The EU has agreed to grant Britain a “flexible extension” of Brexit until October 31. The delay was shorter than had been widely expected following marathon talks between the 27 EU leaders, which saw French President Emmanuel Macron oppose calls for a longer delay of nine to 12 months. Theresa May accepted the new plan and avoided questions about her future, having previously hinted she would resign if Brexit was delayed beyond June.
The Prime Minister will address the House of Commons this afternoon, where she is likely to face growing calls to step down.
The new agreement – which revealed sharp divisions between France and the rest of the EU – leaves the prospect of a wide range of scenarios open, but could rule out a no deal Brexit.
Although no deal has its supporters, including the likes of Jacob Rees-Mogg and Nigel Frage, many experts and politicians, including the Prime Minister, regard this as a nightmare scenario that could shrink the economy, spark shortages of food and medicine, and even risk tensions flaring in Northern Ireland.
However, newly-resurfaced reports based on a successful precedent, could suggest the contrary.
New Zealand provides an example of what leaving without a withdrawal agreement in place could be like, as the country lost preferential access to its biggest trading market, something which was a legacy of its history in the British Empire and then the Commonwealth.
The cause of its closure was Britain’s accession to the European Economic Community (EEC).
In 1961, when Harold Macmillan first flagged Britain’s intention to join the European club, New Zealand Prime Minister Keith Holyoake warned that his country would be “ruined”.
Before the UK joined the Community in January 1973, it was the destination for 30 percent of New Zealand exports, amounting to 8 percent of the country’s economic activity or GDP, the BBC reported in 2018.
However, through diplomacy, New Zealand signed a free-trade deal with Australia in 1965 and negotiated access to the beef markets in Japan and the US.
The combined effect was that, by the time the UK actually joined the bloc in 1973, Britain only took 25 percent of New Zealand’s good exports.
From the moment Britain joined the bloc, though, New Zealand faced the EEC’s common external tariff.
Total export earnings fell in the first two years, investment slowed down and then declined from 1975.
The economy went into recession in 1974.
However, the 2018 BBC report notes New Zealand was not the only economy to face such economic downfall in the mid-Seventies, as there was a global recession linked to a rapid in rise in oil prices and disruptions to the international currency system.
Eventually, Wellington found new markets and economic growth started flourishing again in the Eighties.
With the loss of its biggest trading partner in 1973, New Zealand performed a full-scale strategic shift eastwards.
It struck trade deals with Japan, the US, China and South Korea and economically became an Asia-Pacific country.
In 2018, New Zealand’s main trading partners were China, Australia, the US, Japan and the EU.
Together, these five partners account for 66 percent of New Zealand’s two-way trade.
However, trade with the EU is declining as demand from Asia continues to grow.
The EU currently takes only 8 percent of New Zealand exports but provides around 12 percent of imports.
The collapse in UK-New Zealand trade was just as severe as many feared, following Britain’s accession to the bloc but the damage was offset by a whole set of new trading relationships.