The UK government is standing firm in its insistence that the transition period will end this year. However senior figures like Sadiq Khan are calling for a delay. We examine both sides of the argument:
Joe Halawin: The sooner we leave the EU, the better
Ever since Covid-19 became more than just a flu, Brexit has become a secondary issue despite its importance during the 2019 election.
Is it wise to pursue an unprecedented departure during an unprecedented pandemic? Or will leaving sooner provide the UK with the opportunity to evolve
At what cost?
The cost of a no deal exit from the EU is speculated to reach £30 billion a year as stated by the IMF and the Office for Budget Responsibility. Whilst £30 billion is not a small sum by any means, it is dwarfed in comparison to the estimates made by a recent report by the pro-Brexit thinktank the Centre for Brexit Policy (CBP). The report states that an extension could cost £380 Billion over the two-year period based on studies carried out by the University of Cardiff.
The majority of the £380 million figure is due to the UK missing out on potential Free Trade Agreements (FTA’s) and the loss of benefits brought by post-Brexit regulatory flexibility. If the UK is still a transitionary member after the original period, the lack of freedom from the EU’s ever increasing budget and ever expanding red tape will not only lead to slowing much needed economic gains, but also prevent the UK from evolving its economy after the crisis.
After the pandemic is dealt with the economy must change to prevent future outbreaks and ensure that the most vulnerable are the best protected. The EU’s rules concerning state aid can prevent more invasive economic action such as public ownership and giving preference to public bodies for government contracts. Brexit would provide the opportunity for a reduction in the use of private contracts within NHS trusts which would in turn allow for a potentially more centralised approach if such a pandemic were to arise again. Government interference may be even more necessary in privately run sectors such as social care which saw a quarter of the total Covid-19 deaths in the UK and failings in providing PPE to their staff.
Not only are there potentially significant economic costs but the political ramifications could also be just as severe. At a time where trust in the government is so crucial yet ever so lacking, adding the additional burden of yet another broken promise could lead to a complete lack of faith in the government. The majority of the public voted to leave and have also voted for two more successive governments that promised the UK would leave by a date that never materialised. How much longer can the public wait until the ‘once in a generation’ vote is achieved?
Additionally, as contained in the CBP report, a ComRes poll commissioned by the CBP found that the majority of the public thought the transitionary period should not be extended and the public have confidence in the government to focus on both Covid-19 and trade negotiations.:
Given the short- and long-term socioeconomic costs of an extension it is fair to argue that the UK can and should leave sooner rather than later. Therefore, allowing itself to evolve post-lockdown to meet the demands of the future stricken or not by the threat of a pandemic.
Mario Laghos: We Must Delay Brexit
The COVID-19 crisis is all but guaranteeing that the UK falls into depression. With limited time left to negotiate a deal, the UK's hard line stance could well lead to a 'No Deal' Brexit. Studies have down that a No Deal scenario could cost the UK £30 billion per year. With war like mobilisation in play against COVID-19, abandoning key resources to the ideological commitment of leaving this year, would be an act of national self harm.
Cooperation is key
Now is the time to be cooperating to the fullest extent possible with our European neighbours. The EU is launching a large scale bailout of the Eurozone economies, that we are not part of it is regrettable, but we should not exacerbate this disadvantage by decoupling with our allies in the areas within which we still maintain reciprocal arrangements.
The Pick for Britain campaign has made clear the demand the UK economy has for labour. When attempts were made to recruit Brits into fruit picking jobs in April, just 112, out of a total of 50,000 applicants took up jobs on the farms.
As we look to revitalise our economy coming out of the COVID-19 crash, we would be well served to enjoy access to free movement of labour, which will increase our productivity, and ensure the good function of key industries.
Can we negotiate effectively in these conditions?
We must call into question our capacity to negotiate effectively in the current circumstances. As we are mustering virtually all resources into our battle against the virus, and face to face meetings have been postponed, these are surely not ideal circumstances for successful negotiation.
We are being hamstrung by circumstance, and we should take the opportunity to let that circumstance pass, before we make our exit.