Last reviewed 2 April 2020
The UK’s decision to leave the European Union was opposed by many in both Houses of Parliament, caused concern in groups ranging from the CBI to the TUC and resulted in serious warnings from, among others, the Bank of England, the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF). Some of these objections certainly put obstacles in the path to Brexit, but the arrival of Boris Johnson as Prime Minister and his significant victory in the December 2019 general election left little doubt that the UK now had a set date to leave the Union — by the end of 2020. If that date was to change, the Prime Minister warned, it would only be because the current trade negotiations were not heading in the right direction — in which case he was prepared to call an end to the talks and leave the EU in the summer.
Even before Mr Johnson celebrated his pre-Christmas victory, however, news was appearing of an unusual number of pneumonia cases being reported by health authorities in Wuhan, Hubei Province, China. A new coronavirus was quickly identified as the cause of the outbreak but it was mid-February before the World Health Organisation (WHO) assigned the official name COVID-19 and 11 March before the outbreak was declared a pandemic.
Keep calm and carry on negotiating
At this point the reaction of the Government was that it could deal with the coronavirus problem as a public health issue and that there was no reason to interrupt the newly-started trade talks. Cabinet Office Minister Michael Gove told Parliament that negotiators had met in Brussels on 2 March for the first round of talks with 11 negotiating groups set up to examine issues including: trade in goods; trade in services and investment and other issues; transport; fisheries; energy and civil nuclear cooperation; and trade in services and investment.
The next negotiating round would take place starting on 18 March in London, Mr Gove told MPs, when the UK expected to table a number of legal texts, including a draft free trade agreement (FTA). It was at this point that the coronavirus interrupted proceedings.
Sickness in the camp
Ahead of the expected second session of talks, a Government spokeswoman said: “In light of the latest guidance on coronavirus, we will not formally be convening negotiating work strands tomorrow in the way we did in the previous round.” While the two sides were still considering ways of continuing the talks if face-to-face negotiations remained impossible, such as the use of video-conferencing, it was announced that the EU’s chief negotiator, Michel Barnier, had tested positive for the coronavirus. He said that he was following all the necessary instructions while being confined to his home and was “doing well and in good spirits”.
Given these significant interruptions to what was already a very tight schedule, the EU said that it was expecting the UK Government to ask for an extension of the post-Brexit transition period. Among other problems, it noted that the European Parliament would need to approve the final deal but had already had to drastically reduce its activity with many MEPs unable to leave their home countries because of the pandemic. However, when Mr Johnson’s spokesman was asked whether the transition period might need to be extended as a result of the current problems, he said simply: “No”, then added: “In UK law, a request for an extension is not possible”.
Going it alone
In his first Budget, on 11 March, new Chancellor Rishi Sunak unveiled a £30 billion package aimed at tackling the problems associated with the COVID-19 outbreak. A suspension of business rates, grants for small businesses and new rules on sick pay gained general approval and attention quickly turned back to trade. The Government introduced its Trade Bill to Parliament, explaining that it would see a new body, the Trade Remedies Authority (TRA), replacing anti-dumping work previously done by the European Commission, and that the Bill would ensure that all elements in trade continuity agreements could be fully implemented in domestic law so that the UK could continue to trade with many of the countries with whom it is currently linked through the EU.
More help needed
This shift of emphasis was brief as, barely a week after his Budget, the Chancellor was standing with the Prime Minister at Number 10 to tell the nation that government intervention “on a scale unimaginable only a few weeks ago” was now needed. The number of patients with the virus had continued to rise sharply, as had the number of deaths, and people were being advised to stay away from pubs, restaurants and other public places. Faced with the huge hit to the economy, Mr Sunak put forward a package including a massive £330 billion of guarantees — equivalent to 15% of UK GDP.
Unprecedented as this had been, the Chancellor had to return within days as the crisis deepened and the Prime Minister moved from telling people to avoid pubs to closing them down — together with cinemas, theatres, bingo halls, spas, libraries, skating rinks and just about anywhere else that people might gather in social groups (including schools). With so many people now out of work and businesses looking at possible bankruptcy as customers disappeared and work dried up, Mr Sunak said: “Today I can announce that, for the first time in our history, the Government is going to step in and help to pay people’s wages.”
Brexit before breathing?
The EU was in the meantime taking its own steps to deal with the pandemic, one of which was the setting up of an EU joint procurement scheme for urgently needed medical equipment. A UK Government spokesman said that it was not taking part in the scheme as “we are no longer members of the EU and are conducting our own work on ventilators”.
The European Commission had put out tenders for personal protective equipment (PPE) including masks, gloves, goggles, face-shields, surgical masks and overalls — all of which were in short supply in various parts of the NHS. It soon became clear that the UK could have participated in this scheme as, during the transition period it remains a member of the EU, and some Opposition MPs accused it of “putting Brexit over breathing”.
A Downing Street spokesman then contradicted earlier insistence that Britain would not take part because it was an EU initiative and instead explained that the decision not to join the Commission’s project had been due to a communication problem. Officials had not received emails inviting the UK to join the first round of procurements, it said, and there was a possibility that it would join future schemes.
Cost of EU Exit preparations
In any normal month, a report issued early in March by the National Audit Office (NAO) would have grabbed the headlines as it revealed that the Government had spent more than £4 billion on preparations for leaving the EU last year. Operation Brock — the planned traffic management system to be used in Kent in the event of a no deal exit — had alone accounted for £69 million.
The Cabinet Office had reported spending £49 million on communications, including funding for the ‘Get ready for Brexit’ campaign. At least £1.9 billion was spent on staffing, reaching a peak in October 2019 when 22,000 civil servants were working on Brexit planning. Given the amounts being pledged by the Chancellor to deal with the impact of the coronavirus outbreak, however, the NAO report disappeared almost without trace.
Calls for a Brexit break
The UK’s chief trade negotiator David Frost was in self-isolation before the end of the month after also testing positive for coronavirus (as did the Prime Minister). Despite this, and the massive strain on Government resources caused by the pandemic, Downing Street has insisted that there would be “no change” to the talks timetable. It announced that Michael Gove would step in and would hold a video conference with European Commission Vice-President Maros Sefcovic on 30 March as planned.
Meanwhile European Commission President Ursula von der Leyen has repeated her warning that it will be impossible to reach a comprehensive trade deal in the few months left before Mr Johnson’s deadline. Her call for an extension to the UK’s transition period has been echoed in the UK by the Road Haulage Association (RHA) with its Chief Executive Richard Burnett warning Mr Gove that the industry is “simply not in a position to give the complexity of future trade arrangements with the EU the necessary focus”.
The UK’s road transport industry must be completely focused on supporting the unprecedented demand that has been placed on the supply chain and ensuring that the flow of critical goods — food and medical supplies — are maintained throughout this crisis, he argued. Mr Burnett stressed that the association had no political motive and was not trying to delay the Government’s plans. However, he insisted, “the current climate makes the ability to negotiate, agree and manage new trading arrangements impossible”.
These calls for an extension to the transition period seem to be resonating with the general public as a recent opinion poll shows 62% in favour of a delay.