for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

Breakingviews - Brexit brinkmanship revives risk of worst outcome

British Prime Minister Boris Johnson outlines his government's negotiating stance with the European Union after Brexit, during a speech at the Old Naval College in Greenwich, in London, Britain February 3, 2020.

LONDON (Reuters Breakingviews) - The spectre of a chaotic Brexit is back. Less than 11 months after Prime Minister Boris Johnson negotiated a withdrawal agreement with the European Union, his government may be preparing to undermine aspects of the deal. It could be a ploy to unblock stalled EU trade talks. But it again revives the possibility of a messy departure from the union.

Johnson’s exit deal, which became law in January, was supposed to settle the terms of Brexit with respect to Britain’s financial obligations, the rights of citizens, and the status of Northern Ireland. Since then, officials have concentrated on negotiating a future trade agreement.

Those talks, which are supposed to be completed before Britain’s phased withdrawal ends in December, have stalled amid disputes over issues including fishing rights and the UK government’s scope to subsidise strategic industries. Failure to reach a deal would subject British exports to the EU to tariffs and quotas – and vice versa. That would be economically painful for both sides, especially given the disruption caused by Covid-19. But it would be less damaging than the chaotic “no deal” Brexit Johnson appeared to have averted last year.

Now, however, the UK government may be unpicking the previous deal. According to the Financial Times, it is introducing legislation which would “eliminate the legal force of the withdrawal agreement” with respect to state aid and Northern Ireland customs. That could lead to customs controls on the Irish border – an outcome negotiators spent years trying to avoid.

It’s hard to rationalise what Johnson’s government is hoping to achieve. It may have given up hope of a trade deal and have decided that parts of the previous agreement are unworkable. Alternatively, Johnson may be trying to shunt the EU into a trade compromise by showing how awkward the United Kingdom could be if the two sides can’t agree. However, threatening to renege on a treaty that’s less than a year old hardly seems the best way to win the trust of the EU - or other potential trade partners.

Johnson is nothing if not unpredictable. Last October, he won a breakthrough by conceding to EU demands and declaring the resulting deal a great victory for the United Kingdom. A similar outcome could be on the cards this time. For now, however, the risk of the worst Brexit outcome is back.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up