As Boris Johnson broke the grim news in March 2020 about a wave of new restrictions in the wake of coronavirus, Brexit was pretty much the last thing on anyone’s mind.
Yet since the pandemic, it is quite likely that the UK Government will extend the deadline or risk absorbing more economic shocks. In fact, the economic crisis which has followed is underscoring the post-Brexit coordination and regulatory challenges that lie ahead.
What businesses need to know from the get-go
I am absolutely perplexed at the fact that during Theresa May’s three-year tenure, there’s been a vast amount of uncertainty. This has caused a huge degree of damage and businesses, therefore, need to know what will now happen – how they will now be supported and what the new ‘process’ is going to be.
In my opinion, with an institution like the EU – yes, you can try to negotiate. But you need to negotiate on your terms and if you can get them, great – (which we’re trying to do right now) – but it seems a little too late.
We need to make this clean break first and then negotiate onwards – where both sides come to the table and honestly discuss their pain points, and then come up with a solution without any further delays.
When it comes to negotiation, you need to be in a position where both sides agree that there is a problem and there needs to be a solution – and admit to the fact that it’s hurting them both, more specifically, their economies.
As it stands, there’s a lot of bravado but no hard facts. The ideal way to break away from any sort of membership is to be able to make a clean break. Because only when you catch a clean break, you can then go back more confidently and renegotiate on certain sectors or certain issues.
With regards to Brexit, this sort of elongated negotiation – which, in my opinion, isn’t even a negotiation but rather delay tactics – is harming local business more since the vast majority are from the consumer and service sector. Most of our consumption is done locally so let’s get that straight and ensure that Brexit is a positive experience.
The Other Side of the Coin: Brexit Polarisation will not end with Brexit
Now, these aren’t my own personal views by any means – but it pays to consider the other side of the coin too:
Johnson has for the most part opposed a deadline extension – he even had legislation implemented that would bar the government from doing so.
The prime minister had earlier threatened to walk away with ‘no deal’ if British demands were rejected. And if that happens, then the UK will trade with the EU only as a third country, like Australia, for example.
So I think in the wake of coronavirus, both paths must be considered carefully because there are economic risks to deal with;
Let’s say there is a deal, businesses that manage to rise from the effects of the pandemic by the end of this year will most likely face near-term disruptions. The government’s very own in-depth analysis which was conducted towards the end of 2018 reported that a free trade agreement would see a 4.9% decline in GDP, in contrast with remaining an EU member.
British businesses are working hard to integrate practical changes which will go into effect by the end of 2020 – this includes a new immigration system, regulation laws and border checks. Meanwhile, the UK Government has given an advance warning of Brexit-related disruption, including those to supply chains.
Now, if there is no deal, the government would advertently create a second economic shock. If an extension is requested, however, the prospect of more payments to Brussels will be politically off-putting, especially if the coronavirus-induced recession overstays its welcome. Still, it would be the lesser of both evils, as they say.
Coronavirus has also caused a number of challenges to stare in the face of the government in terms of regulating, coordinating and responding to crises, once it fully departs from the EU.
Officially as it stands, the British government is strongly opposed to having an extension in the transition period. The British public, however, remains polarised. In a recent survey, it was revealed that 55% of the public support an extension, with a quarter opposing it and 21% being completely uncertain.
To conclude, it seems that Johnson may very well end up like a surgeon trying to convince a patient that amputating the right leg won’t make a difference, as the left one has already been done away with – or perhaps like a chef who creates the perfect new dish and hopes that it will be happily devoured by diners.
Remember, how we talked about Brexit being a positive experience for everyone?
The only way to make that experience positive is to allow UK businesses to trade freely with other countries outside the EU and the key focus should be on those trade negotiations with other countries – however small they may be at first.
The key take-home is that more trade negotiations or trade deals, means you have more opportunities for business. And business is smart, believe me – it will know where those gold coins are hiding and they will move towards those countries. This is where we’ll start to witness some exponential growth when we start to trade with India or the US, for instance – both of which offer huge growth and expansion opportunities for UK businesses.