PM tells business to prepare for 'no deal'

Prime Minister Boris Johnson told UK businesses on Friday to prepare themselves for a no-deal Brexit at year's end, but backed away from an earlier threat to end negotiations if a trade agreement had not been sealed by October 15.

David Sapsted

16 October 2020

Last month, Mr Johnson said that, if a deal were not done by Thursday's EU summit in Brussels, "then I do not see that there will be a free trade agreement between us, and we should both accept that and move on".On Friday, however, he left the door ajar, though not wide open, for further talks before the Brexit transition period ends on December 31. The EU Commission later confirmed that "intensified" negotiations were set to be held in London next week.Mr Johnson said: "From the outset we were totally clear that we wanted nothing more complicated than a Canada-style relationship based on friendship and free trade. To judge by the latest EU summit in Brussels, that won’t work for our EU partners."They want the continued ability to control our legislative freedom, our fisheries, in a way that is completely unacceptable to an independent country."And since we have only 10 weeks until the end of the transition period on 1 January, I have to make a judgement about the likely outcome and to get us all ready.

"And given that they have refused to negotiate seriously for much of the last few months and given that this summit appears explicitly to rule out a Canada-style deal, I’ve concluded that we should get ready for January 1 with arrangements that are more like Australia’s, based on simple principles of global free trade."And so now is the time for our businesses to get ready and for our hauliers to get ready, for travellers to get ready."And, of course, we’re willing to discuss the practicalities with our friends where a lot of progress has already been made, by the way on such issues as social security and aviation, nuclear cooperation, and so on."

Neil Wilson, chief market analyst at markets.com, described Mr Johnson's comments as "a clearly signposted and choreographed set-piece" in the wake of the prime minister's supposed October 15 deadline."The UK wants to gain the upper hand in the talks and hopes fissures will open up between member states (Germany and France in particular) and that the EU will eventually crack and go for what the UK is offering," he said."We knew before these statements that the UK and EU will continue to talk and work towards a deal. Boris wants to talk tough and ramp the no-deal rhetoric but it’s for the crowds – talks are ongoing."Mr Johnson's comments came after a survey by the Institute of Directors (IoD) showed business leaders feared a potential double hit from the Covid pandemic and a no-deal Brexit.The survey of almost 1,000 directors also showed almost a half of firms were not yet fully prepared for the end of the transition period, with nearly a quarter of respondents reporting that their company may not be ready in time.Allie Renison, the IoD's senior policy adviser, said: "The prospect of no deal would be daunting enough, let alone dealing with it in the middle of a global pandemic. These disruptions won't cancel each other out, if anything they would compound the pain for British businesses. "When it comes to preparing for Brexit proper, directors' hands have been tied by a number of constraints and competing pressures. Reacting to the pandemic has taken up so much of business leaders' time and energy throughout the year. On top of this, much of the information companies need is still subject to negotiations."Brexit adjustments will further add to businesses' cashflow challenges in the months ahead. The government must look to how it can smooth that process. Financial support as seen in other countries, whether through vouchers to help access advice or through extending tax reliefs to facilitate that adjustment, would give small firms a much better chance of coping."Dame Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), said that this was "no time to give up" after four years of negotiations and with so many hurdles already cleared."Neither side can afford to fall at the final fence," she said. "A deal is the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.“Businesses are clear on the benefits of a deal. Agreement brings the clarity needed for urgent preparations. Maximising customs cooperation will minimise red tape. A deal will bolster implementation of the Northern Ireland Protocol and safeguard investment critical for future jobs.“It will also make fast agreement on data possible, so vital for the UK’s 80 per cent services economy.“With tenacity, common sense and compromise, a deal is still possible. Businesses call on leaders on both sides to stay at the table and find a route through.”