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Analysis

We’ll crash out or get a crap deal next Xmas

by Hugo Dixon | 21.10.2019

The Prime Minister hasn’t just negotiated a terrible sell-out divorce deal – which turns Northern Ireland into an EU colony and makes Great Britain much poorer than it would otherwise be. He is ramming us up against another artificial deadline at the end of next year. That means the EU will have him over a barrel when negotiating a free trade agreement (FTA). 

Boris Johnson says he won’t extend the “transition” under which Great Britain will stay in the EU’s single market and customs union until December 2020. He hopes to negotiate an FTA by then. But ambitious trade deals take years to nail down. So his chances of success are slim.

The Prime Minister says he will conduct the talks at a “blistering pace” – just as he has negotiated the divorce deal in extra quick time. And maybe he will. But, as with the divorce deal, he will then end up giving the EU pretty much everything that it wants. After all, the other countries know that we need them more than they need us. As the clock ticks towards the end of next year, Johnson will get more and more desperate about falling off a cliff – and will be tempted to give away concession after concession.

What’s more, the ultimate deal may be so awful that he turns it down and we do crash out. The hardliners in his party will be saying that “no deal is better than a bad deal”. Indeed, John Baron – one of the so-called Spartans – said he was only supporting the divorce deal because it left open the possibility of leaving without an FTA at the end of next year if the trade talks fail. 

So Johnson is setting us up for a crap trade agreement or crashing out in a year’s time.

One way of mitigating this risk is to take longer to negotiate an FTA. That’s what Philip Hammond is pushing for. The former Chancellor wants Parliament not the Prime Minister to determine whether we ask the EU to extend the transition.

Johnson’s deal – and indeed Theresa May’s before it – allows us to ask for up to two more years (See Article 132). The snag is that we will have to pay for the privilege – and the fee will only be determined after we have left. Fat chance that the other EU countries will let us hang onto the “rebate”, the multi-billion pound a year discount that Margaret Thatcher famously negotiated. They may even think it amusing to suggest we pay £350 million a week – on the basis that the Prime Minister dishonestly kept telling the British people that that is what we pay.

What’s more, we have to agree to such an extension no later than July 1 of next year – which means we will have to start negotiating even earlier. So if we don’t want to be slammed against a deadline at the end of next year, we will be slammed against one in the middle of the year instead.

There, is of course, one way to avoid all these terrible choices. Hold a referendum and stay in the EU.

The headline and excerpt were updated on December 3, and the reference to some Labour and moderate Tories supporting him was removed.

Edited by James Earley

3 Responses to “We’ll crash out or get a crap deal next Xmas”

  • I do not understand why there is such urgency to leave EU within the next 10 days when there is still so much to be done. Not least is to pick over and thoroughly assess the proposed termed on which we’d be leaving. If we are being sold a pig in a poke and asked for a blank cheque for it, then caveat emptor – we must check it out thoroughly before signing up to anything.
    (I even saw a rumour that some people are betting on the outcome – £8bn if we leave with no deal by 31/10?)

    Is it because there are some who want to ditch EU membership so as to sign up to US instead?
    Folly. US would treat UK as a minnow desperate for a deal, having burned our EU boats
    We have a very good deal already with EU, negotiated and worked up over 50 years, and operating pretty well, but it seems to me this is being totally ignored, deliberately side-lined. .
    if we really want a decent deal with US, seems to me we’d get a much better one (without burning boats) by remaining in EU, and EU as a whole working towards a US-EU trade deal. More balanced, two parties of similar weight. But I think I read somewhere that US pulled out of that idea very early – presumably because EU was clearly not going to be a push-over. All the more reason for being in EU in such a negotiation!

  • There is an indecent haste about all this. In addition we have Javid saying we don’t need to see the conomic assessment because everything is going to be so wonderful once we have left the EU. Yet Gove then says he’s implementing Yellowhammer! And we are told Johnson has enough support from all sides to get his deal through.
    Have they all been on the magic mushrooms again?

  • According to a poll in the BBC website slightly more people at large support the deal than oppose it. But just as many have responded they don’t know or have no knowledge of any deal. These are the people we have to persuade. They are probably not interested in the debate or do not understand the detail in the bill. Even Barclay got confused as to the detail! Many of the don’t knows do not engage in political debate, it bores them or they do not understand ‘customs union’, ‘single market’ etc. We have to explain in simple terms how it will make them and the country worse off. Not easy but we cannot allow the Daily Mail to decide our future.