Critics stated that the Brexit arrangement could resurface Britain's 'healthy fundamentals' if EU relations were supported

March 2, 2023: Analysts suggest that the most delinquent Brexit agreement between the U.K. and the EU may support Britain’s “healthy fundamentals” back to the fore, delivering relations with Brussels to continue to improve.

On Monday, U.K. Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen told the Windsor Framework agreement to fix the controversial Northern Ireland Protocol.

The Protocol is a long-standing bugbear for unionist pro-Brexit parties in Northern Ireland. It had brought the devolved Northern Ireland Assembly to a standstill more than the previous year after the Democratic Unionist Party made in protest.

Though anticipated to pass through the British parliament, the deal has been met with mixed messages from Belfast. The DUP currently examines the deal’s details against the “seven tests” it has insisted upon.

On Monday, Tony Travers, professor at the London School of Economics and Political Science, said that while the DUP could still make things tough for Sunak, the P.M’s more friendly approach to Brussels providing a “platform for the U.K. and the EU to make a more rational connection.”

On Monday, Berenberg Senior Economist Kallum Pickering said in a note that the breakthrough draws a “line in the sand” following six-and-a-half years of damage.

The recent accord potentially removes the threat of a tit-for-tat trade war amid the U.K. and its significant market, which had been an ever-present threat under the more combative approaching of Sunak’s predecessors, Boris Johnson and Liz Truss.

Pickering said this would improve confidence and unlock business investment on the sidelines risking a U.K.-EU trade dispute.

“While the U.K. is suffering a lasting impact on its growth potential after it decided to increase trade barriers with the EU, the huge factor holding the U.K. economy back from the referendum has been uncertainty,” he stated.

“If this ends, we expect the U.K.’s healthy fundamentals, capitalised banks, cash-flush households and companies, and well-regulated markets to re-assert themselves.”

Berenberg retains the above-consensus GDP that projects for the U.K. over the coming three years, seeing a 0.8% contraction in 2023, a 1.6% rebound in 2024 and a further growth of 1.7% in 2025.