the beginning of a process, we welcome the direction of travel but there is much to do to and a need to move at pace,' she said. Rain Newton-Smith, the Chief Executive of the CBI, said 'cooperation on SPS measures is a significant win for business. 'Current costs, complexities and delays disrupt trade flows – meaning lost growth in a time of economic need,' Ms Newton-Smith said. 'As both sides look to iron out the details in the coming months, easing trade barriers for Northern Irish firms and supporting island of Ireland supply chains must remain a priority.' The North's First Minister, Michelle O'Neill, welcomed the announcement but said 'the devil will be in the detail. 'Anything that protects the all-island economy, anything that maximises our access to both markets in terms of trade, anything that removes barriers for trade, then that's something we would obviously very much welcome,' she said. The Traditional Unionist Voice (TUV) leader, Jim Allister, said the 'surrender of UK fishing waters for another 12 years to the EU is the most vivid illustration of the [UK] government's agenda to sabotage Brexit. 'The deal copper-fastens NI as EU territory,' he said, adding that despite the 'spin of diminishing the Irish Sea Border' a number of points of divergence between the UK and Northern Ireland remained.
