Batten down the hatches for Covid, Brexit and US elections

IF navigating the UK through the pandemic is not enough, we’re about to face the perfect storm of the end of the Brexit transition period and the outcome of the US election on November 3. These three issues are inextricably interlinked and are likely to have a profound impact on the economic wellbeing of our region.

With the deadline for extending the Brexit transition period now passed, unless our negotiators can agree a trade deal by December 31, the UK will be leaving on World Trade Organisation (WTO) rules, meaning that most goods exported from the UK to the EU will be subject to tariffs.

For the West Midlands, where the EU is our largest export market, worth approximately £13 billion each year, a no deal will have adverse implications for business, particularly manufacturing.

Because the majority of people in the UK voted to leave, we must accept the result and make the best of it. Whether the UK Government in its negotiations has done so is debatable.

However, I do not believe that the EU’s dogmatic approach to the negotiation has helped either.

Even though I voted to remain, I never regarded the EU as a form of utopia which those who run the institution seem to regard it to be.

The sad fact is that although a trade deal is demonstrably in the best interests of all parties, the EU will not want to see the UK flourish outside of its organisation for fear of encouraging others to leave.

Michel Barnier, the EU’s chief negotiator, always refers to the ‘‘consequences’’ of the UK’s decision to leave in contrast to Boris Johnson’s belief in the ‘‘opportunities’’ that Brexit provides.

One of those ‘opportunities’ is the prospect of a US/UK trade deal. It is undeniable that such a deal would benefit the West Midlands. The US is our second largest export market worth approximately £6.6 billion each year.

By all accounts those trade negotiations have been progressing well but according to Wilbur Ross, the current US commerce secretary, they are unlikely to be concluded this year.

This may well mean that the UK will face a new administration far less friendly towards the UK than the current administration.

Whilst the Biden family emigrated from Liverpool to the US in 1825, it is the Irish Catholic side of the family, the Finnegans, that Joe Biden often refers to as his favoured roots.

This may well have influenced why he was quick to condemn the UK government’s proposed Internal Market Bill – supporting the EU’s interpretation of the bill – as a threat to the Good Friday Agreement.

His words ‘Any trade deal between the US and UK must be contingent upon respect for the agreement and preventing the return of a hard border. Period’ do sound ominous. As do the words of Nancy Pelosi, the speaker of the House of Representatives, when she stated that there was ‘‘no chance’’ of a trade deal if a hard border was erected on the Irish mainland.

I fear that a Johnson/Biden relationship is not destined to be that ‘special’. Such is the suspicion between the Democratic party and the Johnson administration, seen very much as an ally of the Trump administration, that last week Ms Pelosi even suggested that the US would not sanction approval of a Covid-19 vaccine ‘‘approved by Boris Johnson’’.

So this is the perfect storm that faces the UK. How the UK will navigate the consequences of Covid-19, the complex negotiations of an EU trade deal and a potentially less than friendly new administration in Washington is anybody’s guess.

However, what is clear is that this continuing uncertainty is bad for businesses, particularly here in the West Midlands.

It’s going to be a rough ride... time to batten down the hatches and support each other as we navigate through this tricky period.

Steve Allen, President of Greater Birmingham Chambers of Commerce and Birmingham office

head of Mills & Reeve LLP