UK businesses warn Johnson’s government against trade war with EU

UK business leaders have warned Boris Johnson’s government against suspending the Brexit deal with the EU, saying a “devastating” trade war is looming over Britain’s economy over the next few weeks. 

It comes as Brexit minister David Frost warned last week that the government could still suspend the Northern Ireland Protocol if certain demands are not met – such as scrapping the European Court of Justice from overseeing the Protocol.

But, according to experts who spoke to The Independent, the bloc is ready to take immediate retaliatory action against the UK if the government pushes ahead with its ambitions – and UK business chiefs are terrified of the outcomes. 

Threats

Catherine Barnard, professor of EU law at Trinity College, Cambridge, told the newspaper that the threats could go beyond Article 16.

She says that if the EU decides to trigger Article 506 in the agreement signed by the UK, Britain could no longer fish in EU waters and face taxes and stricter checks on its fish and other goods exported to the bloc.

David Henig, UK director at the European Centre for International Political Economy, said EU leaders are considering a “nuclear” option of terminating the Brexit agreement – which is equivalent to a “no-deal” scenario. He believes this would hit the economy hard, as Britain would be forced to trade under World Trade Organisation rules. 

Meanwhile, the British Meat Association said trading in such a way would be “horrendous” for the industry, calling the prospect “incredibly depressing”

“We’re struggling enough with food inflation without a damaging trade war and retaliation measures. Another year of uncertainty would be devastating for our industry and the whole of the food sector – it means all the investment our economy needs could be put on hold,” chief executive Nick Allen told the newspaper. 

Meanwhile, the Road Haulage Association (RHA) also expressed concern that if the EU retaliates, this could “cause even more disruption to very stressed supply chains”.

And Barrie Deas, chief executive of the National Federation of Fishermen’s Organisations (NFFO), said a trade war would “hurt everybody” and could potentially mean “all of us” would be “losers”. 

US warns UK risks both peace and trade

The concern among UK business leaders comes after last week US officials warned the UK’s threats to suspend the Protocol risk undermining peace and trading relations.

In a statement, members of Congress on the House Foreign Affairs Committee – in charge of trade, foreign affairs and European Union relations – condemned UK threats to trigger Article 16 and unilaterally suspend the Protocol.

In a warning shot across Westminster’s bow, US officials released a withering statement, which read: “The Northern Ireland Protocol was a significant achievement during the volatile Brexit process, and its full implementation is critical for ensuring Brexit doesn’t undermine decades of progress toward peace on the island of Ireland. 

“The Good Friday Agreement and broader peace process took patience and time to build, with good faith contributions from the communities in Northern Ireland, the United States, the United Kingdom, Ireland, and others.”

It added: “However, peace can unravel quickly.  

“In threatening to invoke Article 16 of the Northern Ireland Protocol, the United Kingdom threatens to not only destabilize trade relations, but also that hard earned peace. 

“We call on the UK to abandon this dangerous path, and to commit to implementing the Northern Ireland Protocol in full.”

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