The United Kingdom is finally breaking ties with the EU. Here’s what changes.

For Brexit advocates, including Prime Minister Boris Johnson, such costs are justified by the benefits and opportunities that the exit from the EU will bring. Leaving will allow the UK to boost British trade with the rest of the world and set laws to shape its economy and society without interference from Brussels, they say.

“Brexit is not an end, but a beginning, and the responsibility now rests with all of us to make the best use of the powers that we have regained,” Johnson said on Wednesday during a debate on the UK free trade agreement and the EU in Parliament.

The agreement reached on Christmas Eve between London and Brussels on the terms of their future relationship spanned more than 1,000 pages, covering areas as diverse as fishing rights and cooperation between law enforcement agencies.

Still, some important areas of the UK’s post-EU agreements with its neighbors still need to be concluded, mainly the long-term basis for trade in financial services and international data exchange. The United Kingdom is a powerful exporter of the former, while the latter is one of the most important lubricants in the global trade.

For companies, the sharpest changes on January 1 will be felt by British exporters and importers negotiating with the EU. New procedures for customs declarations and regulatory paperwork will take effect. Tariffs will not be charged on trade in goods, but companies that import components from around the world to produce goods for sale in the EU will need to comply with the rules of origin, which specify a minimum level of foreign inputs that a finished product can contain for avoid tariffs.

The United Kingdom said it would give companies that bring goods to the UK some leeway to enforce the new rules to facilitate the passage of goods. The EU has given no guarantee, increasing the possibility of delays and interruptions in cross-border trade while the new agreements come into force.

This disruption is likely to affect economic growth, especially in the first quarter, and will continue throughout the year, Citi economists said in a research note this month. They said the effects are likely to be exacerbated by the pandemic, which has distracted business managers in the UK from making the necessary preparations. A Bank of England survey in November of corporate executives revealed that only 40% said they were fully ready for January 1.

Overall, Citi estimates that the disruption will reduce the UK’s gross domestic product in 2021 by about 2%, compared to what it would have been had it remained within the EU’s single market, its common regulatory zone and its area. customs.

Service companies face similar, if not greater, challenges as of January 1. The free trade agreement between the UK and the EU included only general provisions for trade in cross-border services that do not correspond to the level of access available in the single market, the Institute of Government said in a report published after the agreement was closed.

IfG, a non-partisan think tank focused on policy making, said UK service companies will also face local restrictions, depending on the laws that individual member states apply to non-EU companies. Professional qualifications will not always be recognized automatically, for example, and business travelers may need a visa to see customers depending on the length of their stay. No obstacles apply to professionals from EU members. Some services are completely prohibited for providers outside the EU.

“UK citizens will not be able, for example, to sell actuarial services in Italy or construction services in Cyprus. They cannot be surveyors in Bulgaria or tobacco shops in France, ”said the IfG report.

Most financial services companies based in the UK, as of January 1, will no longer be able to provide services to EU customers, pending the so-called EU “equivalence” decision on the extent of market access that has not yet been made. However, the Bank of England said in November that the UK’s leading banks, insurers and asset managers have already established subsidiaries domiciled in the EU to ensure that their EU operations are not interrupted.

The UK Treasury has granted temporary permission to EU companies that offer a variety of financial services to UK customers, but the EU has done the same only to offset some financial assets through UK stock exchanges. EU officials said they cannot give any deadline to give equivalence to the UK’s financial services sector, although both sides are expected to establish a cooperation agreement on financial regulation by the end of March.

Data is another important issue. Companies will still be able to shuffle personal data electronically at the UK-EU border on January 1, for up to six months. The EU said it would make a decision on whether UK laws meet its standards to allow for continuous data movement in the first months of 2021.

Brexit will change trade even within the UK To avoid the need to rebuild a customs border on the island of Ireland, Northern Ireland remains in force in the EU’s customs area and single market. This will require a greater number of controls on products moving from the British continent to Northern Ireland.

For British families, January 1 will also bring changes. British passport tourists will no longer be able to use the fast lines for EU citizens with automatic gates at airports. Those traveling to destinations in the EU will have the chance to shop tax-free – but will face new restrictions on the amount of alcohol they can buy. EU limits on certain mobile phone charges will no longer apply, probably meaning higher prices for international calls and texts.

British students will face higher fees and access requirements to study at EU universities. And pets, who could travel freely with their owners across the block under an EU pet passport program, will need a veterinarian from January 1 to issue a health certificate to enter a country. the EU.

—Laurence Norman in Brussels contributed to this article.

Write to Jason Douglas at [email protected]