In the second part of Anadolu Agency's (AA) dossier news titled "From Brexit to Breturn", the economic consequences of Britain's re-accession to the EU were compiled based on expert opinions and analyses.
Before the Brexit referendum, groups in favor of Britain leaving the EU presented arguments such as that the country would thus be freed from strict regulations, that contributions to the EU budget due to membership would remain in the country, and that the EU's negotiations with third countries in the field of free trade were "progressing slowly".
The opposing group shared their opinions that access to the single market and customs union, attracting foreign investment and separation would negatively affect the country's economy in the long term.
British Prime Minister Andy Burnham's statement that leaving the EU would do more harm than good to the country, and the EU Commission's statement that it was open to discussions on the options to come to the agenda, brought the UK's re-membership to the agenda.
The parties will gather in Brussels on 20 November for the 2nd EU-UK Summit, in a period dominated by this agenda.
Economic impact of Brexit on the EU and the UK
Analyzes carried out by various organizations, especially the UK Office for Budget Responsibility (OBR), reveal that Brexit reduces the size of the UK economy by 4 to 8 percent. It is considered that this economic contraction negatively affects the growth performance in the country, causes living costs to rise and productivity growth to slow down.
It is stated that new obstacles in trade relations with the EU increase transaction and trade costs, and this situation continues to limit the long-term growth potential of the British economy.
According to the EU Commission's budget revenue forecast for the 2021-2027 period, the annual average of contributions based on the gross national product of member countries is expected to be 144.9 billion euros, while the Commission pointed out that the gradual decrease in the UK's payments arising from previous budget periods affected the course of national contributions together with the new period's expenditures.
The EU created a "Brexit Adjustment Reserve" of 5.4 billion euros to support member countries and sectors such as Ireland, the Netherlands and Belgium, which were most affected by Brexit.
The EU is the UK's first and the UK is the EU's third largest trading partner.
According to the latest data of the European Statistical Office (Eurostat), while the EU will trade a total of 504 billion euros in goods with the UK in 2025, 345.3 billion euros of this will be recorded as exports and 158.7 billion euros as imports.
The UK is the third country with the EU's goods trade volume after the USA and China. In terms of service exchange such as finance, consultancy and digital services, the UK becomes the EU's second largest trading partner after the USA.
While 45 percent of the UK's total trade of 1.9 trillion pounds in 2025 will be with the EU, the country's first commercial partner is recorded as the EU.
Opportunities and risks for the parties in the UK's return to the EU
Analyzes made by European-based think tanks indicate that the UK's re-membership to the EU will mostly be advantageous for both parties, and indicate that the negotiations will not be easy.
In the research of the Center for European Reform (CER), it was noted that Brexit reduced the UK's exports to the EU by 12 percent and its imports by 16 percent, and pointed out that especially customs procedures, different regulations and product certification processes increased trade costs.
It is stated that one of the most important economic gains for the UK will be regaining access to the EU single market.
While it is predicted that the re-membership of the United Kingdom may have positive effects on economic growth, investments and productivity, it is stated that re-joining the customs union alone will be limited to compensating for trade losses resulting from Brexit, and more comprehensive economic gains may be possible with reintegration into the single market.
Goldman Sachs, one of the largest banks in the USA, estimates that Britain's return to the EU could provide significant economic gains, and that the country's economy could grow by up to 150 billion pounds if re-joined to the single market.
For the EU, advantages such as increasing the economic scale of the Union and the size of the internal market, easier access of European companies to the British market, and the UK contributing to the EU budget again are highlighted.
On the other hand, it is also pointed out that the re-membership process will create some economic and political obligations for both parties.
While the UK is expected to comply with EU legislation, accept the principle of free movement and contribute to the Union budget, the situation of determining independent trade policy will also be reshaped.
Research indicates that the UK's return to the EU will depend on the extent to which its economic gains will be realized, membership conditions and how the transition process will be carried out.
Sectoral cooperation is expected to develop in the near future
David Henig, director of the UK Trade Policy research project at the European Center for International Political Economy (ECIPE), told AA correspondent that the growth rate of the UK economy is expected to be below 2 percent, and that this led the government to the idea of establishing closer relations with the EU. "(Britain's re-accession) This situation will undoubtedly be economically positive for both the UK and the EU." made his assessment.
Henig shared the view that re-membership would be more beneficial for London than Brussels, that economic growth would not "accelerate immediately", but would help the EU's efforts to increase its competitiveness in the long term.
Stating that the parties are likely to reach some sectoral agreements at the 2nd EU-UK Summit, Henig said, "It does not seem likely that significant progress will be made without the victory of the Labor Party (in government in the UK) in a general election that could take place any time before 2029." he said.
Noting that if the Labor Party wins the election planned to be held in 2029, new negotiations with the EU, including membership talks, may be opened, Henig said, "The most likely outcomes are this (re-membership negotiations) or a search for a regulation similar to Switzerland's, but this will bring about a number of problems." made his assessment.
