Amid all the current horrors, doubtless you have been comforting yourself with the thought that at least we are shot of the Brexit wars. But Brexit is about to return to bite us. Although the UK formally left the EU on Jan 31, we are still in the so-called transition period until Dec 31.
We are currently in negotiations with the EU about a trade deal, to be effective after the transition period has expired. They are not going very well. So our old friend, the no-deal Brexit, has re-emerged as a real possibility for the end of this year. But there is an option to extend the transition period. Would such an extension be in the UK’s interest?
Yesterday, the recently established think-tank, the Centre for Brexit Policy (of which I am a fellow), published a report arguing that a delay is very much not in our interests, regardless of whether we have secured a trade deal. To some extent, the arguments about this issue will be all too familiar. If you believe that leaving the EU is going to entail severe economic costs – even more so if we leave without a deal – then delaying our effective exit appears to make good economic sense. And for many delayers, there is the added hope that an extension may lead to yet another extension and, you never know, we may never leave the beloved EU.
Unsurprisingly, if you believe, by contrast, that leaving the EU is going to bring economic benefits, then why should you not want to proceed with all speed in order to secure those benefits sooner?
But the coronavirus crisis has added a new dimension. Superficially, at least, it appears to argue in favour of an extension. At the least, in the short term, Brexit will bring a measure of dislocation, especially if we leave without a deal.
In today’s world, where businesses are battling for their very survival, why lumber them with another set of costs, added administrative burdens and increased uncertainty?
This is a respectable argument. But when you think about it seriously, it is not very convincing. In particular, it fails to take cognisance of some major factors pointing in the opposite direction.