UK firms must prepare for no-deal Brexit eventuality - PM Johnson

Author: Jonathan Lopez

2020/10/16

LONDON (ICIS)--UK businesses trading with EU countries should get ready for the eventuality of a no-deal Brexit and the consequent tariff-based trade under World Trade Organization (WTO) terms, the country’s prime minister said on Friday.

With only 11 weeks left to go before the UK exits the EU, Single Market negotiations appear to have stalled on key issues such as fishing rights – UK waters are key for EU companies – or state aid for companies.

UK voters decided in June 2016 to leave the EU but this was delayed on several occasions; it finally left the now 27-country bloc on 31 January although it remains in most EU bodies under a transition period which is due to end on 31 December.

Both sides are aiming to sign a free trade agreement (FTA) as both have strong economic links after more than 40 years of UK membership.

However, Johnson called on business to get ready for an Australia-type relationship with the EU, which is almost the same as WTO terms, although Australia does not have an FTA with the bloc.

Although the UK government announced in May many chemicals tariffs would be slashed to 0%, the measure could not be replicated by the EU, in which case chemicals would have tariffs between 4.5% and 6.5%, as per WTO terms.

“Given that they [the EU] have refused to negotiate seriously for much of the last few months, I have concluded we should get ready for 1 January with arrangements more like Australia's based on simple principles of global free trade,” Johnson said in an interview with public broadcaster BBC.

"So now is the time for our businesses to get ready, and for hauliers to get ready, and for travellers to get ready.”

The response from the EU was timid for the moment as intense negotiations continue at pace.  Analysts predict that a no-deal Brexit will be a further blow to the UK economy, which is already suffering greatly from the pandemic.

The president of the European Commission – the EU’s executive arm – said on social media platform Twitter that negotiations would intensify next week.

“The EU continues to work for a deal, but not at any price. As planned, our negotiation team will go to London next week to intensify these negotiations,” said Ursula van der Leyen.