Britain is finally severing ties with the EU. Here’s what’s changing.

For Brexit supporters, including Prime Minister Boris Johnson, such costs are justified by the benefits and opportunities of leaving the EU. The departure will allow the United Kingdom to stimulate British trade with the rest of the world and establish laws that will shape its economy and society without interference from Brussels, they say.

“Brexit is not an end, but a beginning, and it is now up to all of us to make the best use of the powers we have regained,” Johnson said Wednesday in a debate on the UK’s free trade agreement. United and EU Parliament.

The agreement reached on Christmas Eve between London and Brussels on the terms of their future relationship was more than 1,000 pages, covering areas as diverse as fishing rights and cooperation between law enforcement agencies.

However, some major areas of the UK’s post-EU agreements with its neighbors have not yet been finalized, in particular the long-term basis for trade in financial services and cross-border data exchange. The United Kingdom is a strong exporter of the former, while the latter is one of the most important lubricants in global trade.

For companies, the strongest changes from 1 January will be felt by British exporters and importers trading with the EU. New procedures for customs declarations and regulatory documents will enter into force. Tariffs will not be charged for trade in goods, but companies that import components from around the world to produce goods for sale in the EU will have to comply with the rules of origin, which specify a minimum level of foreign inflows that a finished product may contain. to avoid tariffs.

The UK has said it will give companies bringing goods to the UK a degree of freedom in applying the new rules to make it easier for goods to pass through. The EU did not provide any such assurance, increasing the possibility of delays and disruption of cross-border trade while the new arrangement takes place.

This disruption is likely to affect economic growth, especially in the first quarter, and will persist throughout the year, Citi economists said in a research note this month. They said the effects could be exacerbated by the pandemic, which has distracted UK company managers from making the necessary preparations. A Bank of England survey of corporate executives in November found that only 40% said they were fully ready by January 1st.

Overall, Citi estimates that the disruption will reduce Britain’s gross domestic product in 2021 by around 2%, compared to what it would have been if it had remained within the EU’s single market, its common regulatory area and customs.

Service firms have been facing similar, if not greater, challenges since 1 January. The UK-EU free trade agreement only included general provisions for trade in cross-border services that do not match the level of access available in the single market. , the Institute for Government said in a report released after the agreement was agreed.

IfG, a non-partisan think tank focused on policy-making, said service companies in the UK would also face local restrictions, depending on the laws Member States apply to non-EU companies. Professional qualifications will not always be automatically recognized, for example, and business travelers may need a visa to see their clients depending on how long they are staying. No obstacles apply to professionals from EU members. Some services are completely banned from non-EU providers.

“British citizens will not be able, for example, to sell actuarial services in Italy or construction services in Cyprus. There will be no topographers in Bulgaria or no tobacco in France, ”the IfG report said.

Most financial services firms in the UK will no longer be able to provide services to EU customers from 1 January, pending a so-called “equivalence” decision by the EU on the degree of market access that has not yet been made. However, the Bank of England said in November that large UK banks, insurers and asset managers had already set up EU-based subsidiaries to ensure no disruption to their EU operations.

The UK Treasury has granted temporary permission to EU companies providing a range of financial services to UK customers, but the EU has done the same only to offset financial assets through UK stock exchanges. EU officials said they could not set a deadline for granting equivalence to the UK financial services sector, although the two sides should reach an agreement on co-operation in the field of financial regulation by the end of March.

Data is another outstanding issue. Companies will still be able to transfer personal data electronically across the UK-EU border on 1 January for up to six months. The EU has said it will make a decision on whether UK law meets its standards to allow data to continue flowing in the first few months of 2021.

Brexit will change trade even within the UK To avoid the need to rebuild a customs border on the island of Ireland, Northern Ireland remains in place in the EU customs area and in the single market. This will require an increased number of controls on products moving from the British mainland to Northern Ireland.

For British families, January 1 will also bring changes. Tourists with a British passport will no longer be able to use express lines for EU citizens with automatic gates at airports. Those traveling to destinations in the EU will have the chance to shop free of charge – but will face new restrictions on the amount of alcohol they can buy. EU limits for certain mobile phone charges will no longer apply, which is likely to mean higher prices for international calls and messages.

British students will face higher fees and admission requirements to study at EU universities. And pets, who could travel freely with their owners across the block as part of an EU pet passport program, will need a veterinarian from 1 January to issue them a clean health bill to enter. in an EU country.

—Laurence Norman from Brussels contributed to this article.

Write to Jason Douglas the [email protected]