Thought September 07, 2020 / 07:52 am UTC

The Hardest Brexit Possible?

By Andrew Wroblewski

In a blatant ratcheting up of Brexit discussions, the UK may now demand a trade deal with the EU by October 15. The question is whether this is just more political bravado or (perhaps now more likely) a reflection that both sides are accepting that a no-deal is the most likely outcome.

Going into the weekend, media speculation was building around a view that the UK at least was more of a view that the trade talks with the EU will fail. But progress on the already-fragile and labored talks is now threatened further by plans revealed on Sunday for the UK government to publish legislation that would contravene the (legally binding) Northern Ireland protocol element of last October’s Brexit withdrawal agreement. 

While it remains clear that the UK is blaming the EU for prioritizing a deal on the difficult areas, most notably the issue of state aid rather than fisheries, with Britain focused particularly on the former for its implications for technology companies. Rather than political bluster, this UK stance may reflect a genuine line of thinking, possibly nurtured by No. 10 policy advisor Dominic Cummings.  He has long advocated the UK needs to develop large technology companies and at a scale that requires state involvement, otherwise it would even more reliant on either the US or China.  

Regardless, while the UK may this have a genuine but debatable rationale for its unwillingness to compromise, the mere threat that Britain may undermine the protocol could not only cripple trade talks between the two sides due this week but the bad taste that would ensue (as we have warned) would also mean that the EU would not smooth the way for the UK to move to WTO rules.  This would mean the hardest of all Brexits lies ahead.

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I, Andrew Wroblewski, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.