Tensions on stalled Brexit trade talks intensified as Boris Johnson, the British Prime Minister, said Britons should prepare for a no-deal departure if the European Union (EU) did not compromise, raising the prospect of supply chain chaos across Europe.
Johnson stopped short of saying he was walking away from the discussions, even though a self-imposed deadline for a deal passed on Oct. 15, and EU leaders said they were sending a team to London next week “to intensify these negotiations.”
“From the outset we were totally clear that we wanted nothing more complicated than a Canada-style relationship based on friendship and free trade,” Johnson said.
Angela Merkel, the German Chancellor, called for “the United Kingdom to remain open to compromise, so that an agreement can be reached.”
“This, of course, means that we, too, will need to make compromises. Each side has its red lines,” she said, adding that the bloc’s single market needed to be protected. The two sides are still stuck on state aid rules and fishing rights.
With the Brexit transition period ending on Dec. 31, Johnson said he had to “make a judgement about the likely outcome and to get us all ready” for what he calls the “Australia solution,” effectively switching to World Trade Organization (WTO) rules. This would leave the U.K. as a “third country” when dealing with the 27-member EU.
Earlier this year, the British government presented its new tariff regime known as the U.K. Global Tariff (UKGT), and which will replace the European Union’s Common External Tariff from Jan. 1, 2021. The UKGT will apply to goods exported from countries with which the U.K. does not have a preferential agreement.
Under the UKGT, the U.K. has removed import duties for frames and mountings. For sunglasses, spectacles and goggles the tariffs will be cut to 2.0 percent from 2.9 percent. The same duties apply to lenses and contact lenses.
British business leaders reacted with dismay to Johnson’s remarks, with the Institute of Directors (IoD) warning that preparations for no deal in the middle of the Covid-19 pandemic “will be a Herculean task.”
“Our figures show that most directors think that Covid will magnify the impact of no deal. It’s tied their hands throughout the year and put immense pressure on cashflow,” an IoD spokesperson said.
Carolyn Fairbairn, the chief of the Confederation of British Industry, said that “neither side can afford to fall at the final fence. A deal is the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.”