Extension to Brexit ‘could cost £378bn’
ALMOST half of Britons believe extending the Brexit transition period would leave the UK locked into the EU’s orbit for the foreseeable future, according to a poll, as Downing Street warned that Michel Barnier’s mandate was “totally unnegotiable” on the issues that stalled trade talks last week.
The poll is contained in a report by a new pro-Brexit think tank, the Centre for Brexit Policy, which claims that opting for an extension could cost up to £378billion.
With talks between the UK and EU over the future trade agreement now at an impasse, Boris Johnson has faced calls to extend the transition period. He has until July to take a decision on that.
However, Downing Street has ruled out an extension, suggesting the UK could simply leave the EU’s customs union and single market without a comprehensive trade deal in place.
Last night, a No10 source insisted that “no government” would agree to some of the demands made by the EU through Mr Barnier, its chief negotiator, including that the bloc would effectively have “oversight” of UK legislation in order to maintain a “level playing field” on tax and regulation.
“We’ve made very clear that such conditions would be unacceptable and can never form the basis of an agreement,” the source said.
“Michel Barnier is doing his best. He must know that he has an impossible job with a mandate that in certain areas is totally unnegotiable with us and gives him no flexibility where he needs it.” UK sources have called for a “political injection” from EU leaders to break the impasse.
According to the poll of 2,058 people by Savanta ComRes, 46 per cent believe extending the transition beyond Dec 31 will lead to “further extensions”, compared with just 16 per cent who disagreed.
Overall, 35 per cent said the transition period should remain as currently agreed, 8 per cent believed it should be shortened, and 40 per cent thought an extension was necessary.
The Centre for Brexit Policy was founded by Owen Paterson, the former Tory Cabinet minister, and John Longworth, the former director-general of the British Chambers of Commerce.
Its report warns that a two-year delay to Brexit resulting from another 12-month extension would cost the UK up to £378billion. The figure is based on the UK continuing to pay £11billion a year to Brussels, a loss of an estimated £132billion in free trade agreements with non-EU countries, and £176billion that could be realised by adopting better regulation.
Mr Longworth said: “The combination of these eye-watering costs and continued subservience to EU rules would wreck any chance we have of restoring our fortunes as a nation as the pandemic subsides.”
With the UK unable to strike trade deals while in transition, the report assumes that a potential 3 per cent annual boost to GDP from these arrangements would be lost.
It places the potential benefit of diverging from EU rules at 4 per cent of GDP, or £88billion annually.
On Friday, David Frost, the UK’s Brexit negotiator, called on Brussels to drop its demands for “level playing field” guarantees on tax, labour rights, state aid and the environment, and status quo access to UK fishing waters under “existing conditions”. Mr Barnier has accused Britain of failing to understand the consequences of Brexit.