For the second meeting of the EU Chambers of Commerce in UK (or equivalent organisations) the EU Delegation invited Professor Anand Menon from UK in a Changing Europe (UKICE).
In a very direct and open intervention, Professor Menon underlined the recent politicisation of UK economy, trade and international relations.
Since Brexit and with the current government, the relationship between politics and economics has been reverted, politics overtaking economics. There is less and less guarantee that Ministers will even talk to businesses. Moreover, as long as the war in Ukraine is ongoing, “a bad economic situation in the UK does not look that bad”.
On the EU-UK relationship, he noted that there is little chance to solve the current crisis, with the European Research Group (ERG), Democratic Unionist Party (DUP), UK government and the EU red lines being incompatible. The Northern Ireland Protocol (NIP) row is in the interest of the present UK government, who is using it for domestic politics. It is more likely now that the NIP Bill may be adopted before the end of the year. Bottom line is more uncertainty across the board. Professor Menon pondered if there was a stable equilibrium to achieve in the EU-UK relations at all (putting NIP aside). He reckoned that 70% of the current problems stemmed from the UK leaving the Single Market and the Customs Union. On the possible spectrum between FTA-EEA Internal Market/Customs Union models, the UK chose the first (TCA). It was logical as it is unimaginable for a country such as the UK to ever go for the EEA model and be a rule taker. There is thus inherent post-Brexit tension written into the EU-UK relationship and a degree of uncertainty. Having significant EU Single Market as the closest UK neighbour will always feed into the UK anxiety.
In the ensuing discussion:
- In reply to RO, Professor Menon expressed his doubt that the UK would change its stance on immigration and mobility: Brexit was won on the anti-freedom of movement narrative.
- Menon expressed his surprise on how little businesses spoke up against Brexit before the referendum. He further noted how few businesses go to the Labour Party Conferences. He opined that following pro-remain stance, CBI has lost the government’s ear. According to him, the Federation of Small Businesses is currently the most influential voice of business in the UK, as it kept a neutral stance on Brexit.
- IE representative praised the EU unity on the NIP. He noted that the NIP row brought collateral damage to the EU-UK relations on economy, research (Horizon), energy cooperation, etc. He asked for Professor Menon’s views on possible landing zones on the NIP and expressed his readiness to present EU business views more in details. In a reply, UKICE suggested to organise an event on Business and Brexit. Menon was not optimistic as regards solving issues with the NIP, according to him that would require a change of the government. The current one has entangled itself too much into a negative narrative, including on the ECJ. Professor Menon opined that technical solutions on NIP are possible but that the current government does not want to solve it. He further pondered which of the Labour presented proposals in the Keir Starmer recent speech on Brexit would be acceptable to the EU (very few) and expressed the view that a scenario where the Labour wins the next elections but does not have the majority may bring more political instability. At the moment political map of UK looks inconclusive.
- DE called for adjustment of the UK visas to make cross-border trade possible. Menon raised that EU and UK are barely talking to each other currently: he opined that the TCA was construed as a living agreement but for this we need trust and good relations.
- ES stated that SMEs were the most disadvantaged by leaving the EU but that the impact of Brexit was a forgone growth rather than a negative growth.
- BE noted that Brexit instigated less choice and higher prices in UK.
- PT concurred with the assessment that Brexit and NIP were political and not economy-driven and that was why the FSB became more influential than CBI as it steered away from taking political sides. SMEs were indeed most affected.
As the final point, EUDEL asked if Chamber’s representatives had any issues to raise as concerns the TCA implementation, in view of the meetings of Trade Specialised Committees under the TCA to be held in the autumn. None of the participants took the floor.
Next meeting of the EU Chambers network will be organised in the autumn.
Participants:
EULON (Justyna Lawniczak, Kristin Vandenbergen, Cyril Robin-Champigneul, Lionel Mesnildrey)
Attending 11 representatives of EU Chambers
Sign-off: Lionel Mesnildrey, Head of Economic and Trade Affairs Section