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Brexit Calculus Is Changed Dramatically by Covid

If it weren’t for Covid-19, the chances of an EU-U.K. trade deal would be slim to none. But will the British public accept any pain from Brexit right now?

Brexit Calculus Is Changed Dramatically by Covid

If it weren’t for Covid-19, the chances of an EU-U.K. trade deal would be slim to none. But will the British public accept any pain from Brexit right now?

Harder times.

Harder times.

Photographer: Pool/Getty Images Europe
Harder times.
Photographer: Pool/Getty Images Europe

When Boris Johnson had his breakthrough meeting with then Irish leader Leo Varadkar outside Liverpool in 2019, he had a burning need to strike a Brexit deal and only one major obstacle standing in the way: the Irish border. Faced with either betraying Brexiters in his party, which would have been the end of his leadership, or plunging his country into the chaos of a no-deal exit, the U.K. prime minister met the European Union more than halfway and clinched a deal.

At first look, the picture couldn’t be more different this year. As Britain and the EU enter their final round of post-Brexit trade talks before Johnson’s Oct. 15 deadline, there isn’t one sticking point but multiple ones — from access to U.K. fishing waters for European boats and Brussels demands for a level playing field on state aid to issues around police and judicial cooperation and even how the treaty will be administered and disputes settled.

Negotiations rely on a degree of trust and chemistry to succeed. Johnson may have been regarded skeptically by Europe’s leaders when he replaced Theresa May as prime minister, but there was an effort to build a rapport and take him at his word. A year later, trust in the U.K. government from the EU side has been eroded. The bloc is threatening legal action over the Internal Market Bill, a bombshell piece of British legislation that breaches international law by overriding parts of the Brexit treaty pertaining to Northern Ireland. Johnson’s excuse for breaking the deal is that he signed the treaty in a hurry.

Nor is the motivation quite the same this year. Crashing out of the bloc last year with no divorce deal in place would have brought an overnight jolt to just about everything: markets, supply chains, travel, jobs and food bills. The EU too was motivated. The costs for Ireland alone would have been massive.

If it doesn’t work out this time, the consequences are more a tumble down the stairs than a fall off a cliff for the U.K. For Johnson, with an 80-seat parliamentary majority, his reputation may take a hit, but his leadership isn’t obviously on the line. While the EU would clearly prefer a deal, bandwidth in Brussels has been taken up with more pressing issues; a defense of the bloc’s rules and principles will take precedence. 

If it weren’t for Covid-19, you’d say the chances of a deal right now were slim to none. And yet, the pandemic really does change the political calculus. Johnson is already facing battles on several fronts: criticism over his handling of the new coronavirus as case numbers rise and the U.K.’s test-and-trace system has proved a shambles; a rebellion in Parliament over his Covid laws; and pushback from even Brexit-supporting loyalists over his plans to breach international law. 

Nobody thinks this winter will be anything but painful for the Brits. Job losses are coming, as the Treasury implicitly acknowledged when it rolled back support last week. While most people accept the renewal of virus lockdown measures, there is mounting frustration with many of the restrictions and Johnson rushing in new rules overnight with no notice. Police clashed with anti-lockdown protesters in London too this weekend. It will have unsettled Downing Street that Spain had to bring in the army to enforce restrictions in Madrid.

With this going on, the threshold for Brexit pain is low. Even with a deal that eliminates tariffs and quotas, post-Brexit trade barriers are inevitable. Michael Gove, Johnson’s de facto deputy, admitted that may well mean a two-day pile-up of trucks on the border, as new customs procedures come into force. Without a deal, prices for important foods will rise at a time when people are losing their jobs and perhaps their homes. These are bad optics for a prime minister in need of wins.

A failure to reach a trade agreement from the prime minister who made it all sound so easy would be yet another blow to Johnson’s credibility. It would hand Keir Starmer, the Labour Party leader and former prosecutor, a cudgel to use against the government.

None of this guarantees a deal will happen. A year ago the legal text of the main agreement had been largely nailed down by the time Johnson and Varadkar met. This time the two sides are working from separate documents. Even for an army of overworked lawyers, crafting that much legalese is a lot of ground to cover in a very tight time frame.

And much would depend on what compromises were struck. The EU, never forget, is the more powerful partner. It will compromise (as it already has on state aid), but it will demand bigger concessions in return. Johnson may have a large parliamentary majority, but he’ll still have to expend political capital selling any climb-down.

Still, these are unique times, and the Conservative leader would be wise to reflect on them. There is no reason ultimately why he shouldn’t seek a deal just as avidly as he did last year. It would reduce uncertainty and allow his government to redouble its efforts on fighting Covid. It would also set a more positive tone for a U.K.-EU relationship, destined by history and geography to remain essential. In a dismal year for the prime minister, Johnson can either add to Britain’s burden or lighten it a little.

    This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Therese Raphael at traphael4@bloomberg.net

    To contact the editor responsible for this story:
    James Boxell at jboxell@bloomberg.net