We may be in the middle of summer butNew Year’s Eve is really not that far away. Injust a few short months the UK and EU willhave either secured a post-Brexit trade dealor they will be facing a massive rupture. Asalways with Brexit, time is running out.Unless the two sides can quickly reachagreement on key issues, from fishing rightsto state aid, the chances of striking ameaningful deal seem to beslowly disappearing.

London could have asked Brussels for anextension to the current transition period.The coronavirus crisis would have offeredBoris Johnson’s government the perfectcover. But for political reasons that wasnever going to happen.

Instead there is growing concern that thedevastation caused by the pandemic may beused by Downing Street to hide the trueeconomic impact of no deal. And despiteanother round of talks, there is still no signof a big breakthrough. Yet again we aremoving closer to the cliff edge.

British businesses are preparing for theworst. Miles Beale heads up the Wine andSpirit Trade Association (WSTA) – anindustry worth £49 billion. He believesfailing to secure a deal is now “highly likely”and is advising members to prepare fortrading on WTO terms come January 1st.

BREXIT: IS THE DOOR CLOSINGON AN EU TRADE DEAL?

Alexandra Forrest Whiting

3 JULY 2020

“This is all very frustrating,” he admits.“Whichever side of the channel you are on,you want to produce your drinks forconsumers wherever they are. You want tofulfil the demand. That’s how trade works.So for us and for our members it’s more aquestion of whether the European wine andspirit industry can persuade politicians tostand up for free trade, European businessesand consumers. As we all look to recoverfrom the effect of Covid-19 it ought to be ano-brainer!”

His concerns are echoed across Britishbusiness. At the beginning of July, more than100 chief executives and business groupswarned the British Prime Ministerthat  failing to  secure an EU deal would behugely damaging. But is the PM and his VoteLeave team in Downing Street evenlistening?

While Boris Johnson is the face ofgovernment, it’s his top adviser, DominicCummings, along with Cabinet Minister,Michael Gove, who are seen by many asdriving Brexit policy. Johnson’s refusal tosack Cummings over his lockdown breachesmade that even clearer.

These men are ideological. As Govehimself said earlier this year, “In pursuit of adeal we will not trade away our sovereignty.”But as all ministers know,  sovereigntydoesn’t fill order books or pay suppliers.

The British government is now pinningits hopes on securing trade deals elsewhere.One could be agreed with Japan withinweeks – that short timetable at Tokyo’srequest. While that would ensure a quicksuccess for Mr Johnson, a rushed job willleave little time for the UK to negotiate whatit really wants.

Trade deals with Australia and NewZealand should be fairly straight forward.But negotiating via video conference can’t beeasy. And anyway, why would they sign offon a deal until they know what therelationship between the UK and EU willlook like? As for an agreement with the US,you only need to mention chlorinatedchicken and hormone-fed beef tounderstand that securing anythingpreferential  or even balanced  withWashington could be extremely difficult.

There is still a belief among some in theUK that in the end Germany will ride toBritain’s rescue. For too long politicians andmany in the British media have been waitingfor Berlin to put its own industry(particularly automotive) first, at the expenseof the rest of the EU. As we all know, thathasn’t happened.

Germany’s former ambassador to the UK,Thomas Matussek, who is now an advisor atFlint Global, says Brexiteers have failed tounderstand how Chancellor Angela Merkelworks. Her priority, he stresses, has alwaysbeen to protect the interests of the EU andthe integrity of the Single Market. Some alsoseem inclined to overestimate the power shehas over the other 26 EU member states, heexplains, while underestimating her personalstrengths.

“They misinterpret her polite tone asbeing soft,” Matussek says. “She’s not softand she hasn’t fallen for Boris’ charmeither,” he adds.

On July 1st, the very day Germany tookover the EU presidency, Chancellor Merkelwarned that the EU should be prepared fortrade talks with the UK to fail. And unlesssomething changes fast, there could be a lotof sore heads when the UK wakes up on NewYear’s Day, 2021.

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Alex Forrest Whiting is Brexit Analyst forDW News and former ITV News politicalcorrespondent