Britain is in for a tough ride

Britain leaves the EU on December 31 2020. Come hell or high water, or economic collapse.

Even though Michael Gove was categoric about this when he met his EU counterparts in early June, we may yet see that date move, if past form is anything to go by. We will have to wait and see.

However, let us assume for now that Britain will have actually left – not just officially left as that happened at the end of January this year – the EU, and will be standing on its own ready to take on the world and make trade deals that will be the envy of our European cousins across La Manche.

All right, I embellished that last bit, but I am sure someone somewhere who is in favour of this has said something similar at some point.

The fact is that for now, Britain’s Prime Minister Boris Johnson has urged the EU to work with the UK government to speed up the talks, even saying he sees no reason why an outline trade deal could not be completed as soon as July.

I have no problem with someone being optimistic, as I tend to be a half-glass-full person myself.

But by July? Really? When the actual vote to leave the EU was around four years ago and both Theresa May and now Boris Johnson have failed to get close enough to a trade deal in all that time to get it across the proverbial line?

Plus, in case anyone needed reminding, there is the very large Covid-19-shaped elephant in the room that has put a spanner in the works for, well, everything really.

Not least high level and intense negotiations for future trade partnerships between two sides who are failing to agree on anything much.

The wisdom of not extending the transition period really should be examined and challenged.

Both the Scottish first minister Nicola Sturgeon and the Welsh first minister Mark Drakeford had requested an extension to the transition period. But their pleas fell on deaf ears.

Even the EU has said it is still open to an extension of the transition period, but the government is currently adamant this will not happen.

Depending on your point of view, this approach is either foolhardy or utter genius.

Another shock to the UK economy in the form of a no-deal Brexit is likely to be a catastrophic blow

The Covid-19 pandemic which has shutdown economies worldwide has taken a massive toll already on the UK economy.

In April alone, the UK’s GDP fell by a record of 20.4 per cent as all types of businesses shut their doors and either furloughed workers or had their staff work from home where they could.

That figure, more than three times the fall of 5.9 per cent suffered in March 2020, is astonishing by any measure.

But when you consider the impact of the financial crisis back in 2008 saw GDP fall by just 1 per cent in September 2008 and how long the economy took to recover from that, it becomes clear just how steep the economic hill we have to climb to recover is going to be.

The prime minister has said the government needs “to work slowly to get the economy back on its feet” while simultaneously preventing a second spike in Covid-19.

Yet at the same time, he is asking the EU negotiators to “put a tiger in the tank” of Brexit to get an outline deal done by July. If this sounds familiar, it is little wonder – this was a slogan that has been used by Esso in adverts since 1959.

Quite why this came to the prime minister as a way to encourage extra vigour to be put into negotiations is anyone’s guess.

So, on the one hand the decision to press on regardless with the end of the Brexit transition period on December 31 could be seen as foolhardy because there is little expectation that much of that loss of GDP will be recouped by the end of the year.

Another shock to the UK economy in the form of a no-deal Brexit is likely to be a catastrophic blow.

The Confederation of British Industry, for example, has outlined that any financial buffers companies had in place to absorb the impact of a no-deal Brexit have been wiped out by the Covid-19 pandemic. So, companies would be left in a seriously precarious position by a no-deal Brexit at the end of the year.

Yet on the other hand, if you are in power and you end up with a no-deal Brexit, the move could be considered pure genius because as the Covid-19 crisis continues to play out, the line between the costs of that and a possible no-deal Brexit could become blurred.

But that is playing politics with people’s lives and livelihoods, which no matter what your political persuasion is frankly distasteful.

If such little progress has been made so far in the trade negotiations, it would suggest that encouraging faster moves towards agreement is posturing more than substance.

If Mr Johnson wants his legacy to be a stronger Britain, with good job prospects and a flourishing economy, he will need more than a tiger in the tank. As things stand, he will need a miracle.

Alison Steed is a freelance journalist