With Britain’s full departure from the European Union now less than two months away, the question on all our lips is: will they or won’t they? Will the British government and European leaders manage to strike a trade agreement in time to avoid a no-deal Brexit?
Clock is ticking
In truth, the deadline is even sooner than 31 December 2020, when the current transition period is due to end. It’s thought that any deal would need to be finalised by the week of 23 November so that it can be signed off by the European Parliament before the end of the year. That’s just a couple of weeks away.
Will they or won’t they?
So, to return to the original question, will they or won’t they? Recent signs have not been good. In the middle of last month, our prime minister, Boris Johnson, claimed that the European Union had “abandoned the idea of a free-trade deal” – adding that, unless progress were made, we might end up with “the Australia solution”.
Which brings us to another question: what is the Australia solution? As the Times explained when Johnson made his statement, “an Australian-style trading relationship with the EU is… effectively a no-trade-deal Brexit with the hope of agreeing something better in the future.”
A no-deal Brexit of this sort would have significant ramifications for the vehicle market and, by extension, the leasing industry. The UK’s trading relationship with the EU would default to World Trade Organisation (WTO) terms, which would see tariffs imposed on a number of imports – including a 10% tariff on cars.
There is hope, however. Some observers speculated at the time of Johnson’s statement that he was just raising a worst-case scenario to provoke the EU into agreeing a deal. And there does now seem to be a better-than-zero chance of agreement: an EU Commissioner last week put it at “50-50”.
But there’s no doubt that, as talks resume, the situation is concerning. Ideally, a deal would have been reached some time ago. As it is, the two sides still can’t agree about several specific issues, including the “level playing field” of unified rules and standards – and time is ticking away.
Whatever happens, LeasePlan UK is prepared. We have been scenario-planning for a possible no-deal Brexit for months, as well as speaking to suppliers and testing our own systems to ensure that everything keeps running smoothly. All our customers will benefit from this work.
Other recent stories
- European car manufacturers are pushing the EU’s chief negotiator, Michel Barnier, to soften his stance on the trade of electric cars.
- The BVRLA estimates that a no-deal Brexit would leave fleets spending an extra £2.8 billion on pure electric cars over the next five years.
- Manufacturers are warning that they cannot guarantee company car prices beyond the end of the year, even for orders placed now.
- BVRLA paper details the effects of a no-deal Brexit on the vehicle leasing and rental industry