An extension to the Brexit transition period past December 31st was being seen as increasingly likely by the British International Freight Association (BIFA) according to its director-general Robert Keen.
Negotiations between the UK and EU started again last week but progress appeared to be slow-to-non-existent. Keen described the UK government’s insistence that it would not ask for an extension as “a very risky move”.
Keen said that “in light of the huge issues involved, with a sharp change in trading conditions at the start of 2021, particularly if that were to coincide with another Covid-19 outbreak, we think an extension looks increasingly likely. Our understanding is that there has been very little progress to date on key negotiating points. There has been little meaningful consultation with UK trade regarding the policies and procedures required in order to ensure that trade with the EU can continue relatively uninterrupted post December 31st 2020.”
Keen said that the UK and EU realistically have until October to agree on terms, allowing time for ratification. However, many of the civil service resources previously assigned to support negotiations had been reallocated to deal with the emergency response to the Covid-19 pandemic.
Keen said that the transition period was not just designed to facilitate negotiations; it was also there to give businesses time to prepare for the future relationship. He said that, no matter what was or was not agreed this year with regards to free trade, there would inevitably be major changes to the UK’s trading relationship with the EU at the start of 2021.
“Even before the pandemic, there were concerns among BIFA members … that the 11-month transition wouldn’t leave enough time to prepare for a potential no deal. Now, having had their businesses knocked sideways by the virus, many of our members have furloughed staff whilst they work out how they can keep their businesses afloat. It is unlikely that their companies and the clients they serve will have the capacity to increase readiness for a sharp change in trading conditions in 2021.”
With very little information forthcoming from government on when restrictions on key sectors of the economy were likely to be lifted, and the as yet unknown economic damage to the sector and to the UK economy as a whole, BIFA members were in no position to respond to a second massive shock if there was significant change in the terms of trade with the EU at the end of the year.
“We believe that refusing to even consider extending the transition period is very risky and together with a growing chorus of Brexit commentators, think an extension to the transition period remains likely, and it is really only a question of when”, Keen said.