The government does not want a ‘no deal’ scenario with the EU.
Within the strict parameters of the EU’s rigid sequencing of talks, the UK has been both proactive and creative in its approach to post-Brexit trade with the bloc.
The EU’s resistance to discussing that future relationship is a consequence of its own intransigence and inflexibility as much as it is down to the two sides’ failure to “make sufficient progress” on the terms of exit.
Talks resume this week, and it remains the case that while progress is painfully slow most pundits and City analysts still expect the two sides to forge an agreement on transitional arrangements as well as the future partnership. Nevertheless, it’s right to prepare for the collapse of talks and, what’s more, be seen to be doing so.
In the early days of May’s premiership she would routinely trot out her “no deal is better than a bad deal” line, but the phrase appeared to fall out of her stump Brexit speech in the aftermath of her disastrous June election.
Some took this as a sign that the government had ceased contemplating a no deal situation, but while the PM may have toned down the rhetoric it’s clear from the government’s latest white papers on trade and customs that they are preparing, in their own words, for every possible outcome.
Indeed, the justice minister Dominic Raab said over the weekend that while the government wouldn’t “run around advertising it demonstrably” preparations for a no deal outcome were being made “quietly, assiduously”.
Though some businesses may find reassurance in this, the City considers a workable transition period and a deal on financial services to be of the highest importance.
Chancellor Philip Hammond has promised to secure “a bespoke deal” for the sector and a huge amount of work has already been done by lawyers and practitioners on both sides of the channel to set out how such an arrangement could work.
Once the UK and EU move past the thorny issues associated with the divorce, they will find there is much to discuss about our future trading relationship. While the government is right to prepare for no deal, its focus must remain squarely on engineering a breakthrough in the current talks.