BUSINESSES already struggling during the Covid-19 economic shutdown will be further hit if the UK Government does not ask for an extension to the Brexit transition period, a former senior civil servant has said.
Philip Rycroft, the former permanent secretary in the UK Government’s Department for Existing the EU, told Holyrood’s Europe Committee that a refusal to not seek an extension is a “political decision”, based on loyalty to those who voted for Brexit.
But Mr Rycroft hoped it was still possible for the UK and the European Union to agree a new trade deal before the transition period expires at the end of the year, placing the chances at around “50-50” - but warning there is a “huge amount of work still to do”.
READ MORE: Senior MEP warns social distancing hampering Brexit talks as fisheries 'disagreements' remain
Mr Rycroft warned that even if a trade agreement is reached between the two parties, "the terms of trade will change very substantially" between the UK and EU.
He described this as a "huge challenge" for both sides.
He added: "Where we are at the moment, pretty much every business in the UK is dealing with the biggest peacetime economic shock we have felt since 1929, at a minimum.
"And the afterburn of that shock is still going to be with us this year and probably well beyond.
"It would appear to be an odd time, when you have got a choice, to be adding to the burden on businesses."
READ MORE: Coronavirus: Brexit delay 'essential' to avoid double hit to economy
The new trade border with Europe will come into place "just at a time when businesses are trying to find their feet again after the coronavirus crisis," he said.
Mr Rycroft, who also worked for the Scottish Government during his civil service career, said: "It is a perfectly legitimate political decision to take but of course that political outlook does not necessarily coincide with the interests of a lot of UK businesses.
"Assuming no extension to transition, we know we are going to have a trade border.
"For goods that will mean, in either deal or no-deal, that goods transiting that border by freight will have to have customs declarations, security declarations, they will have to go through the rules of origin process to prove where the goods have come from, they will have to go through the regulatory procedures to ensure that those goods are capable of being marketed either in the UK or in the EU."
READ MORE: Nicola Sturgeon: Covid-19 resources will be diverted to no-deal Brexit plans if no talks extension
He added: "These are the so-called non-tariff barriers which will apply at the end of this year, come what may, if we don't get an extension.
"If we are in a no trade deal context, add to that the potential for tariff barriers as well, which would be an additional burden for business."
Failing to reach a trade deal will have a "very big impact", he said, adding that "pretty much overnight" the UK would move on World Trade Organisation terms and conditions.
He said: "There is clearly a risk in that because businesses have not had the time, partly because of coronavirus, to prepare for that.
"There would be hold-ups at the border, because businesses would not have the right paperwork in place."
He added: "I have no doubt that if coronavirus hadn't happened the UK Government right now, for example, would be running a very big campaign as it did last year, to engage businesses to encourage them to take forward their own planning for what is going to pertain at the end of this year."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel