Boris Johnson plans Brexit talks with EU chief amid looming recession

Edmund Heaphy
Finance and news reporter
UK prime minister Boris Johnson must decide by the end of June whether to extend the Brexit transition period beyond the end of 2020. (Kirsty Wigglesworth/AP Photo)

Prime minister Boris Johnson is hoping that crunch talks with European Commission president Ursula von der Leyen will inject “political momentum” into post-Brexit trade negotiations.

Johnson’s plan to hold talks with the EU chief comes as officials on Tuesday began their final round of scheduled trade negotiations.

Crucially, the high-level talks with Von der Leyen would come ahead of this month’s cut-off for extending the Brexit transition phase.

Johnson must decide by the end of June whether to extend the period beyond the end of 2020.

Amid the coronavirus crisis, a looming recession, and expectations of a prolonged economic recovery, his government has faced growing calls to request an extension to the transition, which would guarantee frictionless trade with the EU for a longer period.

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The Bank of England last month warned that the UK was on the precipice of its worst recession in over 300 years, and business groups have warned that a cliff-edge withdrawal from its most important trading relationship could further cripple the country.

The bank predicted that the country’s gross domestic product (GDP) could shrink by 30% in the first half of 2020, the sharpest decline since the Great Frost of 1709.

Though the UK officially left the EU on 31 January, the transition period means that the bloc’s laws continue to apply in the country — something that would cushion the country from a further blow to its economy.

Because neither side is expecting much progress from the final scheduled phase of negotiations, UK officials are hoping that a “high level” political meeting with Von der Leyen could lead to a breakthrough that would negate the need for an extension to the transition, according to the Financial Times.

Expectations of a breakthrough come despite warnings from experts that, even prior to the coronavirus pandemic, hopes of inking a trade deal by the end of 2020 were overly ambitious.

The UK government has nevertheless said it will not seek an extension under any circumstances, leaving it just seven months to strike a deal that would under normal circumstances take years.

Little progress has been made thus far in negotiations, with scant agreement emerging from the prior four rounds of talks between officials.

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The UK’s chief negotiator, David Frost, told his counterpart Michel Barnier in a May letter that he was “perplexed” by the EU’s approach to the talks, calling them “ideological” and the deal the EU was offering unfair.

For his part, Barnier told the Sunday Times that UK negotiators needed to show “more realism.” The Frenchman accused Johnson of reneging on the commitments agreed during Article 50 negotiations.

The spat has raised the prospect that the UK could walk away from trade talks altogether.

A crash-out exit from the trading relationship could mean that consumers face price hikes for European foods and cars from January, and that businesses across the country face huge new trade hurdles.

The UK and the EU are likely to impose new tariffs on goods and services if no deal can be reached, and Johnson’s government last month signalled that EU cars and agricultural goods would be among those facing import taxes.