MPs’ ratification of Boris Johnson’s withdrawal agreement depends on the outcome on December 12, says Ian Taylor
The general election will be “critical for the outcome of Brexit”, a senior analyst has told industry investors, amid fears a Boris Johnson government could run out of time to negotiate a trade agreement and Britain still leave the EU with no deal.
The UK is currently due to leave on January 31, but MPs’ ratification of Johnson’s withdrawal agreement depends on the outcome on December 12.
A week ahead of the poll the most likely result appeared to be a Conservative majority or a hung Parliament. Yet neither outcome would end the uncertainty because the government would still have to negotiate an EU trade deal.
The analyst – who spoke on condition of anonymity – said: “Businesses thought the Brexit date was the critical event. [But] it’s just the beginning. The UK will be treated as if still a member state for the transition period to December 2020 unless by mutual agreement the period is extended for one or two years.”
Johnson has ruled out extending the transition, insisting last month: “I see no reason whatever why we should extend the transition. We start negotiations in a state of perfect alignment so the negotiations should be extremely simple.”
This may have been intended to persuade Brexit Party leader Nigel Farage not to stand candidates in Conservative-held seats. However, the Conservative manifesto confirmed: “We will not extend the implementation period beyond December 2020.”
Yet Johnson also confirmed Britain would diverge from EU regulations, announcing last week that he would change state-aid rules.
The analyst told investors: “The UK and EU have signalled they would like regulatory alignment on goods, but there is everything to play for on services. It could be like a no-deal Brexit. Financial services already know it will be no deal.”
The services sector makes up more than 80% of the UK economy and includes travel.
Peter Foster, Europe editor of the Daily Telegraph, warned Abta’s Travel Convention in October: “Johnson’s version of Brexit would introduce significant frictions between the UK and EU. It means a long and grinding process.”
It threatens at least two new Brexit ‘crises’ next year – in the run-up to July 1, the deadline for agreeing a transition extension, and December.
EU chief negotiator Michel Barnier has warned summer 2020 would bring “a moment of truth”.
If there is no extension and no deal by December, Britain would leave without a trade deal – meaning trade barriers, quotas and tariffs under World Trade Organisation rules.
Former British ambassador to the EU Ivan Rogers warned last week: “The crisis likely to confront us is at Christmas 2020. Firms are only just waking up to the huge implications.”
Industry associations have issued their own ‘manifestos’. Abta called on the incoming government to prioritise a liberal immigration regime and a deal with the EU on posted workers, among other measures. The UKinbound association is seeking continued access to the EU single market and customs union and extension of the transition period.
One Conservative post-Brexit plan has already been revealed – a US-style Electronic Travel Authorisation visa-waiver system will be introduced for EU and Commonwealth visitors to the UK. Home secretary Priti Patel also announced last week: “We’ll introduce an Australian-style points-based immigration system after Brexit.”
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