FX.co ★ EU on trade warpath with UK

The EU and the UK seem to be unable to live in peace after Brexit. Have they reached an agreement on one issue, there is always another insoluble problem. The transition period is also not going smoothly. Having assessed the existing trade relations with the UK, the European Union does not exclude a trade war with its former member. Reportedly, the block has also assembled a group to work on sanctions if London remains unwilling to make concessions.

The UK has recently threatened to terminate the previously signed trade agreement with Northern Ireland, which remains part of the EU customs territory after Brexit. At a meeting with European Commission Vice-President for Interinstitutional Relations Maros Sefcovic, France, Germany, the Netherlands, Spain, and Italy called for retaliatory measures if the UK terminates the current trade agreement. For instance, Sefcovic is proposing a "bespoke Northern Ireland-specific solution". "Most food products will not need to be physically checked when arriving into Northern Ireland from Great Britain," he said. However, some EU member states doubt that this measure will somehow affect the UK.

If the UK and the EU relations turn sour, the block has a wide range of leverage against the UK. The UK’s weakest point is the energy sector. Europe accounts for approximately 10% of electricity supplies and 12% of gas supplies to the United Kingdom. In addition, the termination of the trade agreement ensuring duty-free trade between the EU and the UK may also be used as a retaliatory measure.