The argument in favour of extending the UK’s transition period for leaving the EU is overwhelming. Leaving the Single Market and the customs union at the beginning of 2021 would impose unnecessary additional costs on businesses and consumers for no political or economic gain.
The UK will simply not be ready to implement the range of controls and procedures that are required at international borders to handle trade with the EU by 1 January 2021. The private sector has not recruited the customs agents it needs to manage these procedures and there can be no guarantee that Government IT systems to deal with the trade and taxation consequences of Brexit will be in place by then either.
The default option of trading with the EU on WTO terms would extremely damaging for British business not just because of the tariff burden but also because of the need for elaborate controls (rules of origin, food safety checks, phytosanitary controls etcetera) on imports and exports (and even the US does not trade with the EU on purely WTO terms).6
Extending the transition would have a cost but the UK’s contribution would be likely to be on a per capita basis similar to that used for Norway (as provided for in the Withdrawal Agreement), as Stefaan de Rynck of the European Commission stated recently, rather than the far larger amounts suggested by some supporters of no deal.
Without a trade agreement with the EU, the argument for extending the transition was always a strong one. But in the current circumstances failing to extend would be highly irresponsible. We are only just beginning to understand the scale and depth of the economic crisis that is developing daily as a result of the pandemic. The recession we are likely to experience will be deeper than anything experienced in the United Kingdom since the eighteenth century. It would be extraordinary to put commitment to Brexit before the economic interests of consumers and businesses struggling to cope with the potential losses of millions of jobs and of tens of thousands of businesses.
A decision in June to extend is thus the only sure way to avoid the damaging consequences of failing to reach a deal with the EU by the end of this year.
Conclusions from the full report by Senior European Experts