UK GDP shrank by 2.9 percent in January from December, but trade dropped by the most on record as Brexit kicked in.
The European Union has launched legal action against the United Kingdom over its alleged violation of the Brexit divorce deal’s contentious Northern Ireland Protocol.
The 27-nation bloc is objecting to the UK unilaterally extending a grace period beyond April 1 that applies to trade on the island of Ireland, where the EU and the UK share a land border and where a special trade system was set up as part of the Brexit agreement.
The EU has sent a letter to London demanding it reverses this decision, and has given formal notice of Brussels’s plans to kick-start an “infringement procedure”, which could lead to fines being imposed by the EU’s top court.
That could be at least a year off, however, leaving time for a solution to be found.
Maros Sefcovic, the top EU official in charge of UK relations, has sent a separate letter to his British counterpart David Frost seeking talks to resolve the issue this month.
But the UK says it has not violated the agreement, which leaves the UK-ruled province of Northern Ireland subject to some EU regulations, and requires checks on some goods arriving there from other parts of the UK.
British Prime Minister Boris Johnson said on Monday the extension was simply a technical decision aimed at being fair. The protocol, he said, should guarantee trade between Britain and Northern Ireland, as well as across Northern Ireland’s land border with Ireland.
Later on Monday, a government spokesman said Britain received the EU letter and would respond in due course.
Acrimonious UK-EU relations
The dispute marks yet another worsening of relations between the two sides since a divorce transition period ended on January 1, with disputes over coronavirus vaccines and the level of diplomatic recognition of the EU in the UK.
This is the second time the EU has feuded with the UK over the Irish question. Last September, the UK did acknowledge its Internal Market Bill would break international law by breaching parts of the Withdrawal Agreement treaty it signed in January 2020, when it formally left the EU.
The legislation would have given Johnson’s government the power to override part of the Brexit Withdrawal Agreement relating to Northern Ireland.
However, it dropped certain contentious clauses in December, two weeks before the two sides struck a trade deal.
The sensitivity of Northern Ireland’s status was underscored this year when the EU threatened to ban shipments of coronavirus vaccines to Northern Ireland as part of moves to shore up the bloc’s supply.
That would have drawn a hard border on the island of Ireland – exactly the scenario the Brexit deal was crafted to avoid.
Northern Ireland is part of the UK but remained part of the EU’s single market for goods after Brexit to avoid a hard border that could revive sectarian violence.
That means that products arriving from the UK face EU import regulations. The grace periods cover areas such as supermarket supplies and parcel deliveries to Northern Ireland from the rest of the UK, and mean checks are not yet fully applied.