Brexit: The challenges around getting a deal, or No-Deal

Despite both the Scottish and Welsh Governments urging more time to complete negotiations, the deadline for asking for a delay will expire on Tuesday.

Talks between the UK and EU negotiators will intensify over the next two months, but whether agreement can be reached on key sticking points remains to be seen.

A statement issued last week by the European Council, which represents the governments of member states, noted the “limited progress” achieved in the negotiations until now and warned all outcomes should be prepared for – including a No-Deal.

Meanwhile, with Germany about to take over the EU Council presidency, chancellor Angela Merkel has signalled a hardening of tone over the prospect of a No-Deal scenario.

She said the UK would have to “live with the consequences” of Boris Johnson ditching plans to maintain close economic ties with the EU.

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Boris Johnson yesterday repeated his threat of walking away from talks with Brussels after Merkel’s warning.

During a conversation on Saturday with Polish prime minister Mateusz Morawiecki, Downing Street confirmed Johnson had reiterated that the UK was prepared to leave on “Australia terms” if no agreement was forthcoming.

Australia has no bespoke trade deal with the European Union, leading Brexit critics to describe the proposals as akin to leaving on No-Deal terms, albeit with a number of mini-deals put in place to allow vital sectors, such as air travel, to continue.

Anthony Salamone, managing director of think tank European Merchants, said there were only a handful of months left to agree a deal.

He said: “It’s worth remembering that these negotiations on the future relationship didn’t start until March, so we’ve only been going for a couple months anyway.

“There is very little time to begin with, it’s been made shorter by the coronavirus, and very little progress has been made with the talks.

“They have held four rounds to date, and they try to be nice in terms of their diplomatic language but basically in those four rounds they’ve achieved very little, if not nothing.”

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He added: “So it’s very challenging and the EU have said that any deal would need to be done by October in order to leave time for it to be ratified by the EU and possibly by the member states as well. We’ve got between now and the end of October.”

Adding to the time challenge are the numerous differences standing in the way of agreement over the future EU-UK relationship, including the key issue of the “level playing field”.

The EU wants the UK to remain signed up its current and future standards, in order to prevent businesses from being able to undercut rivals and gain a competitive advantage in areas such as workers’ rights and environmental protections.

Salamone (above) said: “The UK Government has said we intend to keep high standards, but we don’t want to sign up to those commitments – which presumably means that they might want to diverge from them.

“The UK is a big economy right on the EU’s doorstep. So that really matters to the EU and they’re not going to compromise on that much.

“Of course there are other questions like fisheries, which is very contentious for a few member states and particularly France, Netherlands and Denmark, which is obviously sensitive for the UK as well.

The Prime Minister said he was hoping for a deal by the end of July; the EU have mooted the 31 October as more realistic

“These negotiations really should take months to years and we just don’t have the amount of time.”

Salamone said other possible outcomes included a low-quality deal which would cover the “bare bones” of the future relationship between the UK and the EU – but this was likely to be damaging for the UK.

“The worse the deal, the worse off we’ll be,” he said. “One of the defining features of the Brexit era is that the UK Government seems to care fairly little for the UK’s economic wellbeing, which is odd for a government supposed to do its best for the people and not consciously pursue a course of action that they know will make people poorer and worse off.

“But that’s what a low quality deal or No-Deal Brexit would do.”

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Georgina Wright, senior researcher at the Institute for Government, pointed avoiding a No-Deal outcome will mean the UK and EU not only reaching a deal, but also having time to ratify it.

“EU ratification is more complicated this time round requiring at the minimum approval at the EU level, so the council (grouping of 27 governments) and the EU Parliament.

“Then businesses also need to be ready to adapt to a radically different environment. The Prime Minister said he was hoping for a deal by the end of July; the EU have mooted the 31 October as more realistic.”

Wright said EU trade negotiations typically took anything from 1.5 years to six years to conclude and it was “quite normal” for both sides to stick to their positions at this stage of the negotiations.

You look at the state of the world, whether geo-politically or economically, the idea there is some grand global Britain is clearly absurd

But she added: “The difference here is that the UK and EU do not have that luxury of time. Unless they find a way to secure more time later in the year, the UK and EU will trade on radically different terms on January 1 – whether there is a deal or not.

“I expect there will be more movement over the summer, but it will require both sides to compromise.

“As with much of Brexit, [the question] remains the same: can everything be done in time?

“The Government and the EU would be wise to step up their No-Deal planning even if the ambition is still to reach a deal.”

The negotiations for the EU are being carried out by the European Commission’s Task Force for Relations with the United Kingdom, headed by Michel Barnier.

On the UK side, the “Taskforce Europe” Cabinet Office team is led by chief negotiator David Frost.

One stark feature of negotiations to date has been the lack of involvement of the devolved nations – particularly given both Scotland and Northern Ireland voted against Brexit.

Professor Nicola McEwen, of Edinburgh University (above), compared this to the four nations ability to take different approaches during Covid crisis in a recent article for think-tank The UK in a Changing Europe.

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“By contrast, in Brexit negotiations, the starkly divergent priorities of the four territories have been overshadowed by the UK Government’s monopoly of the negotiation process,” she said.

“The devolved governments have struggled to get their voices heard.”

Scottish Constitution Secretary Michael Russell said the UK Government has “ignored the wishes of the overwhelming majority of people in Scotland” during the Brexit process.

He said: “As part of our preparations, we have brought forward a bill which will enable devolved Scots law to be aligned with EU legislation, when appropriate, following the end of the transition.

“But the only way to secure the benefits of EU membership and the European Single Market – which is seven times the size of the UK – is for Scotland to become an independent country and member in our own right.”

Kirsty Hughes, founder of the former Scottish Centre on European Relations (below), pointed out the Joint Ministerial Committee on EU Negotiations, which comprises ministers from the UK and devolved governments, only met in January and May this year.

“There seems to be no consultation on the big strategic choices or even the sort of middling strategic choices with the devolved governments,” she said. “There has been at least some discussion between officials at the very detailed levels – such as types of fish stocks. But then there is not even feedback of what final position goes into the actual talks.”

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She added: “It is not at all surprising, because it is what Theresa May did too and you wouldn’t necessarily expect Boris Johnson to be more concerned about trying to reunite the UK than Theresa May.

“But it is quite extraordinary – and even though we are not surprised, we should still be appalled.”

Hughes said she believed both the UK and EU did want a deal – but neither wanted one “at any cost”.

Meanwhile the idea other countries will be lining up to secure excellent trade deals with the UK has been dealt an early blow.

Japan last week gave the UK just six weeks to strike a deal, highlighting the possibility of Britain being forced to accept a series of bad agreements as the deadline for fully leaving the EU looms.

Hughes said: “You have an EU-Japan trade deal, so that is the basis on which Japan and the UK currently trade. If they don’t want to suddenly go to WTO trade terms with Japan, the UK has to do something.

“But Japan basically feels it is in a pretty powerful position compared to the UK, so it seems to me it is almost saying take it or leave it by giving the six-week deadline.”

She added: “It just shows you there isn’t lots of goodwill and trade talks are hard-nosed. It is about power and interest, it is not about being nice.

“You look at the state of the world, whether geo-politically or economically, the idea there is some grand global Britain is clearly absurd.”