REMEMBER BREXIT? HERE'S WHY WE ARE AT A CRUCIAL MOMENT

Sky News 9 June 2020 - by Tamara Cohen, political correspondent

© Getty Boris Johnson struck a gong as the UK left the EU on 31 January

Remember when Brexit was the biggest story in town?

As the crowds waving Union Jack flags massed in Parliament Square on the night of January 31 - and the countdown clock projected onto the façade of 10 Downing Street marked the moment when Britain left the EU - it seemed the terms of our exit would dominate this year.

Prime Minister Boris Johnson declared: "This is the moment when the dawn breaks and the curtain goes up on a new act in our great national drama."

The plot then, of course, took an unpredictable turn.

That same day, in Newcastle-upon-Tyne, the first two COVID-19 cases were confirmed in the UK and, within weeks, the entire government machine in the UK and other European countries would be absorbed, as never before, on controlling the pandemic.

© Reuters Brexiteers celebrated in Parliament Square on 31 January, when the UK officially left the EU

But, while Brexit has slipped down the political agenda, this is a crucial month which is likely to have ramifications for decades to come.

The deadline

The end of this month is the deadline - written into law via the Withdrawal Agreement Act that Mr Johnson's government triumphantly passed at the start of this year - to extend the transition period.

Currently the UK remains in the EU's single market trading arrangements, accepting free movement of people and the bloc's laws until 31 December, by which time the government aims to negotiate a trade deal.

We can extend that transition period for up to one or two years; but have to agree it this month.

© PA Labour's Sir Keir Starmer is waiting to see if the government agree a deal

There seems almost no chance of that, as the prime minister has repeatedly insisted - and has indeed passed legislation to guarantee - that the UK does not delay.

His ministers are increasingly bullish on this.

Cabinet Office minister Penny Mordaunt told a fellow Conservative MP in the House of Commons on Tuesday that he was "damn right" that extending would "serve no useful purpose" and was a "crazy" idea.

Talks stalling

And yet talks on the new trade deal have made little progress so far, according to both sides.

© Reuters Tory Brexiteers won't accept any backsliding

The EU's Michel Barnier and senior UK negotiators acknowledged on Friday that after four rounds of talks this year - three of them by video conference due to coronavirus restrictions - big stumbling blocks remain.

These are fishing, a totemic issue for the UK and several key EU countries including France; the "level playing field" - or how far the UK aligns with EU rules into the future; and state aid rules.

State aid would not have troubled previous Tory administrations.

But Mr Johnson has indicated he wants to take a very different approach to government investment to achieve the "levelling up" he promised at the 2019 election.

Little pressure to extend

Why not then, as opposition MPs and some business groups suggest, extend the timescale to secure the right deal, not least in case the UK and Europe are hit by a debilitating second wave of COVID-19 infections later in the year?

© Imagebridge Boris Johnson is due to meet the European Commission's president this month

But the clamour to do so is actually pretty muted.

The Tory party is, publicly at least, at one over Brexit.

Labour leader Keir Starmer, who pushed his party to back a second referendum, is holding fire, saying the government promised a deal by the end of the year and "let's see how they get on".

Even the CBI, which once declared that "Rome is burning" at the possibility of no deal, now says there's no point prolonging the uncertainty beyond this year.

The devolved administrations have also voiced concerns.

Scottish First Minister Nicola Sturgeon, riding high in the opinion polls, says it would be "deeply irresponsible and reckless" not to extend, as vital resources would need to be diverted away from the COVID-19 pandemic to prepare for a no-deal Brexit.

The Labour First Minister of Wales, Mark Drakeford, has also written to the prime minister warning of a further "economic shock".

And in Northern Ireland, where the UK government has now conceded that businesses will have to follow some new administrative processes after the transition period, the Assembly has passed a resolution calling on the UK government to extend to give business time to prepare.

None of this is likely to change the calculations in Number 10, although pressure on the Union may have longer-term consequences.

Useful timing

There is a view in Number 10, some insiders say, that the way world trade and travel has been transformed by COVID-19 would make the trade barriers that would come with a no-deal Brexit more acceptable.

Or cover the impact.

As one minister put it to me: "No-deal Brexit was going to be the biggest thing to happen to our economy until three months ago. Now it's almost irrelevant.

"That's certainly part of the Brexit calculation, if we're going to see 10-15% wiped off our GDP anyway.

"Politically there's no case for extension, it looks humiliating and angers Boris's natural supporters."

Restive Brexiteers on the Tory benches, who have already bared their teeth over Dominic Cummings, the quarantine rules and Huawei, will not accept any backsliding on this.

Unprepared

The UK in a Changing Europe think tank warns in a new report that the possibility of no deal means a double whammy for business.

They say: "The economic impact of leaving the EU at the end of the year with no deal in place, to trade with the EU on WTO terms (what the government now calls an Australia-style deal), would be serious - and hit businesses who will just have seen the furlough scheme end and will still be in a precarious position as they (hopefully) recover from the worst impacts of the pandemic."

The state of practical preparations is uncertain, including the plans for 50,000 new customs officials, which recent reports suggest is off target, and progress on the points-based immigration system due to be ready for 1 January 2021.

Breakthrough?

Mr Johnson is due to meet European Commission President Ursula von der Leyen, in person or remotely, this month in the hope of a political breakthrough, but there seems little pressure to provide more than warm words at this stage.

The EU says a trade deal would need to be struck by the end of October, in order to allow time for it to be ratified by all 27 member states and regional parliaments.

Brexit deadlines have been moved at the last minute before.

EU expert Professor Catherine Barnard, from the University of Cambridge, says extending the transition later in the year would be legally very difficult, but a "magnificent fudge" by EU and UK lawyers is not unthinkable.

One figure in government with experience of EU talks is relatively confident of a last-minute breakthrough.

"Last time it was no deal, no deal right until the end, and then suddenly at the last minute the PM flies to Brussels there was a deal," they said.

"The EU need a deal too."

When the real deadline in December looms, this moment in June may seem far more significant than it does now.

None of this is likely to change the calculations in Number 10, although pressure on the Union may have longer-term consequences.

Useful timing

There is a view in Number 10, some insiders say, that the way world trade and travel has been transformed by COVID-19 would make the trade barriers that would come with a no-deal Brexit more acceptable.

Or cover the impact.

As one minister put it to me: "No-deal Brexit was going to be the biggest thing to happen to our economy until three months ago. Now it's almost irrelevant.

"That's certainly part of the Brexit calculation, if we're going to see 10-15% wiped off our GDP anyway.

"Politically there's no case for extension, it looks humiliating and angers Boris's natural supporters."

Restive Brexiteers on the Tory benches, who have already bared their teeth over Dominic Cummings, the quarantine rules and Huawei, will not accept any backsliding on this.

Unprepared

The UK in a Changing Europe think tank warns in a new report that the possibility of no deal means a double whammy for business.

They say: "The economic impact of leaving the EU at the end of the year with no deal in place, to trade with the EU on WTO terms (what the government now calls an Australia-style deal), would be serious - and hit businesses who will just have seen the furlough scheme end and will still be in a precarious position as they (hopefully) recover from the worst impacts of the pandemic."

The state of practical preparations is uncertain, including the plans for 50,000 new customs officials, which recent reports suggest is off target, and progress on the points-based immigration system due to be ready for 1 January 2021.

Breakthrough?

Mr Johnson is due to meet European Commission President Ursula von der Leyen, in person or remotely, this month in the hope of a political breakthrough, but there seems little pressure to provide more than warm words at this stage.

The EU says a trade deal would need to be struck by the end of October, in order to allow time for it to be ratified by all 27 member states and regional parliaments.

Brexit deadlines have been moved at the last minute before.

EU expert Professor Catherine Barnard, from the University of Cambridge, says extending the transition later in the year would be legally very difficult, but a "magnificent fudge" by EU and UK lawyers is not unthinkable.

One figure in government with experience of EU talks is relatively confident of a last-minute breakthrough.

"Last time it was no deal, no deal right until the end, and then suddenly at the last minute the PM flies to Brussels there was a deal," they said.

"The EU need a deal too."

When the real deadline in December looms, this moment in June may seem far more significant than it does now.