You can tell that it’s squeaky bum time, as Alex Ferguson was so fond of saying. Industry groups and think-tanks are rushing to the printers to publish warnings of doom for their sector if Boris Johnson and the EU decide they can’t or won’t compromise on a post-Brexit trade deal in the next few days.
Yesterday, the New Economics Foundation and University College London warned that UK businesses would face up to £1.6 billion in compliance costs to continue cross-border data flows.
Today, it is the turn of the car lobby, in the form of the Society of Motor Manufacturers and Traders (SMMT), to warn that a ‘no-deal’ Brexit could cost UK automotive industry more than £55 billion in production losses in the next five years.
Like all pieces of economic forecast, these are just educated guesses but they do bear out a clear pattern. It’s hard to find any UK industry leader who thinks they’ll be better off trading on World Trade Organisation terms.
The governments of Theresa May and now Johnson have spent much of the past four years dismissing such prophecies of doom as ‘project fear’, or attempts to talk down the good ship ‘Global Britain’.
This time, however, in the middle of the second wave of a pandemic that is going to see the UK treasury rack up a whopping £300 billion deficit in 2020, ministers are eschewing that kind of cavalier confidence.
In the end, a deal will probably be done to avoid chaos on 1 January.
But, alas, Brexit is the gift (or curse) that just keeps on giving.
The lingering bad blood from the Brexit process, and the political constraints on both the EU and Johnson, mean that the trade deal that Michel Barnier and David Frost are likely to conclude is going to be wafer-thin.
Canada Plus or ‘the easiest trade agreement in history’, as proclaimed by Johnson’s boosters, it ain’t. As a result, it’s unlikely to be more than just a starting point for years of sector-by-sector negotiations.
On Tuesday, Stewart Jackson, a Brexit-supporting former Conservative MP and adviser to ex-Brexit Secretary David Davis, conceded that “the difference between this thin trade deal and no deal is not that great.”
Johnson’s government would survive a ‘no deal’ scenario, he reckons, but it probably won’t take the risk.
David Campbell Bannerman, a former Tory MEP and another long-time Brexit campaigner, says the likely deal will be less than ‘Canada minus’ and will deliver little economic benefit for either side.
Indeed, the car industry report believes that a ‘bare-bones’ trade agreement of the sort that is on the table would still lead to a £14.1 billion economic hit.
“We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost 28 times that to COVID,” said SMMT President George Gillespie.
“Let us not also be left counting the cost of tariffs, especially not by accident.”
The world of tariffs and the WTO will probably be avoided, but anyone expecting resolution in 2021 is going to be disappointed. Brexit, it appears, is more about the journey than reaching a destination.
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Look out for…
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- European Parliament plenary session
Views are the author’s
[Edited by Zoran Radosavljevic]