At the end of December 2020, after intensive negotiations, the approval of a trade deal between the UK and the EU was rushed through the British Parliament. There is, however, still little clarity on what Brexit will mean in practice in the long run. What are the threats and opportunities for international development resulting from the UK-EU agreement? Let’s see what international experts say about that.
What are the threats and opportunities for international development resulting from the UK-EU agreement?
“The transition is over and Britain is fully out of the European Union. The Brexit agreement references sustainable development, climate change, public goods, but solely as principles underpinning UK-EU relationships on trade and commerce. On aid, the agreement is silent. Are there major risks or opportunities? Whether the UK contribution to EuropAid will revert into UKAid is a moot point just now with the aid budget reducing, but one direct threat is already evident – many UK development-focused NGOs and private sector bodies face an EU-aid freeze out. Looking wider, there may be an opportunity to reshape how the UK ‘does’ aid – leading to greater impact in selected focal areas, as a ‘force for good’. The upcoming UK leadership of the G7 and Glasgow COP could be useful divining rods. Among these, topical in the Brexit environment, are: beefing up British business ethics, stronger illicit finance/tax avoidance rules, offering vastly better trade and invest B2B partnership terms than the EU does for developing nations. Backed by significant hands-on expert support to deliver results of course – an opportunity. Can action on these ‘national interest’ ‘global development’ issues be driven in a new way? Does the trend toward integrated overseas delivery (security, diplomacy and rights, aid and commerce) lead to tied aid, slide toward national commercial interests? Or can the Global Britain process lead a new and more effective blended development instrument? It could be an opportunity to do more and do different work at a global level tackling selected global public goods in the health space, on tax evasion, or girls education, say. It could also lever non-ODA finance (eg from the UK’s export finance house), commercial resources (from eg London Stock Exchange) and British business can-do, into development projects, bring the UK back firmly into the infrastructure game, visibly, complimenting the development Banks and the Chinese. Or, creatively redraw boundaries on development, getting the NHS, Universities, local governments, or the UK tech-sector, much, much better linked-up to counterpart industry in LDCs. And the big opportunity this year, looking beyond Covid, is COP. OECD nations often focus at home, but here’s an opportunity to really join up thinking and action, transfer technologies, provide dynamic, in-depth development support, bring our multilateral leverage, and for example, BEIS, climate teams in devolved administrations, right to the table. The FCDO Integrated Review, the first real UK development policy articulation after Brexit, may encapsulate these issues. When it emerges it will be consumed with interest to see how it showcases the risk, opportunity and potential development outcomes from post-Brexit ‘Global Britain’ – and how it responds to current risks: pandemic and post-pandemic, falling GNI, falling budgets in the sector; proximate but not closely linked to Brexit. Can it articulate how, at this time, to ignite voter interest in a new, different, joined-up commitment to development? A real post-Brexit teaser.”
“The clear intended policy of the UK after Brexit is to become a vibrant global nation with a strong economy achieved through trading. The threat to development aid is that the UK fails to achieve this and maintaining current budget levels for development programmes falls away. Time will tell. The transfer of DFID to the Foreign Office demonstrates the desire to politicize the overseas aid programs and use “soft power” with its trading partners, particularly within the third world. I also would expect to see joint development programs with the EU. The UK may be out of the EU but there remains much to be gained through joint ventures of this sort. However, the impact of COVID will be a global issue not just for the UK. The recent reduction in the UK’s overseas aid budget is put down to COVID-19 and is meant to be temporary. We will see. Once free of the pandemic there needs to be a clear rethink of development goals for the UK government. I would expect to see new targeted development programs not only from the UK but also institutions like the World Bank, EBRD and the EIB if only to counter the investment power of non-western democracies.”
“The Trade and Cooperation Agreement has multiple references to promoting sustainable development. It refers specifically to the UN 2030 Agenda, the Paris Agreement, and talks about the parties working together in international fora such as the UN, G-20, OECD, and the IFIs. In all this, the prime concern is trade and competition although there is also a section on shared values and global issues of common concern such as climate change. But there is nothing on international development cooperation. By default, this implies the opportunity and the basis for EU-UK collaboration on international development exists. So, given the many settings in which the two are thrown together around the world and their similar outlooks, it can be assumed collaboration will continue. A lot then depends on how keen they are to collaborate in practice. Either party dragging their feet can quickly push up transaction costs and undermine effective support to partner countries. The fact the UK no longer contributes to the EU budget already increases aid fragmentation leading to a potential decline in aid effectiveness. On ODA, the EU loses the UK’s contribution of about US$2bn p.a. but it seems it will fill this gap in the new multiannual budget. However, separately, the UK is planning to decrease its ODA budget from 0.7% to 0.5% of GNI. That could mean about US$5bn less ODA. So, overall, there will be a net loss of global ODA but it is not a result of Brexit. Finally, the Commission will no longer have ready access to UK development expertise. Though there are other member states with expertise who can step in, over time, different approaches could lead to policy divergences unless strong dialogue mechanisms exist.”
“An increased degree of short- and medium-term uncertainty regarding the support level of UK international development aid due to it being solely determined by one party in government instead of it being influenced and balanced at continent-level (EU) considerations. The benefits from the reduced diseconomies of scale, if any, associated with the reduced size of the EU club (EU28 to EU27) are likely to be outweighed by the likely effects of the reduced aid. The reduced size of the EU club is likely to lead to a reduced EU aid budget and international aid support from Europe (EU27 + UK) particularly if UK aid amounts to less than the level of reduction. To offset this would require the UK to spend more than just the reduction as it (UK) will be operating from a position of reduced economies of scale in aid disbursement and management than it did as part of the EU. Consequently, UK taxpayers end up effectively contributing more while recipients end up getting less aid. Also, maybe some element of competing approaches to aid management practices including aid targeting resulting from this would be beneficial to the aid sector (both providers and beneficiaries).”
“Brexit has legitimized what had been a long coming end to the conventional UK approach to international development. For nearly a decade, there have been moves by the incumbent government to convert the UK aid agenda towards softer diplomatic and political influence and power across the world, specifically in sub-Saharan Africa. The collapse of DFID into the Foreign Commonwealth Office is a testament to this trajectory and the negotiations with countries like Kenya and Cote d’Ivoire to keep relations alive post Brexit are evidence of this. The UK-EU agreement is likely to also see a more trade dominated approach than developmental, i.e. aid for trade, market access, and so on will be the name of the game. I suspect there will be a gradual decline in the more social aspects of development like education, agriculture, health, WASH, and so on. Back in the UK, I further see there being more political drivers than economic or development drivers advancing the international development agenda. From a developing country perspective, two immediate issues are (i) a more fragmented negotiating table in terms of development partners which comes with its own opportunities and challenges; and (ii) an additional power war in the scramble for resources from developing regions especially Africa.”
“Putting to one side the emotional arguments around Brexit, most economists agree that it is likely to reduce British economic growth for many years to come. The UK-EU trade deal is better than no deal, but it is a very thin one and completely excludes the services sector which makes up 80% of British economic output and employs 82% of the workforce. The key impact from this is that Britain will likely have less money available to allocate to international development projects. Despite rhetoric to the contrary, the UK is going through a period of looking inwards and may wish to concentrate more of its development efforts from a dwindling budget to the home market. Obviously, the current coronavirus pandemic is compounding this trend. Acting as a counterweight, however, is the political will of the British government to emphasize its freedom to act independently and sponsor international causes which it sees as either in its own economic interest or as being neglected by other large sponsors. The result may result in new projects with a ‘British’ label on them.”
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