Extend the Brexit transition
The prime minister has confirmed that the government will next week set out their plan to gradually reactivate the economy, get children back to school or childcare and allow traveling to work. Crucially, we must first pass the five tests before the plan is even activated. Basing its approach on expert advice, the government will implement a careful, phased approach to lifting lockdown conditions. This is a sensible and understandably careful strategy for a complicated process fraught with risk.
Now, and I’m sorry if this makes you instinctively groan and roll your eyes, but why does the government not consider Brexit in the same way? It too brings major risk to the economy and it threatens our recovery from the pandemic. Why does the decision-making process on whether to delay negotiations and extend the transition period appear to be so rash, reckless and driven by ideology and politics?
Brexit was officially done on the 31 January, but the transition period ends on the 31st December. Until then, the UK will follow all EU trade and customs rules. This time was intended to be enough to negotiate the agreement and give the state and businesses time to prepare and adapt to new trading arrangements. This was always an unusually short and restrictive timeline. Now, the Covid-19 pandemic is taking up all the government’s time and the businesses that aren’t fighting to survive are certainly unable to adequately prepare for conditions outside the single market and customs union.
Not extending the transition period, in response to a health crisis that is causing an economic and social disaster, would be an astonishing act of irresponsibility. This dangerous and unnecessary choice is either being made due to weakness, because the government fears the wrath of Brexit fanatics. Or it’s genuinely because the government thinks it’s a good idea, which is even more worrying because the reasoning behind it is specious.
The government has said it wants the UK to have more flexibility to help businesses once the transition period ends and state aid rules no longer apply. Yet nobody in government has been able to give a single specific example and this ignores the fact that the EU has relaxed its state aid rules in response to the pandemic.
There will be clear benefits from being free of EU regulations in the future, but the disadvantages of leaving the single market and customs union amidst a global pandemic and recession clearly outweigh the advantages. Neither British business nor the government are remotely ready to leave the single market and customs union and operate under new arrangements. This is especially true if no deal is reached and the UK then trades under WTO rules in the manner of a developing country.
Extending the transition period would require further payment, which is a politically contentious issue. But the Withdrawal Agreement clearly states that payments for extending the transition must be mutually agreed through the joint committee which presides over the agreement. The government should negotiate a reasonable set of payments with the understanding that the UK would not contribute to anything it would not be directly benefit from.
The fact of the matter is that British businesses already regarded it as extremely difficult to fully prepare for the 31 December deadline and now it is simply impossible.
As for the government, it is not and will not be ready. Where are the thousands of newly hired and trained customs officers and border guards? At what stage of development are the vital new IT systems we need to deal with the huge upsurge in customs declarations? Do we have the regulatory agencies ready to produce our all of our own technical regulations? Have we built the physical infrastructure required for the new regulatory and customs checks? Are we in a position to implement the Northern Ireland protocol? Is the Home Office ready to manage the new immigration regime?
Without satisfactory answers to these questions, which are not forthcoming, then we are not prepared for the outcome of a set of difficult negotiations which are in any case being continually cancelled, delayed or otherwise majorly disrupted because the whole of Europe is dealing with the crisis at hand. Economies are being bailed out to prevent collapse and thousands of people are dying every day.
On our current course we risk deepening our recession, disrupting supply chains and hindering our ability to procure medical equipment. Something must give before the government commits an act of such great folly.
Perhaps it is time for another Brexit compromise and face-saving exercise. The UK and EU should adopt a phased approach. First, negotiate and conclude as many issues as possible in the limited time left. Then, bundle what has been agreed into a basic treaty that includes a commitment to continue negotiations on a wider agreement and a 12-month implementation period in which the new arrangements are phased in.
We can then conduct sensible negotiations in a timeframe that will bring mutual benefits to both sides and not hinder the UK or the EU’s recovery from the consequences of the coronavirus.
There will be some difficulties because it requires the EU to agree and an implementation period introduced via a treaty may require ratification by national parliaments. Still, the challenges we face in finding a way to avoid the cliff edge on 31 December are far easier to navigate than the ones we face should we continue to hurtle onward and drive over it.