It’s getting easier for the pro-Brexit government in London to make good on its threat that the EU transition period will not be extended beyond 2020, no matter what the circumstances, including a no-deal Brexit.
Boris Johnson’s government has less to lose, after German Chancellor, Angela Merkel, told the European Parliament last week to prepare for a No Deal scenario (but that the aim was for a “good deal” in the autumn).
In her speech to mark Germany taking over the EU’s rotating presidency for six months, she repeated a warning she made a week earlier, on Germany’s first day of the EU presidency, that the EU and Germany should prepare for the possibility of a hard Brexit.
The EU’s chief negotiator on future relations with the UK, Michel Barnier, also advised EU businesses last week to step up their planning for a ‘no deal’ scenario, when the UK leaves the Single Market at the end of 2020.
He said significant divergences remain in negotiations on a new EU-UK trade deal, but added, “We will continue working with patience, respect and determination.”
EU talk of a no-deal allows Prime Minister Johnson to fall back on such remarks later and paint a picture of the EU not being willing to negotiate.
There may even be some truth in it, because Brexit has fallen so far down the EU’s priority list since Covid-19 arrived on the scene in the spring.
The full attention of EU leaders is now on a different set of negotiations, the talks among EU leaders over the European Commission’s proposed €1.85 trillion budget-and-recovery package.
Merkel told the European Parliament that there was no time to waste on finding an agreement for the recovery fund, saying they needed it before the EU’s summer recess.
EU leaders will meet tomorrow to try and thrash out a deal for the rescue package, which is based on raising money on the financial markets, and using debt shared by the member states for the first time.
But some northern European countries oppose having common debt with southern EU countries, such as Greece and Italy, so negotiations on the rescue package could be difficult, and may not be resolved before the autumn.
But if it is resolved , the EU could become even more complacent about Brexit.
Meanwhile, fighting the coronavirus on the ground remains the EU’s other priority.
Both issues have deflected attention from Brexit.
In Brussels, London is no longer the biggest worry, and many EU leaders may find some consolation in not having the UK’s Brexit demands uppermost in their minds.
In turn, many UK leaders may be looking forward to having the no-deal they want handed to them on a plate.
With EU leaders no longer seeming confident that a trade deal can be agreed with the UK, less blame would be attached to the UK government for a no-deal outcome, allowing them to get on with negotiating independent trade deals with non-EU countries (which would be difficult if the EU-UK transition period were extended).
The UK’s Conservative government, with its majority of almost 80 votes, can welcome a Brexit no-deal as their opportunity to fundamentally restructure the UK economy. It could even be claimed as a boost to their poor performance against Covid-19, by enabling the UK to build resilience against pandemics through controlling borders and shoring up key local industries, while it intervenes and supports these businesses without EU interference.
Such political messages could allay public fears in the UK over the government compounding their current Covid-19 crisis by having a disorderly no-deal exit from the EU.
Maybe both sides privately think Brexit has caused enough trouble, and it is time to bite the bullet, rather than have yet another year of transition, on which a deal depends more with every passing day.
Deal, or no deal, there will be major adjustments on each side.
No deal means more than €1 billion in WTO tariffs in Ireland’s agri-food sector alone, and Ireland wants every effort made to avoid that eventuality, through negotiation.
But the Government in Dublin too is planning behind the scenes for a worst-case Brexit.
Foreign Affairs Minister Simon Coveney has said the Government is reminding businesses which are focused on Covid-19 to ensure that our economy is as Brexit-ready as it possibly can be for all scenarios, including a no trade deal Brexit.
Even with a deal, the EU will need many changes in 2021 in goods and services, energy and legal co-operation, travel, and tourism.
How much worse would a no-deal scenario be, than having to deal with a UK government which hasn’t even worked to implement the Northern Ireland protocol, the part of the Withdrawal Agreement which commits the UK to avoid the return of a hard border between Northern Ireland and the Republic?
At least, 2020 has given breathing space to advance Brexit preparedness.
This was evident from the recent Bord Bia Readiness Radar survey report.
In the survey of 128 Irish food, drink and horticulture companies, 91% said they had made progress in Brexit preparedness over the past 12 months.
However, 41% of those surveyed reported an increase in their sales to the UK over the past 12 months; 39% reported stable UK revenues; 55 were planning to grow sales in the UK, and the remaining 45% planned to maintain sales in the UK.
So a no-deal would be a huge let-down for our food exporters, and all who depend on them.
It could be even worse news in Northern Ireland, where many business organisations say their businesses cannot deal with a no trade deal Brexit on top of the Covid-19 crisis.
First things first: the real threat of a no-deal Brexit makes progress this week on EU negotiations of the €1.85 trillion budget-and-recovery package even more important.