Boris Johnson was announced as Britain's new prime minister Tuesday, after campaigning as a Brexit hardliner and refusing to settle for the 'EU Divorce Bill'. But how will Britain's new pro-Brexit leadership and a 'no-deal' departure affect the rest of the 28-member bloc?
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The current deal, which will cost Britain an estimated £38 billion ($48.6 billion) has been controversial for the overwhelming debt, as well as the complications caused by neighboring trade partnerships. The British Parliament previously rejected deals with the EU, to keep open trade and human capital flowing from U.K.’s Northern Ireland and EU-Ireland.
Johnson formally takes office Wednesday before Parliament recesses for the summer. When Parliament resumes in September, the chief U.K. economist at Capital Economics, Paul Dales, projected that any hesitancy in reaching a deal could force the pound Sterling's value to fall.
Dales told the Guardian, “The first three months of Boris Johnson’s tenure as prime minister will be turbulent. How he deals with Brexit will probably determine whether or not he gets a second three months.”
The pound fell to a 27-month low of $1.24 against the dollar during the leadership campaign when Johnson claimed he intends to leave the EU with or without a comprehensive trade deal by Oct. 31.
British billionaire and Virgin founder Sir Richard Branson also warned that the value of the pound would fall to the levels of dollar if the U.K. left the EU abruptly.
Around Europe, member states of the bloc are reporting ripple effects of the Johnson win and a possible 'no-deal'. The European Commission has a website to advise all of the EU member countries in the transition.
According to the BBC, about 1.3 million U.K.-born people reside in the other 27 member states of the EU, while the U.K. hosts about 3.2 million EU nationals.
On Tuesday, Italy’s largest farmers’ lobby, Coldiretti, said that “the enemy of prosecco will handle Britain’s departure from the EU,” with Italy exporting a third of its sparkling wine.
Irish Minister for Finance Paschal Donohoe has suggested major tax cuts would likely be tabled, spending increases in areas like health and social welfare would be threatened, and businesses which export to the U.K. have been urged to register with customs due to detrimental tariffs increases. In preparation for no resolution, Ireland passed legislation in February covering pensioner benefits and fluid transportation for citizens between the countries.
According to the BBC, France is spending €50 million ($55.8 million) on developing port infrastructure to intensify customs. Without a deal, new border inspection posts will be required to check food, plants and live animals. They also passed a law in January protecting the rights of French nationals living in the U.K.
Over 100,000 German jobs are projected to be affected by Brexit, according to a study released in January by The Leibniz Institute for Economic Research Halle (IWH) and the Martin Luther University Halle-Wittenberg. Researchers suggest that British imports from the EU would collapse by 25 percent without a contract. Like France, Germany has granted German nationals living in the U.K. restricted rights for the first three months of Britain's departure from the EU.
In March, Spain announced temporary measures for Britons in Spain to continue living there as now, including making healthcare provisions. They will have to apply for the "foreigner identity card" before the end of 2020, to prove their legal residency status.
Other regional foods like French champagne, Spanish ham or Italian prosecco are currently protected and subsidized in Britain under EU rules. It is undetermined how these exports will be received in the future.
In a 2016 Bloomberg interview early in the leadership races, former Italian Economic Development Minister Carlo Calenda warned Johnson, "OK, you’ll sell less fish and chips - but I’ll sell less prosecco to one country, and you’ll sell less to 27 countries.”
The U.S. too will be affected by Britain's nationalist 'no-deal', favoring isolationist sentiment. The day after the Brexit vote, the Dow fell 610.32 points. Shortly after, while the value of the euro and pound Sterling fell, the value of the dollar rose. However, its strength makes American shares more expensive for foreign investors and has the potential to rock American markets.