Post Brexit EU free trade deal off the table?
A few revealing news stories today..
- The UK Government has signalled what it's trade policy will be after the Brexit transition period ending December 31st. A lot of the tariffs will be cut or abolished but a few will remain in sectors where the government wishes to support. Two specifically mentioned sectors are agriculture and automotive. This suggests an economic policy which combines free trade in some areas, with an industrial policy in others. This is basically a reversion back to the policy followed after 1931. It is likely that at least in agriculture, we'll see a return of the "deficiency payments" system which the UK had all the way up till 1973.
- Stephen Kinnock wearing his Shadow Cabinet hat, has come out with an argument for a radical reassessment of UK China relations, on both economic and geopolitical/ideological grounds. I suspect this is going to be an area of consensus - I think most Conservative MPs would strongly endorse his remarks. They were carefully set out at length so this wasn't an off the cuff comment.
Deal or not deal?
What these show together is the way UK politics on both sides is moving towards a much more nationalist position. I now think we are very likely to end up with no agreement with the EU by the end of this year, but this will be a complete anti-climax. The mayhem that the pandemic and the response to it have brought makes the worries about no-deal seem rather trivial. Plus, the negotiating paralysis is on the EU side this time.
No less a figure than Yannis Varoufakis now says he would advise the UK government to just go for a no-deal outcome - his argument is that the point of a deal was to get access to the single market and that is now busted by the varied responses to Covid-19. Keir Starmer has said he is not in favour of extending the 31st December deadline so I think both parties have privately come to the view that they can accept that - they're moving on now.