U.S. markets closed

UK government could walk away from Brexit talks in June

Tom Belger
Finance and policy reporter
Boris Johnson with Michel Barnier during previous Brexit negotiations. (Stefan Rousseau/PA via Getty Images)

The UK government has announced it will consider walking away from trade talks with the EU in June if the “broad outline” of an agreement has not emerged from negotiations.

The abandoning of talks would pave the way for a radical rupture in UK-EU relations when Britain departs from EU rules as the Brexit transition period ends in January next year.

The UK could be treated as a “third country” by the EU if talks collapsed, trading with only the limited rights offered by World Trade Organisation (WTO) rules. Businesses and experts have warned for years this risks heavy disruption to trade and other ties from new tariffs and barriers.

Details of the government’s negotiating plans emerged in an official document published on Thursday. The report makes plain prime minister Boris Johnson’s wish for a significant break with Brussels.

It argues Britain will “fully recover its economic and political independence,” and will “always have control” of its own laws, rules and politics. The government will not commit itself to aligning its laws with the EU, or to giving European courts jurisdiction over the UK.

The vows mean UK negotiators are set for a clash with Brussels. European politicians say Britain must pledge a “level playing field” with the EU on employment and environmental standards, tax and state aid rules. EU states fear being undercut if Britain de-regulates in such areas.

Britain’s determination to rewrite fishing rules on EU access to UK waters are also likely to prove a thorny issue in talks set to begin next month.

Read more: US ‘confused’ by UK fears over NHS and US food in tradee deals

Officials hope the thrust of an agreement can be reached by June, ahead of the EU’s deadline for any potential extension of the transition.

But the report warns that if not, the UK government “will need to decide” whether UK attention should instead shift solely onto domestic planning for exit from EU rules “in orderly fashion.”

The government repeated its pledge not extend Britain’s transition period under EU rules beyond the end of this year.

That would mean trading on terms “similar to Australia's” from next year, the report said. The government has previously been criticised for this comparison, as Australia has no deal with the UK.

Minette Batters, president of the National Farmers Union (NFU), earlier this week called it “code for no deal,” and warned it could be “economically and socially catastrophic.” UK farmers could face crippling tariffs on exports to Europe.

Read more: UK risks ‘empty shelves’ for fruit and veg as farms lose EU workers

But the new report sets out the government’s hopes for a comprehensive free trade agreement like Canada’s deal with the EU, with Britain outside both the single market and customs union.

The government wants no tariffs, quotas or charges on trade in manufactured and agricultural goods. It hopes the deal will also “address” non-tariff barriers, but ministers have previously admitted imports and exports will face new paperwork and checks.

“Directors will be relieved to see a significant amount of detail in the Government's negotiating stance, but disappointed that securing market access continuity seems to be less than a fundamental priority,” said Allie Renison, head of Europe and trade policy at the Institute of Directors. 

Frances O’Grady, general secretary of the Trade Unions Congress (TUC), accused the government of “gambling with people’s livelihoods by again threatening a disastrous ‘no deal.’”

She said jobs and living standards were “on the line” even under the government’s plans for a deal, as they would make trade harder with the EU.

Labour MPs also warned in the Commons on Thursday ditching talks threatened security collaboration.

The report says the government will not seek to remain in the European arrest warrant, which requires other countries to arrest and transfer suspects on the UK’s behalf.