Brexit Bulletin: Britain’s Not for Turning

(Bloomberg) --

What’s Happening? Not even Covid-19 is going to stop Brexit, or at least so says the British government.

Fresh out of isolation, chief negotiators Michel Barnier and David Frost got back to discussions this week—albeit remotely—before formal trade negotiations are due to resume on Monday.

But the virus has changed everything in just a few weeks. Not only is the attention of ministers and officials focused elsewhere, the fiscal damage from the lockdown looks set to be truly staggering: the U.K. economy could shrink by 35%, according to the Office for Budget Responsibility. Fearful of the double whammy of Covid and Brexit, many business leaders have urged, and expect, a delay. Most recently, the head of the IMF called for an extension.

They could be disappointed. On Thursday, Downing Street not only repeated its long-held line that the U.K. won’t seek an extension to the Brexit transition period, but added that it would reject any request for one from the EU. This marks a hardening of the British position, and increases the risk that the country could, in effect, crash out of the bloc at the year-end without a trade deal.

Paradoxically, the virus may have given the government a political incentive to press ahead: the cost of leaving the EU could be dwarfed by that of the virus. If the economy rebounds next year, the upside could be attributed to exiting the EU (and the costs of leaving left forever open to debate). Some businesses would welcome the certainty, as David Merrick of U.K. Insulations told my colleagues Ed Robinson and Katie Linsell here.

Boris Johnson will still have to tread carefully, as Bloomberg Opinion’s Therese Raphael notes. Britons won’t want the prime minister distracted by the arcana of quotas and tariffs when doctors and nurses complain of equipment shortages. But he will be scrutinizing opinion polls, and has been flexible before. The last time he postponed Brexit, Johnson made sure he was seen doing everything he could to prevent a delay—before conceding one. Until June, then, the easy decision is to make no decision.

Beyond Brexit

• Bosses kept Carnival cruise guests partying even as coronavirus spread on board.
• Meanwhile, Las Vegas casino owners could re-open with dealers in masks.
• The lockdown-stricken U.S. economy has now lost 22 million jobs in the past month.
• Dogs could be used to sniff out the coronavirus.
• Key institutions are not up to the job. The pandemic is a wake-up call to reinvent the state.

Click here for the latest maps and data on the spread of coronavirus.

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