The government has just a 20 per cent chance of striking a post-Brexit trade deal with the EU within its stated deadline of this calendar year, a new report by Oxford Economics argues.
Indeed, analysts believe there is a higher chance of talks disintegrating entirely, leaving the UK trading on WTO terms from the start of 2021, putting that scenario at 30 per cent.
However the global consultancy think it is far more likely that negotiations will have to be pushed into next year, or risk getting only a deal that is “rudimentary and raise substantial non-tariff barriers for UK firms exporting to the EU”. In a note put out today, Oxford Economics gives this scenario a 50-50 chance.
“Ultimately, we expect the UK to seek a deep deal to try to protect vulnerable sectors. But this will take time and if the transition period is not extended, a political fudge – such as an interim deal with an implementation period – may be required to avoid trade frictions being introduced while talks are ongoing,” the note said.
“This timescale is far shorter than seen in most trade negotiations, particularly those involving a large, bureaucratic organisation like the EU. For comparison, the EU’s deals with Canada and Japan took seven years of talks.”
It also points to additional headaches posed by the withdrawal, such as the implementation of the Northern Ireland protocol, as putting further pressure on the timeframe.
“While it’s not impossible to strike an agreement in this window, it does imply that the deal struck would take one of two forms. Either it’s relatively simple – with a very narrow focus or one side largely accepting the terms laid down by the other – or, as European Commission president Ursula von der Leyen intimated in a recent speech, interim in nature, focusing on priority areas and built on over time.”
This morning Prime Minister Boris Johnson said he thought it was “epically likely” a deal could be struck in time.
However this is the second expert warning this week, after a report by the Institute for Government warned that rushing a deal would require sacrifices to be made on trade, and that it would be “virtually impossible” for the Northern Ireland protocol to be resolved in time.
Main image: Getty