Brexit: Is UK no-deal looking increasingly likely?

Brexit | | MIC Customs Solutions |

The EU and UK are still butting heads over Brexit, but Britain may now not be afraid to take a hard stance.

The UK has now published a draft legal text of a potential future free trade agreement with the EU, outlining its aspirations for Brexit after a third round of talks apparently ended constructively in mid-May.

However, with continuing differences of opinion on both sides, could it be that a mutually beneficial agreement is difficult to reach - and might a no-deal Brexit be on the cards after all?

The British government published 13 documents that aimed to set out a future EU relationship, including details similar to those that apply to Canada and Japan.

There were also separate agreements on fisheries and some aspects of aviation, energy and civil nuclear cooperation, with the text based on "friendly cooperation between sovereign equals" and an "unwavering view that the UK will always have control of its own laws, political life and rules".

However, EU chief negotiator Michel Barnier has criticised Britain's demands as unrealistic and suggested he is not optimistic about securing a deal.

In fact, Brussels claims that FTAs such as those enjoyed between the EU and Canada are not possible with the UK because it is too intertwined with Europe.

Cabinet Office minister Michael Gove reacted to this with frustration, telling MPs in the House of Commons: "The EU essentially wants us to obey the rules of their club, even though we are no longer members ... It remains difficult to reach a mutually beneficial agreement while the EU maintains such an ideological approach."

Another Downing Street insider told the Spectator that the deal the EU wants 'isn't going to happen'.

Meanwhile, a letter from UK chief Brexit negotiator David Frost was even more pessimistic and suggested the two sides are actually nowhere near reaching an agreement, despite having made all the right noises in public after the discussions.

Should the talks fail, Britain would revert to default World Trade Organisation rules when its transition period ends on December 31st 2020.

At the moment, a last-ditch meeting in June is pegged as being the moment when London and Brussels decide whether they will continue negotiating for a Brexit deal or not, so we will know within a few weeks if this is the case.

Interestingly, though, analysts have pointed out in recent weeks that the economic threat of a no-deal Brexit might not be the frightening prospect it once was before coronavirus.

After all, most supply chains have already been severely disrupted and the majority of economies have taken a huge hit, while border checks and hold-ups at airports are presumably about to become the new normal.

As one member of the cabinet suggested in comments to the Spectator, would anyone really notice the costs of an Australian-style deal (i.e. trading on WTO terms with some additions) in the aftermath of a global pandemic?

In a strange way, coronavirus may give the UK the confidence it needs to take a hard line in the June talks and to call the EU's bluff on a no-deal.