Talks on a post-Brexit trade deal are stalled and the government appears ready to break international law by flouting the agreement on Northern Ireland it made with the EU to ‘get Brexit done’ at the end of last year.
The latest developments increase the chances of ‘no deal’ adding to the Covid crisis, according to Raoul Ruparel, former special adviser to Theresa May and a member of Deloitte’s Global Brexit Insights team.
Ruparel warned: “If we don’t have clarity by mid-October, the chances of no deal increase substantially [and] people will become increasingly concerned about the interplay between two economic shocks at the turn of the year.
“Covid far outweighs Brexit. Covid has hit travel and hospitality hard [and] travel won’t be as hard hit by Brexit.
Brexit will tend to hit pharma and financial services. But a no-deal Brexit wouldn’t help if there is ongoing disruption due to Covid.”
Ruparel will address Abta’s Travel Convention on October 14 on Brexit. He suggested: “The prime minister does want a deal, but I don’t know he desperately wants one. He doesn’t want a deal at any price.”
He explained the sticking point in talks through the summer had been that “the EU is unwilling to get into more detail” until the issues of Northern Ireland, fishing rights and state aid are sorted out.
Now he said: “Northern Ireland has become a sticking point again. Fishing will be sorted at the last minute. The key issue is ‘a level playing field’ on state aid. The EU needs to see what the UK plans to do on state aid.”
Ruparel suggested: “The October deadline [for a deal] has a bit of flexibility. [But] we need to see some movement in September. If we don’t, no deal becomes more likely.”
He added any deal would be “relatively narrow and shallow and not that relevant for a lot of sectors”, arguing: “A lot of changes businesses are planning for are going to happen in either scenario – [including] changes at borders.”
But he said: “More work needs to be done in preparation for no deal.” Ruparal noted preparation among businesses “varies by firm and by sector” and said: “People have been dealing with Covid and have been stretched on time and resource.”
If there is no deal, Ruparel noted: “One of the biggest implications will be changes in the way people cross borders.”
But he insisted: “They will agree on aviation. The two sides start from the same place. Both recognise this is a huge area. I don’t think huge disruption is likely, but it requires goodwill on both sides.”
