UK-EU trade negotiations to recommence
UK Prime Minister Boris Johnson will meet with European Commission (EC) President Ursula von der Leyen today to continue negotiating a comprehensive future trade deal between the UK and the EU.
The UK’s current barrier-free transition period will expire at the end of the year. If no trade deal is struck by then, British traders will face non-preferential barriers such as tariffs and import quotas that could severely restrict commerce with the nation’s largest trading partner. This scenario could seriously harm the UK’s struggling economy, which is expected to face the worst pandemic-induced recession of any major country after a record 20.4% contraction in April.
Despite indications of a potential extension of the UK’s transition period, London officially confirmed its commitment to the December 31 deadline this week. This commitment may force the UK to make concessions on certain sticking points in order to avoid a prolonged period of painful trade barriers next year.
However, earlier this month, the UK decided to delay border checks on most imports from the EU by six months, allowing importers to defer customs payments until July 2021. The policy, which would soften the transition to stiffer trade barriers, suggests that London may be prepared to enter next year without a comprehensive trade agreement in place. Expect the associated trade disruptions to inflict additional long-term damage on the core of the UK’s economy.
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