EU-UK Brexit deal chaos and COVID vaccine row continues

  • European Union at risk of collapsing following vaccine chaos
  • British pound to euro (GBP/EUR) exchange rate and British pound to US dollar (GB/USD) exchange rate forecast to rise
  • Pro-EU rejoinders told the UK they may have to wait ten years before re-joining the EU
  • UK businesses faced with more challenges due to Brexit than COVID-19
  • Scottish National Party (SNP) threatening to hold an independence referendum in May 2021

Experts have warned that the European Union is at risk of becoming a “fragmented bloc” post-2021 as its handling of the COVID-19vaccine rollout has exposed deep divisions inside the EU.

According to a senior analyst for Stockholm’s leading financial institution Swedbank, Cathrine Danin, Sweden could be next to follow the UK’s footsteps and depart the EU.

Several MEPs expressed their disapproval over how European Commission President Ursula von der Leyen tackled the vaccine shortage in the EU, who later admitted that there had been flaws in the bloc’s approach to the vaccine rollout.

President von der Leyen threatened to block vaccine exports to the UK after pharmaceutical firm AstraZeneca said it would be unable to deliver 100M doses to the EU by March 2021 due to issues at the production site near Brussels.

Ms von der Leyen attacked AstraZeneca for backtracking on its commitments, igniting a massive vaccine row between the UK and the EU, which concluded with the European Commission threatening to invoke the Article 16 Brexit agreement clause.

The EU Commission was forced to remove its threat to trigger Article 16 of the Northern Ireland Protocol before it was invoked. Still, the move severely damaged the EU’s reputation, and as a result, Euroscepticism appears to be rising in some of the bloc’s member states.

Moreover, the UK’s lead in the race to immunisation has only been made possible due to the country becoming an independent state, which may be a point of envy for some EU countries.

Foreign exchange (FX) analysts at leading financial services company, Credit Suisse have raised their forecasts for upside in pound Sterling (GBP) exchange rates in the wake of the developments.

The British pound to euro (GBP/EUR) currency pair has retreated from highs of EUR 1.1443 amid nerves ahead of UK gross domestic product (GDP) data due out on Friday. However, Credit Suisse has downgraded their EUR expectations amid the increased risk of economic downturn and political chaos in the EU.

Credit Suisse Trading Strategist, Shahab Jalinoos, said the EU’s decision to invoke Article 16 sent a worrisome signal about foreign and domestic policy, as well as concerns over the Union’s unity.

He added, “some member states now feel the EU Commission is both unfit to handle the healthcare task to hand and that it is also prone to needless petty vindictiveness when it comes to relations with the UK.”

In combination with broad-based pandemic frustration, the move has increased the risk of significant changes to the bloc’s structure, with eurosceptics in France, Italy and Spain believed to be using the EU’s controversial handling of the pandemic to support their “leave” cause.

France’s National Rally leader, Le Pen, is already reportedly closing in on the gap with incumbent-President Emmanuel Macron in the pollings for the 2022 presidential elections.

Meanwhile, Sweden, who is known to have notably close ties with the UK is said to be on the brink of “Swexit” due to EU vaccine chaos and fears that Britain’s departure will negatively impact the bloc’s stability.

However, the news is bad for British “rejoiners”, who are already having to come to terms with the fact the UK may be unable to link back up with the EU for a decade.

EU threatens to block vaccine exports to UK

Pro-EU rejoiners dealt crushing Brexit blow

Former deputy Prime Minister under Theresa May, David Lidington said it’s unlikely that the UK will have the opportunity to rejoin the EU within the next decade.

He noted that the next general election isn’t until May 2024 and even if the UK votes in a pro-EU government, there’s no way to guarantee that the public will be in favour of returning to the EU.

EU vaccine chaos could also sway public opinion, particularly as the UK has one of the world’s most successful vaccination programmes.

Mr Lidington said that with another EU referendum off the cards for the foreseeable future, the UK government should focus on “strengthening close and strategic partnerships with other countries.”

However, this comes as a great disappointment to UK businesses, many of which face more formidable challenges post-Brexit.

Several business leaders have claimed Brexit is their number one headache, with additional paperwork, unexpected costs and new trading regulations making day-to-day operations more onerous than lockdown restrictions.

UK Business Economy

UK businesses facing post-Brexit obstacles

Despite the UK government’s vow to maintain the zero-tariff-zero-quotas on all traded goods originating from Britain, five of the UK’s largest business firms have cited significant disruption at borders due to new Brexit trade deal rules.

UK business output tumbled by 5.83 points in January 2021 to levels unseen since April 2020.

The Confederation of British Industry (CBI), the Institute of Directors, Make UK, the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC) wrote to MPs last week, warning of the storm brewing due to the obstacles presented by Brexit.

The FSB also delivered a stark message about the profits of small and medium-sized enterprises (SMEs) being erased by additional post-Brexit costs.

A UK-EU Brexit trade deal was expected to provide businesses with a degree of certainty going forward. However, new research from London-based marketing firm Impression revealed that 67% of UK firms are still uncertain about their prospects post-Brexit. Meanwhile, 20% of British businesses expect the UK’s departure from the EU will negatively impact their company in the long-term.

Elton John has also criticised the government over the terms agreed for musicians, who he feels have been primarily neglected during Brexit trade talks.

Elton John accused UK Prime Minister Boris Johnson of “screwing up” by failing to secure an agreement on visa-free travel for British musicians touring the EU.

The Prime Minister has also come under fire for withdrawing from the Erasmus scheme. Italian MEP Salvatore De Meo had fought for the Erasmus programme to remain open to UK students, or at least for those governments interested, referring to Wales and Scotland.

Meanwhile, former director of Labour Market Enforcement, Matthew Taylor has attacked the Prime Minister for his lack of concern over low-paid workers being exploited.

He warned that more of the population is at risk of low-paid work abuse due to rising unemployment levels stemming from the pandemic and changes to the immigration system due to Brexit.

However, the Scottish National Party (NSP) leader, Nicola Sturgeon, is taking advantage of criticism against Boris Johnson to fuel her campaign for Scotland to host an independence referendum, despite the immediate threat of COVID-19.

Nicola Sturgeon threatening to go ahead with independence vote

SNP leader, Nicola Sturgeon continues to push for another independence referendum in Scotland, in blatant defiance of Prime Minister Boris Johnson, who denounced a second referendum amid the coronavirus pandemic.

However, the SNP’s decision to hold a parliamentary election in 2021 despite the pandemic’s ongoing woes has seen the Scottish leader receive some heavy criticism from opposition parties.

Scottish Conservative councillor, Tony Miklinski, said: “She is using the popularity gained from press conferences to further her obsession with independence when she should be trying to help the country under her care recovering from the ravages of the pandemic.”

Scottish Conservative leader Douglas Ross, has also condemned the SNP for prioritising a divisive referendum during the pandemic, especially given that COVID-19 has shown how the devolved nations have come together to support all parts of the country.

Mr Ross added: “To parade her ambitions like this on the back of the pandemic at this time is quite outrageous.”

During an interview with the, Mr Miklinski warned “the clock is ticking” on Ms Sturgeon’s tenure as First Minister due to her fixation on independence and her failure to improve the quality of crucial areas such as education and healthcare during her reign.