July 25, 2019

Can Boris Johnson Untangle the Brexit Web?

In an overwhelming victory, Boris Johnson was confirmed as the United Kingdom prime minister this week, succeeding Theresa May. He is the original advocate for the U.K.'s withdrawal from the European Union and his “take back control" slogan successfully swayed Brexit supporters during the 2016 referendum.

Johnson is controversial. His popularity comes from his eloquent, pro-British speeches, combined with his down-to-earth appearance and famous scruffy hair. He is entertaining, speaks with intellectual wit, and is also known to quote Greek classics in casual discussions. His fearless optimism often persuades people things can happen, even if he gets his facts wrong.

His weakness is that he is no economist. Whether innocently or not, he has cited many false claims to argue a point, a practice that hurt his career as a journalist. His optimism and conviction occasionally defy reality, such as the economic consequences in the U.K. of higher tariffs on exports should a no-deal Brexit occur. While advocating that the E.U. was threatening British identity by imposing stiff budgetary commitments and regulations, he failed to mention its benefits, including free capital and trade. In 2016, Johnson falsely claimed that Britain sends £350 million weekly to the EU, where the real number was closer to £280 million per week. He was almost prosecuted for making such false statements.

As Johnson takes office, he will immediately face the challenge of delivering a worthy Brexit for the U.K. before the Oct. 31 deadline. It's a race with time as the U.K. economy is on the brink of a recession, with business investments stalled due to Brexit uncertainties over the past three years. But can Johnson really deliver in less than 100 days what May could not do in three years?

My View: The current Brexit situation is a tangled web. Leaders of the EU, a body of 23 member countries that allow the free flow of trade and people, have said they don't want to renegotiate the current withdrawal agreement struck with May. A big part of the deal involves the Irish border backstop, to maintain a seamless border between Northern Ireland and the Republic of Ireland, which Johnson has said he doesn't want. Northern Ireland, part of the U.K., may not agree with Johnson, as this would create a customs border between the two Irelands. We are not sure how they can all agree.

Johnson promised that they will leave the EU by Oct. 31– “do or die," “no ifs or buts," but if nothing is agreed to by then, the no-deal Brexit scenario becomes reality. This means the U.K. will have no trade agreement, eliminating Britain's tariff-free trade status with EU members and worsening its trade deficit, which will have to be compensated for by a weaker pound. It is expected to be a disaster for the U.K. economy.

So, the majority of Parliament doesn't want a no-deal Brexit. In this case, Parliament could vote for an extension, which may buy some time for a general election or even a second referendum, though that is still a long shot. But the EU also needs to approve this, which it has already done twice.

In conclusion, if Johnson can resolve all of this by the deadline, we should all cheer. But it's not very likely. And meanwhile the U.K. economy and British pound may remain under pressure. The one thing that Johnson is likely to keep on delivering is his charismatic optimism, telling people to “Believe Britain."

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