Euphoria over vaccine distracts from the Brexit crisis
The UK has become the first country to take delivery of the Pfizer/BioNTech vaccine, accompanied by euphoric statements by the prime minister and his scientific advisers.
Mass rollout is expected to start in the coming week, after an army trial run fittingly called Exercise Panacea”. Because, really, the government and its ministers have been making it seem as if the vaccine will be the panacea, the solution to the UK’s terrible handling of the Covid-19 pandemic.
Moreover, they have been making it seem as if the vaccine rollout will be the solution to all the UK’s problems, economic and social, as well as a shambolic Brexit. Some ministers went as far as saying the speedy rollout showed how much better the UK was than European countries, and that is why Brexit was such a good idea. Education secretary Gavin Williamson said on radio: “I just reckon we’ve got the very best people in this country and we’ve obviously got the best medical regulator, much better than the French have, much better than the Belgians have, much better than the Americans have. That doesn’t surprise me at all, because we’re a much better country than every single one of them.”
Meanwhile, health secretary Matt Hancock says the vaccine rollout was so swift “because of Brexit ”. Never mind the hubris of these statements, the problem is Brexit is 25 days away — the transition period ends on December 31 — and the UK still does not have a trade deal with the EU.
It has now got to the point where Prime Minister Boris Johnson and EU Commission president Ursula von der Leyen are negotiating directly in an effort to break the impasse, which is getting harder to resolve, with grandstanding by French President Emmanuel Macron and disputes about fishing rights in UK waters.
The time is running out fast, and we may be hurtling towards a no-deal Brexit alongside a third national lockdown in January 2021, with financial services represented by the City of London and a quarter of the UK’s GDP likely to be hardest hit.
The City’s world-leading fintech industry, or Silicon Roundabout, is particularly vulnerable as European talent has made a huge contribution to its development.
Workers and sector leaders alike are worried that the policy space in the government has been so dominated by Covid-19 that insufficient arrangements have been made to plan for Brexit. It was therefore still unclear this week from Brussels how access to the EU single market would be determined for financial services, as EU negotiators strengthen their leverage over the UK on this point in the talks.
A no-deal Brexit would be particularly harmful to financial services, which, being a complex sector to regulate, will need arrangements for selling into Europe to become clear as soon as possible.
Research by the office for budget responsibility shows that 2% would be wiped off total UK GDP by a no-deal Brexit, and that financial services would be among the worst affected, even more so than the economic fallout from Covid-19.
However, chancellor Rishi Sunak believes the effect of the virus is the most important issue in the economy now, and did not even mention Brexit or the looming Brexit deadline in his recent spending review.
Shadow chancellor Anneliese Dodds and businesses are concerned that a no-deal Brexit now seems likely.
I think a deal will probably be struck at the 11th hour, but considering the narrow policy bandwidth and other pressures on the government, it is doubtful such deal will include the best outcomes for the UK.
TIME IS RUNNING OUT FAST, AND WE MAY BE HURTLING TOWARDS A NO-DEAL BREXIT
Dr Masie, a former senior editor of the Financial Mail, is chief strategist at IC Publications in London and a fellow of the Wits School of Governance.