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A historic post-Brexit trade deal reached on Christmas Eve got a preliminary stamp of approval from European Union ambassadors on Monday.
“Green light for #BrexitDeal: EU Ambassadors have unanimously approved the provisional application of the EU-UK Trade and Cooperation Agreement as of January 1, 2021,” tweeted Sebastian Fischer, spokesman for the German EU presidency.
He said the next step would be “final adoption by use of written procedure,” which happens when member countries deal with urgent decisions by sending their consent in writing. That deadline is Tuesday at 3 p.m. local time in Brussels, said Fischer. That’s 9 a.m. in New York.
The U.K. Parliament is due to reconvene on Dec. 30 to vote on the Brexit deal, which is not expected to run into roadblocks.
After years of back-and-forth negotiations, U.K. and European Union officials announced the post-Brexit trade agreement last Thursday. Prime Minister Boris Johnson said the deal, which kicks in on Jan. 1, covers trade that was worth £668 billion ($901 billion) in 2019 and was the largest that either side has signed.
EU member states have to ratify around 2,000 pages of legal text. The U.K. officially left the EU on Jan. 31 of this year, but the two sides needed to reach a deal over their future trading relationship before the end of the transition period on Dec. 31, finally doing so, pending completion of the pact, with just a week to go.
The British pound GBPUSD, -0.40% rallied on Monday, gaining 1.2% to $1.3510, while the FTSE 100 UKX, +0.10% was static as trading in London remained closed for an extended holiday break. Trading was anticipated to be thinner than usual.
“While this trade deal is far from perfect and years of negotiations on other subjects are ahead of us, this is clearly a positive outcome for the U.K. economy and U.K. businesses,” said Joachim Klement, research analyst at Liberium, in a note to clients.
Among the imperfections, he said the deal doesn’t cover the service sector, which makes up around 80% of the U.K.’s economy. That means “we will likely have years of negotiations ahead of us on the cross-border provisions of services (in particular financial services),” said Klement.
And professional standards on either side are not automatically acknowledged, “meaning that consultants, architects, doctors, etc., cannot freely move from one area to another to find a job, nor can they offer their services cross-border without meeting additional regulatory standards or opening a local subsidiary in the other region,” he added.
