Brexit trade talks are 'going backwards' as the UK edges closer towards a chaotic exit from the EU

  • UK and EU negotiators failed to make a breakthrough in the latest round of Brexit trade talks.
  • The EU's chief negotiator Michel Barnier said striking a deal this year was "unlikely."
  • The two sides have just weeks to negotiate an agreement to avoid a chaotic no-deal scenario in January.
  • But the UK businesses and borders are set for disruption in four months' time — even if there is a deal.
  • Industry figures across the UK say small businesses in particular are unprepared for the disruption.
  • There is particular concern in Northern Ireland, where there is "palpable nervousness" over the future of many businesses.
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Boris Johnson is being urged to "rapidly accelerate" negotiations with the European Union amid growing fears that the UK is heading for a severe economic shock as a result of leaving the Brexit transition period without a trade deal.

The seventh formal round of trade talks between UK and EU negotiators concluded on Friday with the two sides still a long way off from securing a free trade agreement by the agreed autumn deadline.

The EU's chief negotiator Michel Barnier yesterday said he was "disappointed" and "concerned" by the lack of progress in talks. He also said he was "surprised" by what he described as a UK refusal to "move forward" on key issues, as Prime Minister Johnson "told us in June that he wanted to speed up the process during the summer."

"Too often this week it felt as if we were going backwards more than forwards," Barnier said.

David Frost, the man who Johnson chose to lead the UK's negotiating team, said there had been "little progress" in talks and that while an agreement was "still possible" it was "clear that it will not be easy to achieve."

The two sides remain at loggerheads over the rights of European fishing boats after Brexit and the EU's insistence that the UK signs up to "level playing field" rules to prevent British businesses undercutting those in Europe.

The two negotiating teams will next meet for formal talks on the week commencing Monday, September 7.

The feeling among those close to the negotiations is that any breakthrough leading to a deal is likely to come in October. This would be at the eleventh hour and leave businesses with just weeks to adapt to changes it would entail.

There is also concern that even if the two sides manage to strike a trade deal, there might not be enough time for EU and UK lawyers to turn into a legally-operable text. A final text, if there is one, is expected to be over 700-pages long and the process of fine-tuning several hundreds pages worth of technical agreements often takes months.

The Labour Party has called on Prime Minister Johnson to "get a grip" and prioritize quickly securing a deal with the EU, describing it as "by far the most important deal the UK will strike" as an independent trading nation.

"Last December the Prime Minister told the country he had an 'oven ready' deal and in June he claimed it could be delivered by the end of July," Rachel Reeves, Shadow Chancellor of the Duchy of Lancaster, told Business Insider.

"The failure to make more progress in August only adds to the uncertainty for industries from freight to farming. When the Prime Minister returns from his holidays he needs to get a grip and ensure his Government and the EU rapidly accelerate talks and deliver the deal he promised the electorate."

She warned that businesses will need as much time and guidance as possible to prepare for new checks and paperwork on goods going to and from the UK's biggest trading partner. Senior figures in British business say that smaller firms in particular are still focused on the coronavirus and do not have the bandwidth to also prepare for Brexit.

A senior figure in the UK's food industry, whose businesses rely on frictionless cross-border trade with the EU, told Business Insider: "The bigger businesses are thinking about it [Brexit] now but the smaller ones don't know what's about to hit them and I worry about them a lot. We can't hold all of their hands through all of this."

Labour's Reeves said: "So many businesses are working incredibly hard in response to the economic challenges of Covid-19 and they need to know the Government is negotiating with people's livelihoods in mind."

Deal or no deal, Britain is heading for disruption

Even if the UK and EU do manage to strike a trade deal, the refusal of Johnson's UK government to stay close to the EU's single market and customs union means there will be disruption for business at Britain's borders from January.

The government has resurrected an eyebrow-raising plan to turn 15-miles of motorway in the county of Kent into a contraflow system in anticipation of delays for lorries trying to cross the English Channel to the EU, regardless of whether there is a trade deal in place. UK officials estimate there will be over 400 million additional customs checks a year on goods going to and from the EU as of 2021. Johnson's government is also building around a dozen new customs clearance centres around the country to help handle new checks, including a handful in Kent.

The UK government's campaign of communicating to the public information abour these new changes — "Check, Change, Go" — has been accused of glossing over the level of disruption business owners will need to prepare for.

Maddy Thimont Jack at the influential UK think tank The Institute For Government last week argued that the communications campaign risked "lulling people into a false sense of security" by focusing on "sunlit uplands" of leaving the EU rather than explaining clearly the many changes it'll entail.

There is particular concern for businesses in Northern Ireland, which unlike those in Great Britain have not been granted a six-month period to adapt to new checks at the border in just four months' time.

From January, businesses in Northern Ireland importing goods from the rest of UK face an array of new checks covering customs, safety & security requirements, and strict rules for animal and plant-based goods. This is because the province will stay the EU's single market and customs union to avoid a contentious hard border with the Republic of Ireland.

The UK government earlier this month said it would relieve Northern Irish businesses of some of this new cost and red tape by effectively paying a company to handle customs paperwork for imports on their behalf. Businesses welcomed the announcement but said they needed more information to know how the system would actually work.

Businesses in the province have also asked the UK government to provide support with handling stringent checks on animal goods, which are set to cost importers thousands of pounds. An individual Export Health Certificate is required for each individual type of animal good and costs £200.

A senior industry figure in Northern Ireland said: "There is a nervousness now because of a lack of solution on Export Health Certificates. A palpable nervousness that there hasn't been up to now.

"For some, it will be make or break in terms of their presence in Northern Ireland."

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