A former head of the Foreign Office has said it would be “irresponsible” to stick to the government’s timetable for ending its Brexit transition period if it means leaving the EU without a deal amid the coronavirus crisis.
Simon Fraser, who was FCO permanent under secretary between 2010 and 2015, said the EU and UK would likely have to extend the post-Brexit transition period beyond the end of this year because of the worldwide Covid-19 outbreak.
As negotiations between the two have stalled, Fraser said that if the UK refuses to extend the transition period, it will be left either without a deal or a “very thin deal” covering the bare minimum of trade arrangements.
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The government is still insisting it will not request an extension, saying the 31 December deadline is enshrined in law.
But Fraser told CSW: “I can't believe that behind the scenes, people aren't talking about this because we've now got a situation where we’re near the end of March, there’s only been one negotiating session, [EU chief negotiator Michel] Barnier’s got coronavirus, everybody is completely overwhelmed with the crisis and I can’t see how we’re going to be able to channel resource into the Brexit negotiations in the near future.”
Barnier tested positive for Covid-19 last Thursday, and a day later his UK counterpart David Frost began self isolating after showing “mild” symptoms of the virus.
Under the circumstances, Fraser said, “If we're going to maintain the end of December deadline… then clearly we’re either going to have a deal covering basically traded goods, and other things that absolutely need to be done, but excluding many areas like services – or we’ll end up with no deal, and actually the difference between them is not all that great.”
He added: “I don’t see that there’s a scenario where we leave at the end of this year but do maintain the bulk of the current economic arrangements, because that involves regulatory alignment – accepting the [European Court of Justice’s] jurisdiction and so forth, which the government has said it’s absolutely not going to do.”
He said the government must seek a comprehensive deal, which would almost certainly require extending the transition period into next year.
Fraser said requesting an extension would be “politically very difficult for the government”, given the prime minister’s insistence that the Brexit process would not be delayed further.
“But the point is the world quite literally has changed and I think you have to adapt to that sort of change,” he said.
“This is a major economic crisis, it’s going to affect the British economy and it seems to me it would be irresponsible, frankly, if we come out of this crisis in autumn to then present business with a whole new set of uncertainties around a very significant change in the status of our economic relationship with Europe, either through no deal or through a very thin deal at the end of the year,” the former diplomat, who was previously perm sec for the then-Department for Business, Innovation and Skills, said.
“That must surely create uncertainty around [economic] recovery, and it's not necessary – it’s only necessary because it’s a political decision the government has made. If the EU and the UK were to agree to an extension, then it can be done.”
He said the uncertainty about how the coronavirus crisis would affect trade in future was another reason to extend.
He said it was unlikely countries would “remain committed to just-in-time global supply chain in trade”.
“The whole ‘Global Britain’ concept needs to take that into account. I would argue that is not the moment to be taking decisions on significantly reducing access to the European market, if you don’t have to at that time,” he said.
Fraser – who is now managing partner at the Flint Global business consultancy – stressed that he was not making a “remainer argument”.
“We’ve left the EU. It's an argument about the best way to manage the transition to it in terms of the content of that relationship and the timing of getting there. It’s about the practicalities of government,” he said.
Asked whether ending the Brexit transition period without a deal at the end of last year was likely to have a greater effect on businesses and services than a no-deal Brexit last year, Fraser said: “The argument was that people have had more time to prepare for no deal. But of course, [the coronavirus crisis] is knocking businesses completely sideways, so you’ve got to account for that.
“Business will be weaker, order books will be weaker, cash situations, cash reserves will be weaker. So the economy will be less well placed to adapt to a second shock if there is significant change in the terms of trade with the EU.”