A no-deal Brexit would be "irresponsible" during the COVID-19 pandemic. Federal Foreign Minister Heiko Maas warned on Monday.
Brexit technically took place at the end of January, but the Brexit transition, where the UK is still subject to EU rules for its members, expires at the end of this year. If the UK and the EU do not agree on the terms of their future trade relations by then, a number of trade barriers will arise, including customs controls, tariffs and other regulatory hurdles.
"Given today's health and economic challenges, the people on both sides of the Canal have enough to shoulder that it would be completely irresponsible to burden them with additional problems by a no-deal in this position," Maas said after speaking the most important EU negotiator Michel Barnier had hit Brexit in Berlin.
Maas also tweeted that the pandemic “made conversations more difficult in every way. But it also made an agreement even more urgent. "
If we want to make it to the finish line at #Brexit, we now have to make progress in negotiations with . # COVID19 still made conversations – in every perception. But it also made an agreement even more urgent. I spoke to @MichelBarnier recognize. pic.twitter.com/HWxtL1i38m
– Heiko Maas (@HeikoMaas) October 5, 2020
Time is extremely short for the negotiators. Originally, they had October 15th to reach an agreement. This gave the EU national governments time to approve the agreement so that it can be adopted and signed next month. On Saturday, British Prime Minister Boris Johnson and the President of the European Commission, Ursula von der Leyen, agreed to extend the talks for another month.
The leaders said "progress has been made in the past few weeks but significant gaps remain, particularly but not limited to fisheries, a level playing field and governance."
Fisheries is about how much access EU companies ultimately get to UK waters. The “level playing field” is the Brussels language for the UK, which continues to abide by EU rules in areas such as state aid so that UK companies don't get an unfair advantage over their EU counterparts.
There is also major disagreement on aspects of the readmission agreement affecting Northern Ireland – the UK is preparing to legislate to suspend this treaty, which was signed earlier this year, and the EU has started legal proceedings against the UK. While this argument may have an impact on confidence, it has so far not broken the Brexit trade talks.
Maas & # 39; warning of the consequences of a no-deal Brexit came a day after Johnson said his country could "live" with the prospect and indeed "thrive" in the circumstances.
However, law firm Baker & McKenzie released a report on Monday that said the double blow from the COVID-19 pandemic and no deal Brexit would save 6% of UK GDP over the next decade – that's £ 134 billion (US $ 174 billion) Dollars) billions) per year.
"In a no-deal scenario, businesses face additional costs from trade tariffs and other non-tariff barriers," Sunny Mann, the law firm's head of international trade, EMEA, said in the report. “Rising costs combined with fewer workers will exacerbate production losses, which will further depress export revenues. A negative investment outlook coupled with tighter controls on foreign investment will also weigh on companies seeking a recovery in the post-COVID-19 landscape, especially those in need of liquidity or needing to dispose of assets. "
Some predict a doomy scenario even if the talks only lead to a “skinny deal” that covers limited aspects of the future trading relationship, such as: B. Goods but not services.
“The difference between the two scenarios is not trivial, but both mean potential UK growth below 1% with significant long-term losses. Both of them cut neutral rates even further and set the (Bank of England) at close to zero for a very long period, ”BofA said in a statement last week. “We expect our base case predictions will include a close deal. However, the chances of not getting a deal remain increased. "
Goldman Sachs also said in a Monday note that it expects a "thin" zero-rate agreement to be concluded by early November, in time for ratification by the end of the year, but warned that "the risk of negotiations collapsing cannot be ruled out."
"Whatever happens now, we will be engaged in a daily struggle to ensure that the goods we need flow across our borders," said Paul Everitt, CEO of the aerospace trade organization ADS, in London last week a parliamentary inquiry.
Meanwhile, Japan's Nikkei reported Monday that automakers Toyota and Nissan are demanding that the UK government reimburse them for the new tariffs – likely on the order of 10% – that they would have to pay when exporting British cars to the EU when there is no deal. Nissan has already warned that its UK manufacturing facility, which employs 7,000 people, would become “unsustainable” in such a scenario.
More needs to be read international reporting from capital::
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