British businesses face hard deadline to prepare for new trading arrangements

The UK having formally rejected the option to extend its post-Brexit transition period beyond the end of this year,  British companies are left with a matter of months to prepare for more restrictive trading conditions with the EU.

Michael Gove, Cabinet Office minister to the UK, revealed that he had “formally confirmed” the decision during talks with Brussels, stating on Twitter: “On 1 January 2021 we will take back control and regain our political and economic independence.”

Brussels said it had accepted Britain’s decision as final, since the legal deadline to request an extension to the Brexit transition period would expire at the end of this month, and priority must be given to implementing last year’s UK withdrawal treaty and unblocking talks on future bilateral relations.

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With time fast running out the EU

Boris Johnson will hold stocktaking talks with EU leaders on Monday to ascertain how to make the most efficacious use of the remaining months before what is now a hard deadline for Britain to exit the bloc’s single market and customs union.

Consequently businesses are now aware that they must start to prepare for a drastically different trading environment with the EU from the start of next year.

Britain has repeatedly been warned that no relationship deal will be able to prevent the need for customs formalities, regulatory checks and animal health inspections on UK goods entering the EU single market, which would translate into a hard trade border being erected for the first time in decades.

The decision not to extend the transition period, according to Mr Gove, was taken during a meeting of a joint committee of EU and British officials that oversees the implementation of the withdrawal treaty.

Maros Sefcovic, the European Commission vice-president who led Brussels’ delegation on Friday’s video call, said that Mr Gove “could not be clearer”. He said the UK minister had told him that the stance reflected “the promise given to British citizens in the election campaign”.

“I take this as a definite conclusion of this discussion,” said Mr Sefcovic, noting nonetheless that he told Mr Gove that the EU “remains open to such an extension

The decision by Britain is a clear reflection of the PM’s adamant stance that he  would never seek an extension, which under the terms of his Brexit deal with the EU could have lasted for as long as two years.

However, the leaders of two of the devolved nations, Nicola Sturgeon, first minister of Scotland, and Mark Drakeford, her counterpart in Wales, said the lack of time left before the UK left the EU risked a “damaging ‘bare bones’ trade deal or even worse, a disastrous no-deal outcome”.

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The UK

“While we hope that the second half of this year will see the beginnings of a recovery, we believe that exiting the transition period at the end of the year would be extraordinarily reckless,” they added.

“It would pile a further very significant economic and social shock on top of the Covid-19 crisis, hitting businesses whose reserves, in many cases, have already been exhausted.”

The UK and EU have confirmed that they will seek to reinvigorate negotiations on their future relationship in an attempt to unblock the talks and reach a deal.

On Friday the two sides declare their intent to negotiate every week from June 29 to July 31, with a focus on the most contentious issues, such as EU demands for a regulatory “level playing field” on state aid, labour rights and environmental law. Talks are also planned for August and September.

Mr Sefcovic said the two sides had also agreed to accelerate work on implementing the withdrawal treaty, notably its provisions on avoiding a hard border in Ireland through checks on goods crossing the Irish Sea.

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With only six months remaining to the deadline for clinching a post-Brexit trade deal, the UK and EU are no closer to bridging their differences.

He added he was “very much reassured” that Mr Gove saw the need to quickly come up with plans to clarify a policy paper on the new arrangements that the UK government issued last month.

“I suggested it would be extremely useful if we could get the technical clarifications by the end of this month,” he said, adding that a specialised EU-UK committee dealing with the topic would meet over the summer.

“Time is really pressing, the clock is ticking and we need tangible results in that process,” said Mr Sefcovic.

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