Johnson to push on with Brexit despite CoVid-19 and cratering economy
TruePublica Editor: The economy is what sustains us all. Whether we like it or not, whether we agree with how it is managed or not – without the economy most of us will starve. It was, therefore with a degree of horror that we found out this week that the Brexit trade talks that had been postponed between Britain and the EU are to continue despite Europe-wide coronavirus lockdown and economic breakdown.
You would like to think that our leaders are of sound mind – but the thought should quite honestly be that they are not.
From the FT yesterday – “By this point in time, EU and UK negotiators were supposed to have completed two intensive negotiating rounds and to be poised for a third next week. Instead, the coronavirus pandemic has restricted both sides to seeking clarifications from a distance. But the reality is that the hard work of hammering out compromises is on hold. It never even really had a chance to begin. Michel Barnier, the EU’s chief negotiator, has tested positive for Covid-19; David Frost, the UK chief negotiator, self-isolated earlier this month after developing mild coronavirus symptoms.”
Security concerns have stopped video-conferencing.
Right now, we have no idea what our economy is going to look like in three months time, let alone by the year-end. We do know this much though – it will have crashed straight into a recession overnight. Britain has never experienced a financial shock like this. The closest experience we have is when the banks blew up the financial markets and in Britain, they held a loaded gun to the taxpayers’ temple and demanded a trillion pounds. Predictions of a ‘V’-shaped bounce are already under fire by corporate bosses who are now preparing for a protracted period of economic instability that could easily reach into the summer of next year – all due to the coronavirus.
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Britain was already heading towards a recession. Brexit was dragging it into a deeper one. The latest Office for Budget Responsibility forecasts models for 5.2 per cent loss of potential GDP over 15 years if a “typical” free trade agreement was struck. Without one, up to 9 per cent. In its own right, Brexit is a self-inflicted injury – but it would have recovered … eventually.
But leaving that aside for one moment, Britain, like so many other countries around the world is only just starting to count the dead resulting from this coronavirus crisis. We are far from this being over. And even when it is, its lingering effects in heavily increased unemployment, bankruptcies and insolvencies, repossessions and the like are completely unknown for both businesses and individuals. The business landscape will have changed considerably.
With death tolls now the focus of headlines and political breath-holding on both sides of the Channel the sense of self-indulgence, as Brian Cox put it, was more than just evident.
“Why would we want to impose a second, voluntary shock on the country in early 2021?”
Even Germany’s robust economy and much lower levels of national debt will see an almighty economic cliff-dive. But most worryingly, as the FT reports in another article, those economies that are ‘services’ orientated can expect very severe downturns. It is an unfortunate fact that the ‘services sector’ accounts for 80 per cent of Britain’s GDP. Hence the OECD has just predicted Britain’s GDP will fall around 25 per cent throughout the lockdown. The cost of that is not known – but it will be horrendous on many levels.
The European People’s Party, the EU parliament’s powerful centre-right group, took the bull by the horns last Monday by calling on the UK to do the “responsible thing” and seek an extension. EU negotiators are wondering the same – surely a postponement is now inevitable. The UK’s response – “The transition period ends on 31 December 2020, as enshrined in UK law, which the Prime Minister has made clear he has no intention of changing,” said a UK spokesperson on Monday.
The FT then states the obvious – “Pre-pandemic, Boris Johnson and David Frost had acknowledged the inevitable new “frictions” as a price worth paying for an independent trade policy. But that logic looks much more suspect in a world where businesses are desperately trying to stay afloat and where the watchword is not opportunity, but survival.”
And there it is. The government is going to go full steam ahead with Brexit even though thousands of British firms are now fighting an existential crisis with the coronavirus. None of them will be preparing for January 1st 2021 when companies would be faced with the creation of a hard regulatory and customs border for trade in goods, complete with new checks, formalities and queues.
But there’s another thing about this Covid-19 crisis that will come to annoy many of us. It provides the Brexit fundamentalists with an excuse about the economy that was already heading into recession territory – that it’s the virus’s fault. The timing of it could not have been better for them. And so, Boris Johnson will continue to drag the country towards Brexit before it has even had time to lick the wounds of a crisis that hit the notion like a tornado and willingly steer it into the path of a hurricane. It will use the Coronavirus Act to slip through whatever it wants with Brexit because if anyone dares to stand up and protest it, they now have unprecedented powers to silence them.