Brexit: A looming no-deal disaster

by Nathan Collins-Cope

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of InQuire Media

Image courtesy of Duncan C in Flickr

With Covid-19 being the new headline filler, it is funny to think most headlines focused on a completely different subject less than a year ago. But Brexit is back with a vengeance, even though the United Kingdom legally withdrew from the European Union on 31 January this year. A transition period was agreed in which the UK would remain a part of the European single market until a trade deal was made between the UK and the EU. The idea of this was to make sure that there was minimal economic fallout from the British departure on both sides and ease us into the new constitutional situation. That intention, however, seems to have been thrown out the window by Boris Johnson, as he bumbled his way into the big job. With the transition period ending on New Year’s Eve 2020, the Prime Minister is leaving this to the very last minute to clinch a trade deal, with much progress to be made in the negotiations. Is Bojo losing his mojo?

The aims of these negotiations are to ensure that Britain remains part of the biggest single market in the world. This is strongly desirable, as it allows for goods and services to cross the UK/EU border, avoiding any tariffs or taxes from either side. But there are three main issues that are causing contention between the two sides: level playing field provisions, governance and fisheries.

The first of these means simply that the EU want us to match the regulations they have, such as worker’s rights, environmental protection and state aid for companies. State aid appears to be the key thing they want us to align with, as it ensures that companies in the UK do not have the ability to unfairly undercut their competitors within the Eurozone. It is true that the UK’s control over industrial policy would be limited by this, but this is a small price to pay to retain access to the European market. Besides, protections for workers, food and environmental standards provided have been beneficial for the UK, stopping governments of the day from imposing deregulations on such thing.

The second key issue of governance relates to settling future disputes. The EU wants to be able to act swiftly if the UK was to break its commitment to any level playing field provisions – which seems very possible since Boris has already reneged his commitment to ensuring no physical border between Northern Ireland and the Republic of Ireland (something which is essential to maintain peace, cohesion and prosperity on the island of Ireland).

The issue of fisheries is the third sticking point. The EU wants its fishermen to have access to the British channel, but the UK is holding back allowing this, as it seems to have become a token of patriotic pride for Brexiteers. The government wants to parade to the nation that we have taken back control of British waters, even though fishing accounts for less than 0.1% of our GDP. Our negotiators, who are meant to be representing our interests, are risking economic instability over an issue of minor overall significance. The fishing industry is already in decline and is unlikely to have a massive impact on the future of Britain.

While it is in the EU’s interests to get a trade deal, with 1 in 5 cars from Germany exported to the UK, there is no doubt they also do not want to be seen to be playing softball with Euroscepticism. Regardless of this, a no-trade deal scenario would affect us more detrimentally. Tariffs on trade are only the beginning of the problem, according to our government’s own assessment on no-deal fallout access to the single market. The first few weeks may see roads throughout Kent packed, with up to 7000 lorries, as between 40 and 70% of them will not be prepared for the drastic change in taxes and regulations. This will cause major road blockages, preventing functionality of emergency services. In the months that follow, imports of fresh food are likely to face severe delays, as well as up to 80% of medicines. As if all that is not bad enough, the assessment states that one in 20 local authorities are at risk of collapsing.

It seems hard to justify the economic damage that will be done from a deal-less break from the EU, with GDP projected to drop around 8% in the following 15 years, according to the government’s modelling pre-pandemic. The uncertainty from the deal or no deal situation is already overwhelming many businesses, who do not know whether to put in place protections against the looming disaster.

The forthcoming recession from a twice-closed economy is hard enough to deal with by itself, without having this unnecessary evil looming at the end of this turbulent year. We can only hope that Boris is intending to break the embargo, rather than leading us off an economic edge as steep as the Cliffs of Dover themselves.