Progress or no progress, there will be no trade talks extension

By Chris Whitehouse May 18, 2020 5:22 pm

It’s clear, and confirmed by both sides, that trade talks between the United Kingdom and the European Union have made little progress, but that certainly doesn’t mean that the UK side will seek an extension to the timetable to ensure that a trade deal is agreed before the end of the year when the current transitional arrangement comes to an end. On the contrary, although the chances of a no-deal year end are rising as the clock ticks, the politics of the Conservative party make an extension almost impossible as an ask for Boris Johnson.

If an extension to the transition period into 2021 is to be sought, it would have to be requested by the British Government in June, and that simply will not happen; it would be too much of a betrayal of the mandate from the last general election and the pledge upon which it was fought, to get Brexit done.

Indeed, from where Eurosceptic Conservative MPs (both backbenchers and many ministers) stand, there’s political advantage to be had in coming out without a deal and burying the costs of Brexit, and costs there will undoubtedly be, under the mountain of cost of the impact upon our economy of the covid-19 pandemic: by comparison to that shock, a no-deal Brexit impact will look like loose change.

What’s more, a no-deal Brexit, with the United Kingdom trading with the EU on World Trade Organisation terms could be seen by Treasury and Industry Ministers, playing to Boris Johnson’s instincts, as giving Britain greater flexibility in supporting industry in this country to get the economy motoring again, unhindered by regulation limiting state aid and intervention in markets.

There will also be a cost to pay for the economic impact of the pandemic on EU economies and to protect the Euro, and the British government will not want to be in the circle when the hat for that particular cash-call is passed around.

But, despite the political attractiveness of a no-deal Brexit, there’s still a decent chance a deal will emerge in November or December, since negotiations with the EU are infamous for going to the wire, only for a sudden, face-saving consensus to emerge. And a pragmatic fudge in some areas is also still possible for early 2021 if both sides want to find one. Indeed, the additional pressure on the EU, which has more to lose from a no-deal Brexit than Britain does, that is imposed by a refusal to request an extension to the talks, makes a last minute deal or a fudge more, not less likely.

The Whitehouse team are experts in the potential impact of Brexit, providing political consultancy and public affairs advice to a wide range of clients, not only in the United Kingdom but also across the member states of the European Union. More information about our Brexit experience can be found here, or, if you have any questions, please contact our Chair, Chris Whitehouse, at chris.whitehouse@whitehouseconsulting.co.uk.

By Chris Whitehouse May 18, 2020 5:22 pm

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