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And as the domestic and international response gathers pace, this week the Government and the European Commission agreed to postpone scheduled trade talks due to take place in London, specifically citing Coronavirus in a joint statement.

In a matter of weeks, then, the central political question of this year — the nature of the UK’s future trading relationship with the EU — has been substantially overtaken. The UK government is at this moment reshaping itself to deal with an unprecedented situation and to mitigate the economic and social effects of the pandemic. Sweeping emergency powers, big commitments of national income and frankly extraordinary public health measures are emerging from Whitehall at great speed.

So what does the new top priority mean for the previous one? What can we expect from trade talks during the rest of this year? Are we seeing the prelude to a wider change in the UK’s approach to the talks, on timing or substance? Will the Government do what the PM has always said he would refuse to do — and extend the transition talks?

And as civil servants begin, like much of the country, to work from home, how can business best engage with rest of Government?

Pressure is mounting to extend the Brexit transition…

The government’s message is uncompromising – the transition period ends on 31 December 2020 and, as Boris Johnson added on Wednesday evening: “there is legislation in place which I have no intention of changing”. The government hopes for an exchange of legal texts with the EU “in the near future” and continuing negotiation by video-conferencing.

Underneath the political headline, however, the realities are shifting. Senior staff are moving from the EU talks team to work on the Coronvirus response. Bandwidth is limited on the EU side, too; although the European Commission have published a draft future relationship treaty, Member States may not be able to agree it quickly, with energies diverted to managing the pandemic.

Strategically, there is a trade-off between timing and substance; the more that Johnson insists on achieving ‘political and economic independence’ by the end of this year, the more constrained his choice on the substance becomes – between ‘no deal’ or significant compromise on his red lines. This was already true pre-Coronavirus, when we had around eight months to conclude a deal, allowing time for ratification. The EU simply isn’t prepared to go through tariff lines individually this year, and has done no preparatory work on this, so the choice was already between a zero-tariff deal largely on the EU’s terms, no deal, or delay.

… and the government’s political calculation may change

The biggest barrier to agreeing an extension is that the No10 team feel that the Coronavirus crisis strengthens their hand, because a big economic hit in the Eurozone makes it likelier that the EU will compromise to avoid no deal. This plays into the key advisers’ worldview that no deal is a credible UK threat. For as long as they think that, sticking to the timetable offers the prospect of last-minute concessions. Coronavirus gives some cover if No10 later come to feel that a delay is in their interests. The Government’s open intention to shock businesses into preparing for new barriers to EU trade from 1 January by refusing to contemplate any extension may increasingly risk looking out of touch or simply undeliverable for small businesses struggling to cope with the Coronvirus shock. For the moment No10 are holding a firm public line against extension, but as the Coronavirus response becomes all-consuming – and if the crisis sustains for many months – they may have little choice.

Lexington will run a webinar on Wednesday 25th March to discuss these questions, in particular looking at how the government is approaching the challenge of delivering the Coronavirus response and sustaining the economy, bandwidth challenges, what this means for business engagement, and the knock-on effects on pre-Coronavirus priorities. We may not be able to answer every question about implementation, since the response is shifting almost daily, but we can advise on the best way to approach government engagement and how to raise concerns or offer support.

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