30th November 2020
Today is the last day of November and in one month’s time, on the last day of December 2020, the Brexit transition period is set to end – by automatic operation of law.
The stabilisers will be coming off the Brexit bicycle.
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The United Kingdom formally departed the European Union on 31 January 2020.
It has not now been a Member State for ten months.
But the effect of ceasing to be a member was artificially delayed by a transition period that was to last until at least 31 December 2020.
This transition period meant that, with some minor exceptions, the substance of European Union law and policy would continue to apply in respect of the United Kingdom even though it was no longer actually a member.
There was the possibility of extending this transition period until the end of next year – which would have been sensible not least because of the ongoing impact of the coronavirus pandemic – but the United Kingdom chose not to seek such an extension, and the formal deadline for that extension is now passed.
There is still, perhaps, a possibility of a formal extension even now – it would not be legally or procedurally easy, and it would need the urgent goodwill of all the European Union Member States – but this is increasingly unlikely.
And so, unless something exceptional happens, the United Kingdom will leave the transition arrangements at the end of next month.
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The next issue is whether there will be an agreement (or agreements) in place between the United Kingdom and the European Union in respect of trade and other matters.
There is already an exit deal in place between the European Union and United Kingdom, which is (supposedly) binding on the parties – and it is this agreement which was freely and knowingly entered into a year ago that the United Kingdom government is now seeking to breach with its proposed internal market legislation.
But that exit deal was primarily for certain tidying-up matters in respect of the departure, rather than the general ongoing relationship (though some provisions regarding Ireland were intended to have lasting effect).
With one month to go – and with no time for proper scrutiny and possibly no time even for ratification – there is still no agreement in place on the ongoing relationship.
It appears one issue is fish and fisheries policy – but it would seem there is still not agreement on far more fundamental issues such as governance of the agreement (that is, what happens when things go wrong or a party breaks its word) and the ‘level playing field’ (that is, will both sides have enforceable and equal standards against the other for commercial activity).
Governance and the ‘level playing field’ are not minor issues, but go to the very heart of any future relationship.
The various antics of United Kingdom government – not just limited to the internal market legislation – have made the European Union nervous about governance – and as has been said, trust is good but law is far better.
The United Kingdom should have spent these last few months showing the European Union – and other potential partners for trade agreements around the world – that it could be trusted to abide with international agreements.
But instead the United Kingdom has, at this most critical of times, shown the opposite – and so has created a needless but major moral hazard.
What serious potential international trading partner would now trust the United Kingdom to keep its word?
And in respect of the ‘level playing field’, the European Union is also – and again understandably – nervous about United Kingdom ministers unilaterally reneging on agreed and enforceable commercial standards in the name of ‘sovereignty’.
Because of all this, there is a non-trivial risk of there not being any formal commercial relationship in place for 1 January 2021.
And there is certainly no reason to expect the European Union to sign up to a deal out of charity or pity or otherwise against their interests – especially as current and future trading partners of the European Union are all looking on too.
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There are still, nonetheless, many favourable conditions for a deal – the parties are still speaking, there is agreement on the majority of the legal text, the parties both have an interest in a deal, and both parties would benefit from a deal.
But all these conditions are not enough if there is not actual agreement on fundamental issues.
So we come to the final month of the transition period, where the end-of-year holidays mean even less working time available to finalise a deal, during a pandemic and amidst forecast of a severe economic downturn.
There is no deal in place.
And even if there will be a deal in place by the end of next month, the general situation and outlook is not good.
This is perhaps the worst time for the stabilisers to come off the bicycle.
Brace, brace.
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If one reads the ERG MPs views on pandemic restrictions it is difficult-to-impossible to envisage them agreeing to LPF treaty provisions – the augurs for a ‘no deal’ Brexit have been there ab initio.
The interesting question is why this was not always the prevelant view.
But (as I’ve mentioned previously) I have already sold my 2020 lamb crop into a market that, despite being utterly reliand on exports into France, is rising higher and higher by the week – the highest lamb prices I have ever seen – on the back on unrelenting certainty that ‘they need us more than we ned them’ and that there will be a deal whereby ‘nothing will change’.
On UK farming fora, warnings of doom are still being met with derisive responses of ‘Project Fear’.
Brings to mind sepia photographs of cheering crowds in London and Berlin in July 1914, ecstatic at future prospects.
We long ago passed the point at which any Deal might be implemented on 1st January 2021, relatively glitch free.
One would hope that any Deal might include an extension of the transitional period, let us call it an implementation period to spare folk any blushes, but that does call for a rational approach by the UK Government which would be a break with past behaviour.
What I have found both fascinating and deeply disturbing since 2016 is how the traditional party of business has proven to be woefully ignorant of how business works. In fact, how UK plc makes its living, mirroring the ignorance of many a Leave and Remain voter.
You only have to sample some of John Redwood’s ever more bizarre Tweets on the opportunities presented by Brexit to realise that the Tory Party in the House of Commons has become a party of crusty armchair entrepreneurs, culture war warriors and finance paper shufflers, cue, stage right, the entry of Soapy Sunak, a three card trick merchant if ever there were one, and his freeports wheeze.
It happens that my politics are centre left, I was a civil servant for twenty seven years and no one in my family has run a business, but I was born in Birmingham into a working class family, who over the years have worked in manufacturing on the shop-floor and in the office so we know more than a bit about trade and industry. Clearly way more than the Sunaks and the Redwoods.
We have a lot of time for a Heseltine, who built up a business from scratch. It speaks volumes that there is no place for him in the modern Conservative Party.
When I got a bicycle for the first time, I got on it and rode away, a little unsteadily and without stabilisers. Some weeks later I started falling off it.
As you say, we are on track to start falling off right from the start. The Opposition has spent four and a half years failing in its duty by not demanding that the Government put in place measures to at least mitigate the impact of some of the downsides of Brexit. Whilst that was understandable under Corbyn’s leadership, after all he was gung ho for Brexit, it is not under Starmer’s stewardship. I do not recall him even taking the Government to task over their decision not to extend the transitional period.
There are growing signs that Starmer is gun shy on the whole issue and that before we get to the farcical levelling up agenda. A vacuous two word slogan, meaning all things to all and thus of no practical value.
Both parties are culpable in our Establishment’s abject failure to try and smooth the path out of the transitional period.
As a resident of Canterbury (and a Brummie) I make three comments.
First, even if there is a deal, there will still be massive delays at Dover as documentation will be needed and will have to be checked. East Kent will gridlock.
Second, it seems that the cumulation arrangements in any deal will be inadequate. This may sound a boring point, but I suspect this will prove to inflict more damage to employment in Brum than COVID 19.
Third the media coverage from East Kent gridlocking will be horrendous and no Kent Conservative MP or county councillor can expect to be safe.
When the M20 was partially closed one Saturday last year, ambulances were delayed and diverted – a concert goer in the cathedral suffered a heart attack and was taken to the A&E at Margate instead of the A&E at Ashford where there is a specialist cardio-vascular unit. If East Kent gridlocks as predicted then it would have been impossible to get to either A&E. Heart and stroke victims are going to die in the back of ambulances (assuming the ambulances can get through at all).
Our politicians have forgotten Stalin’s dictum: “A single death is a tragedy, a million a statistic”. The media coverage (broadcast, print and social) will be swamped with interviews with grieving widows or widowers, children and grandchildren.
Furthermore there will be no doubt who is to blame: Kent’s Conservative MPs and county councillors who in 2016 and 2017 failed to emulate the DUP and demand investment to deal with problems at Dover. There were a small number of schemes (clearance facilities at Manston, some road improvements) almost certainly costing less than £150M in total that would have prepared the county. Kent’s Conservative politicians showed their true nature – monstrous barrage balloons: inert, defenceless and full of gas.
I note with some amusement that Damian Green (whose obsequious grovelling to Boris Johnson was one of the more nauseating spectacles of the last 18 months) has now realised that his survival demands that he resists the Tier 3 categorisation of his constituency. The consequences of Kent being gridlocked will be far worse than those of Tier 3 for Kent. When constituents die in the back of ambulances because Kent’s Conservatives lacked the willingness of the DUP to stand up for them, Green and his colleagues might be wise to find a comfortable exile. Otherwise one fears that his genitalia may become detached from his person….
Birmingham as you will know has diversified its economy since the 1980s.
A conscious decision that was taken in 1988 at the Highbury Conference of the Great and Good. I am not one of them, but in later years I played a small role in advancing the plan.
A key element in the diversification was the extension of the (Inter)National Exhibition Centre; the expansion of Birmingham International Airport; the building of the International Convention Centre, Symphony Hall and the (Inter)National Indoor Arena. Freedom of Movement maximised the opportunities that might flow from such investment, partly supported by European funding that the city would never have got from London.
In fact, over the years, Birmingham has been accorded more respect in Brussels as a regional capital than it has ever received from Whitehall and Westminster.
Covid-19 has put the kibosh on the conference and exhibition trade. I am assuming Brexit has already had an impact on the trade, too. An impact that will increase over time.
There is an understandable tendency to focus on visible exports with regards to Brexit, but Birmingham has benefited from the invisible export of services, many of them actually consumed within the city. For example, it has become a major business tourism destination on the world stage.
Birmingham is home to many interesting businesses and organisations. Islamic Relief had (still has?) its headquarters here. I and colleagues met with them 15 years ago when they were talking of moving to a location in the EU27.
In manufacturing, there has been a move to the production of high value added items. Jaguar cars being one example. And there is a major computer company, their name escapes me, based in the Tyseley area of the city. Their profile is low, because it is a family owned concern. I became aware of their existence, along with colleagues when they approached us for grant funding.
We were genuinely gobsmacked to learn of their existence. Their contact with officialdom was so slight that there was no evidence that they had ever used a Jobcentre to recruit a cleaner. We had to wade through Company House records to build up a profile of the company, ending up with piles of paper on the floor of a room in the process.
And I guess I should not forget to mention the pioneering brothers of DSM Demolition. I draw seven veils over the Richardson Brothers and Taroni’s. All in construction and recycling.
It is hard to imagine an area of the city’s economy that will not be hit directly or indirectly by Brexit.
Whither Birmingham, now?
Nobody should assume that diversification protects from the negative consequences of poor cumulation provisions.
One of the worries about Brexit is the extent to which services will not only be hit directly in a number of ways but that there will also be a hit to services embedded in manufactures or otherwise supporting manufactures. One of them is the exhibition sector you mention but design and IT are at risk too.
I am awaiting, with baited breath, for that last moment when fish will be thrown under the bus.
I think it’s the wheels coming off rather than the stabilisers. It’s been a strange few weeks here in France as we buy our last things, possibly ever, from the UK. Of course, British companies will continue to export, but add in Customs charges, etc, and their goods become uncompetitively expensive for a private citizen – it’s far cheaper to buy from the US. I note with pleasure, though, that Holland and Barrett long ago set up a .nl site and is in the process of setting up a French one, and I have bought from Toast’s .eu site in the same way. What a mess comes from allowing a Tea Party-style group of extremists to take over a political party.
The Conservative Party has lost members who did not appreciate a business strategy made up of just two words, “Fuck business”.
More recently, Boris Johnson disinterred that meaningless phrase, “free enterprise” when talking about Building Back Better.
As an aside, Jeremy Corbyn, at one with the working class, and who frowns on swearing, would not even quote Johnson’s business strategy back at him at PMQs.
How Corbyn got on as a trades union official in the garment trade, known I gather for the generous use of fruity language, beats me!
The borders of N Ireland were the constituency boundaries, to the low water-mark on the shore. But the Irish Free State was set up with, effectively, territorial waters. The position of the border-line in Lough Foyle and Carlingford Lough has never been agreed. Small fry in the fishing dispute, but still.
Milk processing has been a cross-border business for decades now. From January, milk products such as cheese, milk powder, and infant formula, for export into the EU, from these producers can be labelled “Irish”, thus purchasers have the confidence of the EU quality standards.
However, such products when exported outside the EU will have to be labelled with the origin(s) of the product, that is, some portion of the product will come from outside the EU. Consumers may not be so confident that the EU quality standards apply.
I find myself wondering these days if HMG’s big plan for Brexit is simply to screw it up so magnificently and disasterously that Farage himself will be rebranding his latest political party as “Rejoin” the EU.
I don’t think it is a case of taking the stabilisers off, I think the wheels are coming off too. It is hard to imagine a more inept government than the one we have in power now.
As to Mr Starmer standing up against Johnson over some of these issues, the man is plainly intelligent enough to pick and choose his battles and wise enough to know what the limit of his powers are when HMG has an 80 seat majority (courtesty of the ineptitude of his predecessor).
Why worry about stabilisers when your Great British bike is going to fly? (As in ‘E.T. The Extra-Terrestrial’.) All these practical operational details are irrelevant if you have a vision!
A constant in the history of economics is that countries encounter recessions. Since World War II, the U.S. economy has been in a recession for about one of every seven months and for at least one month in roughly one-third of the years over that period. Recessions have many causes—financial markets crashing, monetary policy tightening, consumers cutting spending, firms lowering investment, oil prices shifting—but at some point, economic expansions end and the economy begins to contract. First, recessions are costly. Individuals lose jobs and income. The economy wastes resources and can sometimes even face a permanently lower output path.