If a Boris Johnson government does agree a trade with the EU by the deadline of the end of 2020, which is what the Tories say they want, it’s likely to be a basic deal. That will not be best for the UK economy.
Sajid Javid, the Tory chancellor, said (at 2:12:05) on the BBC’s Today programme this morning that a Johnson government will have agreed “a very ambitious, deep comprehensive free trade agreement” by the end of 2020. In practice, a deal has to be wrapped up by June next year to allow for ratification. The time pressure alone makes a full deal covering goods and services hard to reach.
That means the likely outcome will be a minimal deal securing tariff free trade for most goods but with question marks over agriculture and fisheries, including access to fishing waters. Services would not be covered and the UK’s large and competitive financial services sector would come under a precarious equivalence regime. There would still be issues about regulatory convergence and freedom of movement will probably be restricted.
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This will all limit growth and discourage inward investment. It may allow for trade deals with other countries. But these take time, are unlikely to cover services much and could prove controversial – for example in the case of the US. They are unlikely to be a substitute for the loss of free access to the EU. Government analysis suggests that new deals may not add more than 0.1-0.2% to UK GDP after 15 years.
Most forecasters remain downbeat on the economy. The November OECD economic outlook forecast UK growth of only 1% next year after just 1.2% in 2019, with only a modest improvement thereafter. And the UK in a Changing Europe think tank at King’s College, London, concluded that Johnson’s deal will suffer increasingly from rising non-tariff barriers with the EU. This will leave us considerably poorer than staying in the EU and worse off per capita than Theresa May’s deal.
Edited by Michael Prest
To do a basic deal (before seeking an extension) he’s got only 5 months (Feb 1st – Jly 1st). It would be very basic indeed. You mention trade and fish, but not SERVICES, security, data, research, student exchanges. And you don’t mention the need for approval/ratification from 27 nations.
Don’t the facts that even to get a trade deal there would still be issues about regulatory convergence and freedom of movement, along with the fact that the Brexiteers think any time in transition is time in “vassalage” show that, just for a change, Johnson isn’t lying when he says there won’t be an extension of the transition period?
It’s WTO terms from 1st Jan 2021, I think, with Trump then threatening us along with every other nation.
Unless of course we can prevent a Tory majority.
Quite right Vicky. The Chancellor’s statement that they can do a comprehensive and deep FTA this next year is total rubbish. We are used to this from Boris, but expect better from a Chancellor of the Exchequer.
The reason the Tories aren’t bothered about Borisolini’s appallingly bad deal is that they have no intention of abiding by it. It’s a crash out at the end of 2021. Borisolini thinks he can lie on the international stage with the same gusto he does in the UK, that he can go about signing international treaties and simply renege a la Hitler. His bad faith will be suitably rewarded by the international community.