Why is Boris Johnson’s government refusing to extend transition for a year, when case for is clear, and treaty allows it to be agreed before end-June? A short thread based round my comment in this week’s issue. 1/
Transition of 11 months was always extremely short to get a complex deal agreed and ratified. But covid-19 distraction, problems of negotiating remotely and two extreme mandates have made much worse by producing deadlock in UK/ EU talks. 2/
UK firms on their knees thanks to covid-19 are just not ready for sharp break in January , even if there is a deal in place. Customs agents? Licences? SPS checks? Rules of origin? 3/
Extension is desirable even if result is no deal. Need to smooth implementation of tariffs, border controls, and also to test possible side agreements on aviation, freight transport etc. 4/
Yet Vote Leave crowd controlling No 10 allergic to extension. They hated May’s repeated extensions in 2019. Agreeing to one now seen as sign of weakness that would betray voters and imperil Brexit itself. 5/
This is odd. May’s extensions could indeed have led to Brexit reversal. But it has now happened (January 31st). Also, polls suggest most voters (including small majority of leavers) support extension to get better trade deal. 6/
No 10 claims extension means vast new payments into EU budget and euro rescue fund. But this is plain wrong. Treaty clear that one-off budget payment a matter for negotiation: as UK no longer in CAP, it should be a lot less than now. 7/
Argument that extension constrains UK ability to use state aid to help firms post-covid also wrong. State aid rules largely suspended: Germany and others now spending far more than UK could even dream of. 8/
Would extension stop free-trade talks with third countries? No, for they could simply continue as now. New FTAs could not come into force, but none (bar just possibly Japan) will be ready for this in 2021 anyway. 9/
As for claim that extension means prolonging uncertainty for business, the opposite is true. It is the fear of no deal that fosters the greatest uncertainty. And extension would surely make no deal less likely. 10/
Does refusing to extend put more pressure on EU to cave in? Little evidence of this. Last autumn it was Johnson, not the EU, that made concession to get WA through. And EU leaders have far more on their minds now. 11/
Can we not extend in the autumn instead of now? Very tricky if we go past June 30 deadline. Lawyers say it may then require new treaty, hard to negotiate and even harder to ratify. Much safer to take the option now. 12/
So why not do it? Real answer may be to try to disguise adverse economic effects of hard Brexit in December beneath bigger covid-19 economic meltdown. Politically savvy, perhaps. But hitting firms in trouble with a double whammy is hardly sensible economics. 13/
Moreover worst impact of covid-19 is being felt in non-tradables like services and hospitality, whereas no deal Brexit hits big exporters like aerospace, cars, chemicals, food, pharma. And can hardly disguise queues at Dover either. 14/
In short, forgoing extension option is neither sensible nor responsible. Unless the true goal is to force through no deal and damn the torpedoes. But if it is, Johnson should admit that openly, instead of pretending that he really wants a deal. 15/ENDS
