A low-alignment deal with the EU now seems likely, but it comes with great risks, says political consultant Mujtaba Rahman

Boris Johnson’s honeymoon was always going to be short-lived. The immediate, unexpected, intellect is the sudden escalation of tensions between the US and Iran. But it won’t be long before Brexit once again dominates the headlines.

With the UK set to leave the EU on 31 January, and both sides set to embark on trade negotiations shortly thereafter, the prime minister, his senior ministers and his key aide-de-camps are keen to lower the temperature.” We want to see Brexit on the business sheets , not the figurehead sheets ,” says one ally.

Two key factors will determine whether this aim is achieved. First, will Johnson stick to his decision ruling out any extension to the transition period, in effect imposing a 31 December deadline for concluding a free trade deal with the EU? Second, will he make good on its determination to ” differ” from EU rules and standards, thereby prioritising the government’s right to do things differently over preferential access to the single grocery?

The initial signals aren’t predicting for industry. Johnson will politely dismiss EU admonishes that his timetable is unrealistic when he convenes the new European fee chairwoman, Ursula von der Leyen in Downing Street on Wednesday. Though he now commands an 80 -strong parliamentary majority, extending the transition, and thereby remaining in the single market and customs union with no say over their rules while handing over hunks more money, would earnestly anger Eurosceptic MPs and some voters. Senior priests too believe that the very tight deadline will concentrate knowledge in Brussels.” We will not extend the transition under any circumstances ,” one Downing Street generator told me.

This will leave seven months to hammer out a deal. The EU’s 27 new member states will simply agree on the commission’s mandate to negotiate on their behalf by the end of February. The cabinet and Whitehall will also need time to settle on a final program. Ratification of the transaction will probably take two to three months. In a best-case scenario, that leaves March to September- about seven negotiating hertzs- to strike an arrangement. It’s an understatement to suggest this might not be long enough.

The prime minister hopes the advent of Von der Leyen in place of Jean-Claude Juncker will label a new start, as the two” friends and collaborators” concur a new tie-in. He will too work hard to build personal rapport with EU managers. Only as bonding with his Irish counterpart, Leo Varadkar, unblocked the withdrawal agreement talks, he will hope that strong relationships with other EU uppercases could smooth the trade talks, too. But even if things are more friendly than during the divorce- and that is a big ” if”- the challenge Johnson is setting himself is immense. The danger of a no-deal cliff edge at the end of the year will remain a key concern for financial markets and businesses.

The second, arguably bigger, problem is that many at the top of government envision differing from EU governs as the large-hearted booty of Brexit. While legislation enshrining existing EU criteria in the areas of workers’ rights and the environment is likely, it’s iffy this government will agree to follow EU governs in the future. Some senior executives is our opinion that alignment might actually be easier now as it will be the UK’s choice, but it’s hard to square this approach with the worldview and instincts of those now in power. Indeed, Johnson’s allies rightly point out that his opposition to both Theresa May’s Chequers deal and her withdrawal agreement was not because of details but because he believed it was fundamentally and philosophically the incorrect approach.

Could he prove more pragmatic- just as he was when he pulled off the withdrawal agreement against the odds? Perhaps, but probably only when talks reach a climax in the autumn. After all , not agreeing to follow EU rulers would make it difficult to defend manufacturing industries from EU tariffs and regulatory obstructions- in grassland English, there would be a risk of substantial profession sections and factory endings. The newly elected band of Tory MPs from the north and the Midlands will be anxious to avoid that, and this might cause a rethink. In the end, the government could be seduced to follow EU patterns in sectors such as aerospace, pharmaceuticals and chemicals.

Ursula
‘ Johnson will politely dismiss EU threats that his timetable is unrealistic when he fills the new European board chairperson, Ursula von der Leyen, in Downing Street on Wednesday .’ Photograph: Isopix/ REX/ Shutterstock

But this is not a given. Senior tones in the cabinet tell me that the Tories’ brand-new working-class former Labour voters are likely to be used as a justification to deliver a speedy transaction to deadline and for a tougher approaching to migration. The PM’s aides likewise acknowledge they will need a big selling operation to explain any new barriers to trade:” We will not go for high-pitched adjustment; that they are able to symbolize trade-offs .” Another minister says that” standing up to the EU won’t play severely with these voters. There will be a deep reservoir of support for the PM if he wants to play tough with Brussels .” To the extent there are tasks that need protecting, this could lead to a more forceful industrial plan- including” buy British” procurement the provisions and country aid for firms struggling to survive, both of which will make strains with Brussels.

A final, unresolved strain inside the government is whether to use the prospect of a US-UK trade deal to put pressure on the EU to make concessions. Some officials want to go all out for” world Britain” from 1 February; others want to prioritise the EU and believe such threats could be counterproductive.

Given all of the above, a scrappy, relatively unambitious, low-alignment trade deal is arguably the most plausible landing zone, in contrast to a bargain that preserves both sides economically close and the UK locked into the EU’s regulatory orbit. The probability of tariffs , not only regulatory obstructions, is real. Despite hopes for a less fraught” phase II”, it seems likely that the UK’s noisy Brexit psychodrama isn’t going to quieten down any time soon.

* Mujtaba Rahman is the managing director of Europe at Eurasia Group, a political threat research and consulting firm

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