A longer read for the weekend: The case for an extension to the Brexit transition period

It’s hard to believe that something which had dominated our lives for so long – Brexit – has almost completely fallen off the radar.

After the shock of the December General Election, and the brutality of losing our jobs and heading home from Brussels in January, we former MEPs were geared up for the long haul of holding the government to account as it ground its way through tortuous post Brexit trade negotiations with the EU.

And when Boris Johnson spoke of ‘healing the rift’ between leavers and remainers, it seemed an impossible idea. 

Little did any of us think a global pandemic would sweep across the globe and make those two words almost redundant within weeks. We are now a people divided between frontline workers and those who stay at home, the vulnerable and those less at risk, the sick and the well.

But while many people have far more urgent things to concentrate on, it is vital that some of us don’t take our eyes off what’s happening with Brexit. The transition clock is ticking loudly and it’s only a few weeks until the UK has to decide whether it will ask for an extension to the transition period that is due to end on December 31. 

Senior Europeans say that while the case for an extension is overwhelming, there is little appetite for it on the UK side. And while the Government might be tempted to use COVID-19 to camouflage the disaster of a crash out from the single market and customs union at the end of the year, the costs will be high – and less affordable than ever. 

This government, picked for its adherence to the Brexit mantra rather than its ability to steer us out of the COVID-19 crisis, still seems hell bent on crashing out, rather than looking at the changed landscape we now find ourselves in and accepting that not only we, but other governments too, have other things to think about.

We are so far away from reaching an agreement with the EU that it is fantasy to assume it is now possible. The timeline was extremely tight to begin with, but after talks stalled due to illness and isolation, the prospect of a deal has become even less likely.

And the UK’s refusal to make their negotiating mandate public is infuriating EU capitals. They don’t even know what the UK side is aiming for.

“The problems are immense: the British texts, which are not made public, don’t cover a number of key priorities. Nothing substantial on a level playing field, no text whatsoever on fisheries so far, no recognition of the role of ECJ or ECHR, no commitments regarding climate change, no certainty in the protection of data… The Political declaration is forgotten,” said one senior European who is well aware of what’s happening in the negotiations. 

The source said there was nothing concrete so far on how the UK sees its relationship with EU security or defence policies but by contrast they are making huge demands about access to European data, with no strings attached. 

“More generally, there is an aggressive tone which hurts and doesn’t help. There are many reasons why the talks are only talks, and not proper negotiations. The risk of a no deal is serious and obviously a scenario which has some traction in London.” 

During a remote meeting of the UK-EU Friendship Group set up by MEPs before the UK contingent headed home, Polish MEP Radek Sikorski (EPP) said: “We should all prepare ourselves for a super hard Brexit at the end of this year.”

And French MEP Nathalie Loiseau (Renew Europe), said: “The pace of negotiations is pretty slow. There’s very little progress. We ask for no posturing ideology, but for care for individuals and businesses who will be affected by this.”

The feeling in Brussels is that the UK still wants an agreement with all the benefits, but with minimal obligations. Their language is couched in ideology and hubris. Never mind the details of what being a ‘third country’ means in reality, fulfilling an election promise still seems far more important – regardless of the fact that whole world order has fundamentally changed. 

A quarter of UK businesses have temporarily closed their doors because of the Coronavirus pandemic and the government is paying the wages of one in five workers. Smaller companies, family businesses, the self-employed are feeling the pain hardest. 

Budget forecasters say Britain’s economy could shrink by 13% this year, its deepest recession in three centuries, and public borrowing is set to surge to a post-World War Two high. The budget deficit could hit £273 bln – five times its previous estimate and equivalent to 14% of GDP. For comparison it hit 10% after the global financial crisis and had been gradually reduced to around 2% after a decade of austerity spending. 

So we’re facing a budget deficit way higher than we saw in 2008, at a time when the country needs anything but more austerity spending. 

The results of this policy have been laid bare for all to see during the pandemic – from nursing shortages to a lack of basic equipment in the NHS, and the shambolic state of our social care system, which no politician has been brave enough to address.

Things will be bad enough by December. To add the economic shock of a No Deal Brexit to this would be madness. And incomprehensible that any government would wish that combination on itself, let alone its citizens. 

UK businesses will need every avenue open to them to have a hope of surviving the shock. But with no willingness on the UK side to agree to a level playing field on social and environmental concerns, and the difficult issue of fishing, it looks unlikely that the EU will be granting us access to its single market. 

There is no free trade deal in the world that replaces membership of the single market and customs union – the most advanced trading models ever created. And no government has the time or resources at the moment to create something similar for a country that has become the first and only in the world to want a new trade agreement that gives it less access than it already had. 

As Best for Britain says: “It’s not reasonable to expect the UK to replace all our existing trading relationships during a global lockdown – nor is it fair to expect other nations to prioritise negotiations with us. We need the entire world focused on controlling COVID-19 and dealing with the fallout. 

The totemic industry during the Brexit campaign was fishing. And it’s raising its head again. 

“The EU negotiators are clearly linking fishing to access to the EU market. No agreement on fishing, then no preferential access to the single market. So far, the UK has withheld its legal text on fisheries and this is causing serious frustration on the EU side,” said another EU source.

The UK fishing industry has been all but grounded, not helped by the shutdown of the entire hotel and restaurant market. How long before that picks up? And as the industry creaks back into life can it really face the prospect of having access to its European markets removed? Don’t forget, 60% of the fish we catch in the UK is destined for European markets. 

Another sector that is in a desperate situation is freight transport – nearly a quarter of UK logistics companies face potential collapse in the next few weeks. In other circumstances it would be frantically preparing for the December deadline, but the industry is wrestling with COVID-19 instead. 

“There is simply not enough capacity available to plan the major structural changes needed to implement a successful departure from the EU, as well as… dealing with unprecedented pressures caused by COVID-19,” said Elizabeth de Jong, Policy Director at the Freight Transport Association. “Our industry needs the support of government, not to be broken by it.”

Sometimes things just don’t go according to plan.

To be fair to the Conservatives, and to Boris Johnson’s government, they weren’t expecting a global pandemic when they fought the election on a Brexit platform. 

But things have changed and 64% of the British people now believe it’s right to ask for an extension to the Brexit transition period, given the circumstances we find ourselves in (even one in five Brexit Party voters agreed). 

It’s time for a rethink at No 10. 

 

* Caroline Voaden was MEP for the South West of England from May 2019-January 2020.

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39 Comments

  • The EU is demanding a level playing field as a condition of any trade deal. This innocuous sounding request is designed to negate any benefits obtained by the UK as a result of Brexit and its consequence would be to impose EU regulations across the board and have them enforced by the ECJ. This is an outrageous demand which the EU would never dream of imposing in any other trade deal with a third country.

    Essentially, the EU expects the UK to obey EU regulations on employment law, environment, competition, state aid, mergers and acquisitions, taxation and fishing.

    Maintaining the status quo on fishing, when the UK would have a paltry share in her own fishing waters, is a good example of the fatuous nature of the EU’s demands. Such nonsense constitutes the central element in the mandate given to Michel Barnier and his frustration is palpable as he realises it is completely unacceptable to the UK.

  • Barry Lofty 2nd May '20 - 11:43am

    Yes the chickens have really have come home to roost with regard to Brexit and the on going affects of CV-19. Whatever claims and counter claims about leaving the EU are, in my humble opinion Brexit, for this government, was all about their own and their backers self interest, what the the present crisis has highlighted is that some things like working together with allies is far more important than pure monetary gain and self importance.

  • Utter drivel, you liberals need to sit back and wonder why you lost so many seats. Its a democracy,you get what you voted for and people it wasn,t you and your pandering to the E.U.

  • Awaiting moderation you mean your not posting it because you disagree with it in your own little bubble. That is why you failed miserably in the ELECTIONS should of tried bit of moderation there

  • Andrew Tampion 2nd May '20 - 9:47pm

    If the EU Commissuion feels that an extention of the transition period is desirable then they can ask for one: there is nothing in the Withfdrawal Agreement to say that only the UK can ask for an extention. Will you be lobbying the EU to extend as well as the UK?

  • Peter

    Spot on.

    If it’s a choice between the level playing field nonsense, with the UK effectively becoming a colony of the EU & conceding on fishing, then WTO terms are a no brainer & the EU can have what they least want a ‘Singapore on Thames’

  • Andrew Tampion 3rd May '20 - 6:58am

    *extension

  • Peter

    Spot on

    If the EU persist with the level playing field & fishing nonsense then moving to WTO is a no brainer. The EU can then look forward to a Singapore on Thames which is what they claim they absolutely don’t want.

  • Yeovil Yokel 3rd May '20 - 9:12am

    Thank you for this excellent piece, Caroline, and for all of the good work you and your colleagues did in the all-too-brief time you were in the Parliament.

  • R A Underhill 3rd May '20 - 11:30am

    Tim Farron MP was on BBC1 after the Andrew Marr Show on Sunday 3/5/2020.
    He agreed that an area like his in Cumbria is suffering under lockdown. Seasonal trade is usually higher in the summer, so a lockdown in the summer leads to three winters in succession, as for Cornwall.
    He was balanced by a Tory woman from the southeast, who was formerly Northern Ireland Secretary and said nothing about that.

  • If the 3/4 key issues can’t be sorted this year, what’s the point of wasting another year (other than giving the EU another £ 10 – 20 billion), going round in circles & finding out they still can’t be sorted?

    Hopefully June will be the cut off date & we can move on & be fully prepared for our exit.

  • The EU seems surprised that Britain seeks the same kind of deal that has already been agreed with Canada, but seriously why should we accept anything less? The covid 19 crisis has shown how fragile the global economic system is, more trade increases this. At last people and companies are realising you need to be close to your suppliers and your labour force. The fact that crops are now rotting in the fields highlights the shortsightedness of relying on cheap East European labour. It is not just Labour but the Liberal Democrats too who need to think seriously about why they have done so badly in the last three elections. It doesn’t seem to be happening so far and Electoral Calculus are currently predicting the party reduced to two MPs based on current polling.

  • The impasse in a nutshell is that the EU is terrified of having a strong competitor as a neighbour. It wants to impose regulations and ECJ superiority in order to control and negate UK freedom to act independently.

    The UK is understandably refusing to be ruled by the EU after having left. It is astonishing that the EU thinks that we will give in. Unfortunately Barnier must wait for the EU27 to change his negotiating mandate. Until then, we head towards WTO rules and the EU had better believe it.

  • Katerina Porter 3rd May ’20 – 5:11pm..

    I gather Liz Truss is running the show. What could possibly go wrong?

  • ‘a freeloader as a neighbour’

    Looks like treasure island has 8 months left for those 790,000 annual German car sales, no doubt there will be a queue to replace their largest single export market after the pandemic ends.

  • Andrew Tampion 4th May '20 - 7:09am

    Calls to extend the transition period because of the present circumstances would carry more weight if extending trhe tramsition period, previously cancelling Brexit, weren’t standard, kneejerk responses by senior Liberal Democrats to almost anything that happens

  • Steve Comer 4th May '20 - 9:04am

    I think many people here are missing the point. The Johnson Government DO NOT WANT any agreement with the EU, they want a no deal crash out hard Tory Brexit, and subsequent domination by their right wing allies in the USA.

    Yes this will hurt their white, aging, property owning pensioner voters in the former ‘red wall’ seats badly, but they have served their purpose, and are expendable, just as Tory remain supporters in Esher and Guidford etc. were in 2019.

    It is right to argue for an extension, right to argue for an agreement between the EU and UK, but the Conservatives have now morphed into a Fidesz-PiS-Lega type national conservative party, so don’t expect them to behave like the party led by Major or Cameron. They are ideologically committed to policies that were once UKIP’s .

  • Peter Martin 4th May '20 - 9:57am

    I agree that there is a strong case for an extension, but we need to be careful. The UK might have its problems but the EU could well have even bigger ones.

    Simon Jenkins, of the Guardian is quoting the European commission’s vice-president, Frans Timmermans as predicting:

    “the EU as we know it will not survive this”.

    The wrangling in the EU is, of course, about money and the terms of the support which will be needed for Italy, Spain and others on the periphery. Not just the usual few billion but sums running into the hundreds of billions.

    We will need a firm upfront quotation of what it will cost before we can decide.

    https://www.theguardian.com/commentisfree/2020/apr/10/coronavirus-crisis-truth-eu-union-financial-rescue

  • Alex Macfie 4th May '20 - 10:59am

    Ambighter: Lib Dems are doing a review into last year’s election results. So don’t worry about that. But opinion polls are pretty meaningless at the moment, as they mainly reflect the government basking in the glory of the Coronavirus crisis, with the Tories scoring >50% in most polls. But the Tories won’t to be able to exploit this crisis bounce because there aren’t going to be any elections at all for a year. Minor parties tend to drift downwards in the opinion polls in the months after a general election anyway, especially when the result is decisive and renders the minor parties irrelevant.

  • Peter Hirst 4th May '20 - 11:36am

    There are also the possible constitutional implications of a no deal Brexit that have not been improved, in terms of maintaining the status quo by the pandemic. Labour might see the opportunity to seize the shambolic state of our governance as way of climbing the mountain its leader refers to. With its support we might achieve the reform we have waited so long for.

  • Peter (first comment & comment 3/5 @ 4:44pm)

    Why, precisely, do you object to the ECJ’s role so strongly? For many (most?) Leavers it seems to be a bête noir but why? Please explain.

  • Gordon, as I am sure you are aware, the ECJ is the supreme court of the EU and is responsible for interpreting and applying EU law across the member states.

    We have now left the EU and the jurisdiction of its court. We have our own Supreme Court as is normal with independent Sovereign nations.

    The EU is acting as though it is reluctant to relinquish its pre-Brexit powers and is trying to retain control through any trading treaty. This is unacceptable to the UK as it would to any other nation outside of the EU. It is also trying to use the ECJ as the final arbiter in any future trading dispute with the UK. This too, would be unacceptable since normal practice requires that trade disputes are settled by a mutually acceptable, independent third party such as the WTO.

  • Of course, the EU will *AIM* to get exactly what it wants – just as anyone would in a commercial negotiation and just as the UK does. But, in the real-world it’s a case of ‘big fish eat little fish’, so I think the EU will 90% succeed and the UK will 90% fail. Why would anyone expect anything else? It’s not a win-win context so the UK’s negotiating position is naïve in the extreme.

    Lurking behind several of the comments above is an idealised notion of ‘Free Trade’ that supposedly benefits all involved and which therefore dictates what the EU27 ought or ought not to do.

    ‘Free Trade’ is a figment of the imagination which always comes down to the most powerful country of the age making terms to suit itself and dictating terms to the rest. In Victorian times that was Britain so we have a folk memory (made by the Victorian elite, not those down the coal mines!) that remembers it as a Good Thing linked to when the UK was the sole superpower. An early outing of the then new idea of ‘Free Trade’ was to insist (with gunboats) that the Chinese took our opium.

    That is why most of Europe has chosen to manage its external trade relations via the EU which, by combining the strength of a bunch of small to medium powers, can become a sovereign of enough weight to match the giants – the US and now China. Only by so doing can Europeans defend their interests and living standards.

    As sovereign, the EU is not bound by any precedent (e.g. what it agreed with Canada) but only by what it sees as its interest. And I can quite see why the EU doesn’t want a ‘Singapore on Thames’ next door as it turns out that beneath the shiny tower blocks is an economy built in part on the labour of migrants living in appalling conditions with up to 20 to a dormitory.

    Be careful what you wish for!

    https://www.theguardian.com/world/2020/apr/23/singapore-million-migrant-workers-suffer-as-covid-19-surges-back

  • Peter,

    In my experience extreme hostility to the ECJ long predates any discussion of future trade treaty. For years one good friend has gone puce with rage at the mere thought of it. Yet, when I’ve asked him why, the only reasons he can give is that, in his opinion, it tramples on UK sovereignty and that it’s biased (but he can cite no evidence). I know others who agree with him, yet I for one would only want to live under the rule of law.

    To be sure, many EU laws (and in contexts the whole approach) could and should be better/very different than they actually are but all UK parties (except UKIP which only ever wanted to throw the baby out with the bathwater) seem to have adopted a ‘Yeah, whatever’ approach and just not engaged in how it developed, seeing the EU as something external in which we have no real interest. That is UK politicians’ fault.

    As to the putative role of the ECJ in a future trade treaty, the only things I’ve seen have been rather ambiguous about what future role the EU side wants for it in any dispute. Perhaps you have an unambiguous source.

    What I would say, is that my reading is the EU has a far stronger hand than the UK and that to reduce this to a [family blog] waving contest can only end badly. It’s all very well to cite “those 790,000 annual German car sales” but in 2019 we made 1,303 million and exported 1,055 million (81%). A massive 714k (54.8%) went to the EU. How much of the industry would survive (a) the loss of free access to the EU27, and (b) loss of preferential access to third countries under EU trade deals?

  • Gordon, one has to weigh up the benefits and disadvantages of EU membership. The internal market is indeed a benefit, albeit inward looking, protectionist, bureaucratic, sluggish and in decline.

    I am unimpressed by EU foreign policy or the lack of it, the poor record on security and defence and paralyses on whether to move forwards or backwards on integration. The cost of membership to the UK was exorbitant with frequent increases. The EU claimed supremacy in all competences other than sport and health. The UK lost its sovereignty and the rights of self determination.

    As we look to the future the EU appears weak and rudderless with its decade long Eurozone crisis showing no sign of improvement. Commitment to the project by member state populations continue to falter.

    I, and many others, have made the judgement that life will be better with decisions in our own hands. There may be short term losses but a great deal to gain. The EU project is in long term decline and I am glad we are out.

  • Dilettante Eye 5th May '20 - 10:25am

    Gordon

    “What I would say, is that my reading is the EU has a far stronger hand than the UK”

    Sorry Gordon, but you’re reading it wrong, the EU doesn’t even have a hand, it has 27 differing and fragmenting economies with no centralised method of sharing the burden of debt.
    And that is another good reason NOT to extend the transition, so that the UK is well financially clear of the EU when the ‘rivets pop’?

    “They [EU], don’t even know what the UK side is aiming for. “

    Actually what we’re aiming for is that the EU finally cease their belligerence, and recognise that we are a sovereign nation, and that their pugnacious demands, are not the same thing as negotiations?

    Did the EU trade deals with Canada and Japan, demand a level playing field, legal oversight by the ECJ, or a right to plunder the fishing waters off their respective coast(s)?
    What kind of lunacy would it be, if we demanded in a trade deal, our right to plunder a UK quota of grapes from the vines of France and Italy?

    It’s this very arrogance which has placed the EU in this precarious situation, and I see no other possibility but a WTO exit, until they come to their senses. Moreover, if no progress is made by mid June, it’s more rational for Boris to tell British business to come out of lock down with a WTO business format, with any negotiated trade amendments to be agreed in 2021, post transition.

    I can see why a financially desperate EU would want an extension, but there is no rational case for the UK to contemplate an extension throwing yet more good money after bad. Frankly, shortening transition would make more sense for the UK, unfortunately the date of transition is legally on the UK statute.

  • Mark Frankel 5th May '20 - 10:42am

    The government’s options are (1) to extend, which would be hugely humiliating and just ‘kick the can down the road’; (2) accept the EU’s deal, become a vassal state and hope that the electorate don’t notice; (3) negotiate to re-join and hope ditto (4) go for No Deal. Of all of these, 4 is the least likely. Anyway, lots of opportunities for schadenfreude on the part of Remainers lie ahead

  • Mark Frankel

    Agree there are 3/4 binary choices which will remain unchanged whether a deal is done this year or in the next two years, if we take the maximum extension.
    So what’s the point in waiting?

    Your options 2 & 3 would never get through the parliament let alone the cabinet.

    So the most likely is your point 4, a clean break.

    Unless of course the EU decides that economics takes priority over politics.

  • It now seems that Germany, the primary source of EU funding, may have to pull out of the ECB bail out scheme because it allegedly is in breach of the German constitution.

    Furthermore, the ECB two trillion Euro bail out of struggling countries makes a total mockery of the EU demands for the UK to agree to level playing field regulation.

    This puts the EU economy in a mess, their Brexit negotiation in a mess, what next?

  • Peter

    ‘is in breach of the German constitution’

    Have you got link for that story?

  • @John O

    https://www.bbc.co.uk/news/world-europe-52542993
    I think Peter is referring to this

  • Andrew Tampion 6th May '20 - 9:27am

    “Anyway, lots of opportunities for schadenfreude on the part of Remainers lie ahead”

    Or for Leavers if the economic apocalypse Remainers predict does not happen.

    One of the many things I don’t understand about ardent Remainers is their willingness to predict the most dire economic outcome possible when we leave the transition period: do you really not realise that if things turn out to be less bad than you predict then Leavers will say “look Project Fear again”.

  • Peter Martin 6th May '20 - 9:59am

    ” the ECB bail out scheme …… allegedly is in breach of the German constitution.”

    The ECB is doing its best to make the eurozone work. The German constitution is the real problem. That is in breach of the basic principles of macroeconomics.

    The euro is really a single currency in the way the US dollar is. There is a German Euro which is approximately 2DM. There is a French euro which is 6.5 francs. There is a Spanish euro which is 166 pesetas. etc.

    All the old central banks still exist. All bank notes and coins are country identifiable. If the euro was truly a single currency there would be no need. Naturally people tend to think German euros are safer than Spanish and Italian euros. So money moves from Spain and Italy to Germany. To keep the euros all at parity the ECB has to act to move the money back.

    So if the German court gets its way its bye-bye to the supposed single currency and possibly the EU too.

  • Peter Martin 6th May '20 - 10:00am

    Sorry that should be “the euro isn’t really a single currency in the way…”

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