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Why a Brexit breakthrough cannot wait

One of the few silver linings of COVID19 is that it stopped us talking about Brexit. The sudden and dramatic drop in demand for bathroom products at the end of March put Brexit risks in perspective. Why worry about a cliff edge if you’ve got to cross a canyon first?  

Businesses and politicians alike have demonstrated leadership in dealing with the on-going pandemic and its impact on the economy. The UK government’s coronavirus Job Retention Scheme was a bold measure by the Chancellor that has protected incomes for a large proportion of households. At a sectoral level, the Construction Leadership Council’s task force has lived up to its name. In a few weeks, it rapidly produced safe operating procedures, addressed contractual issues head-on and liaised with the Government to find solutions on issues like reduced credit risk insurance.  

As a result of that leadership, the UK is on the path to economic recovery. While nobody is under any illusion that the recovery will be difficult – many COVID-related uncertainties remain – the level of optimism among bathroom manufacturers is high. Trendmonitor’s finding that most consumers will proceed with KBB projects supports that optimism, which will be further buoyed by Resolution Foundation’s discovery that top quartile earners have improved their household budgets during the lockdown.  

While political leaders have understandably focussed on their policy response to the virus, the UK and EU’s Brexit negotiating teams, led by David Frost and Michel Barnier have made no progress towards a post-December deal. Their inability to meet face-to-face will not have helped, but its not an excuse either. Trade associations rely on meeting with members and stakeholders – we’ve all managed using the tools available so it should not be beyond the wit of our diplomats. The lack of progress means the creation of an unnecessary risk to recovery on both sides of the channel.  

If by the end of this month no extension to the transition period is in place, the UK and EU will trade on WTO terms from 1 January. That means additional customs paperwork, an unclear regulatory backdrop in the UK, and tariffs – all causing an unnecessary distraction for businesses and denting already fragile consumer confidence.    

Most analysts are predicting there will be an extension. I don’t share their confidence – the UK Government seems resolute there’ll be no extension and its not just a bluff. Barnier and Frost, and their bosses, need to demonstrate the same leadership applied to COVID19 on a significant factor in the COVID-recovery – the UK’s future relationship with the EU. 

 

This blog was written by Tom Reynolds, CEO at the BMA

 

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