Boris Johnson’s Successor Will Face Challenges With Post-Brexit Turmoil, Inflation, Energy

LONDON — Boris Johnson came to power in 2019 with a promise to take Britain out of the European Union and lead it into a new era of economic growth and prosperity.

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Six years after Britain voted to leave the EU, the government has yet to demonstrate significant benefits from the UK’s new freedom in rebalancing its trade relations and revising rules previously laid down in agreement with other EU members were.

Leaving the EU has taken the UK out of the EU’s huge market of 445 million consumers. Britain is no longer a member of a customs territory stretching from Turkey to the Atlantic.

British Prime Minister Boris Johnson has pushed for new rules on trade and immigration to reflect British voters’ vote to leave the European Union in 2016.


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Stefan Rousseau/PRESS ASSOCIATION/Zuma Press

British companies have had to deal with additional costs and paperwork for trading with the EU, which accounts for around half of all UK exports. Before the war in Ukraine, this meant the UK lagged behind its competitors as world trade recovered from the pandemic. Mr Johnson had said new trade deals with the US, Australia, India and other parts of the world economy would make up for lost opportunities in Europe. The administration has so far eluded a deal with Washington, however, and trade experts say the deals it has struck largely replicate the terms on which it acted when it was a member of the EU.

Problems are compounded by soaring energy and food prices, which have left Brits facing the biggest drop in real incomes since the 1950s as annual inflation is set to peak at 11% by year-end. The UK has the highest inflation rate of any country in the Group of Seven.

“Probably the biggest issue is the cost of living,” said David Nosiah, a London-based communications manager. “I wish Brexit had never happened. But I don’t think there’s much we can do about it now. The cost of living is the biggest thing people deal with.”

The cost of living crisis stemming from rising inflation eroded support for Mr Johnson’s government, which came to power pledging to implement a 2016 vote to leave the EU but spent much of its time trying to 19 pandemic to fight.

This is the result of a regular survey by the opinion research institute YouGov,

Brits rated Brexit as the country’s top issue as Mr Johnson’s Conservative Party won a landslide victory in the December 2019 general election.

But by April 2020, the pandemic had eclipsed Brexit as the top issue for potential voters. In February, following Russia’s invasion of Ukraine, the economy became the dominant concern for many Britons.

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In the UK, demand for food bank and meal program services is growing as inflation continues to rise.


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Frank Augstein/Associated Press

At the end of June, almost two-thirds of Brits said the economy was the country’s most important issue; only 21% named Brexit as their biggest concern.

Mr Johnson was an early cheerleader for Brexit and, as Prime Minister, pursued policies that led to a definitive break with the EU.

Under his leadership, the UK exited the EU customs territory and the single market, its zone of common regulation. Together, these institutions had enabled the free movement of goods between member states without the need for customs or official controls.

The UK also rewrote immigration rules that stopped the automatic right of EU citizens to live and work in the UK, as well as Brits’ reciprocal right to do the same in the EU.

“I am immensely proud of the achievements of this government, from managing Brexit and managing our relations with the continent, after half a century of reclaiming the power for this country to make its own laws in Parliament,” Johnson said Thursday announced his resignation.

There was little sign of the economic recovery that Mr Johnson and his Brexit colleagues promised in 2016.

In May, the government budget watchdog estimated that UK workers would be 4% less productive in the long-term as a result of Brexit, while UK exports and imports are 15% lower compared to a scenario where the country remains in Brexit would EU.

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Boris Johnson during the election campaign in November 2019, shortly before the resounding election victory of the Conservatives.


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Frank Augstein/Agence France-Presse/Getty Images

A June report by economists at the London School of Economics says that leaving the EU and moving to the further afield trade links agreed by Mr Johnson will result in a post-inflation decline in median income of around 1.8% by 2030. “A less open Britain will mean a poorer and less productive Britain by the end of the decade,” says the report.

The UK’s separation from the EU has also exacerbated disruptions from global supply chain shortages, which have pushed up inflation.

Mr Johnson had hoped Brexit would help rebalance the UK economy and ‘even’ parts of England’s poorer rust belt areas in the north with its richer south. That was part of an appeal to voters to leave Labor and vote for the Conservative Party for the first time, which helped Mr Johnson win a large majority in the legislature.

“Our assessment shows that the North East, one of the poorest regions of the UK, will be one of the hardest hit and that Brexit will widen its existing (and large) productivity and income gaps,” said economists from the London School of Economics.

The new Prime Minister will also have to settle disagreements within the ruling Conservative Party over how far the UK’s separation from the EU should go. The party is divided on whether a larger, more activist state, favored by Mr Johnson, or more traditionally conservative tax cuts are the best way to maximize Brexit gains.

“Brexit is a monster that has now devoured three prime ministers,” said Stefan Koopman, an economist at Rabobank. “A fourth prime minister, whoever that may be, will also be put on the menu if the Tories don’t pull themselves together. The massive structural change Brexit has deepened existing divisions even further.”

Bloc members hope the new Prime Minister will take a less confrontational path than Mr Johnson, including abandoning legislation that would allow the government to unilaterally amend the terms of a 2019 deal that would establish a tariff border within the UK established between Great Britain and the North Ireland.

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Among the issues awaiting the next UK leader are legislation that would allow the government to amend a 2019 agreement that established a customs border within the UK – between Great Britain and Northern Ireland; a ferry terminal in Northern Ireland.


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Emily Macinnes/Bloomberg News

The issue is of particular concern to Ireland, which fears a move it sees in violation of international law would jeopardize a 1998 peace deal that ended three decades of violent conflict in Northern Ireland.

“The relationship between our governments has been strained and strained lately,” Irish Prime Minister Micheál Martin said in one of the few statements by a European head of state on Mr Johnson’s departure. “We now have an opportunity to return to the true spirit of partnership and mutual respect that is required to underpin the achievements of the Good Friday Agreement.”

write to Paul Hannon at paul.hannon@wsj.com and Jason Douglas at jason.douglas@wsj.com

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https://www.wsj.com/articles/post-brexit-turmoil-inflation-energypose-challenges-for-successor-to-u-k-s-boris-johnson-11657299995 Boris Johnson’s Successor Will Face Challenges With Post-Brexit Turmoil, Inflation, Energy

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