Brexit update: Sajid Javid’s non-alignment vow is further escalating the Brexit saga

With nine days to go before Britain leaves the European Union, it looks that if past three and half years have been harsh and steeply volatile, the next 11 months of post-Brexit transition could be even worse. The UK and EU are already in disagreement even before they have commenced negotiating the terms and conditions of their future partnership.

As per Prime Minister Boris Johnson, UK-EU divorce is an opportunity for Britain to go free from what he sees as the “restrictive rules” of European Union. Negotiating a comprehensive deal with the EU would be complex and time-consuming, as PM Johnson has vowed to take the UK completely out of the EU by the end of 2020.

Meanwhile, 10 Downing Street’s vow to deviate from the EU rules post-Brexit has raised alarm at the European Union, with officials warning that it would be economically devastating.

The comments made by Chancellor Sajid Javid has further added a new dimension to the Brexit saga. In his recent interview, he asked the businesses to adjust to a future where the UK would no longer adhere to EU’s restrictive rules and regulations.

He also added that there would not be an alignment; Britain will not be an acceptor of rules.

One official from the European Union has raised his concerns over the kind of loose comments made by Sajid Javid and has opined that it would be bad for both sides.

It was also argued that, if the UK wants to deviate from EU rules, it could deviate, but such an approach would lead to trade hurdles between Britain and the EU, and that will ultimately lead to a decline in trade between UK and EU, lower investments and job cuts as well.

Sajid Javid’s comments have raised consternation among the UK businesses, with the automobile industry reacting that this vow to do not align with the EU rules would be at the expense of billions of dollars and dent British manufacturing and consumer choices. It was also argued that not pursuing existing EU rules would be catastrophic for car manufacturers, aerospace and food and beverages manufacturers.

Javid’s statement follow a warning from EU officials that the 11-month Brexit transition period following the first level of Brexit on January 31, 2020 is too short to negotiate a comprehensive deal on the future trading relationship between both the blocs.

Under the political declaration signed between the UK and Brussels in October 2019 as part of the so-called EU-UK withdrawal deal, Britain and remaining EU27 countries agreed to keep intact the common standards currently applicable to both sides in the areas of state aid, competition, social and employment standards, environment, climate change and tax.

EU officials have emphasized that the greater Britain’s deviation from the EU rules and regulations, the more the gap between the two sides’ post-Brexit relationship will be, on account of barriers that would have to be fabricated to protect the essence of EU’s single market.

The PM Johnson’s government vow for a regulatory divergence from the EU could also endanger its core financial services sector. The Chancellor, Mr Javid also emphasized upon the fact that trade with EU27 would be conducted on the basis of an outcome-oriented equivalence of positions. The biggest catch with this model is that access could be retracted unilaterally by the European Union if Britain’s regulations would veer too far from the EU’s own standards.

The UK’s approach to financial services will derive from its own independent equivalence decision, not through negotiations as one EU official pointed out. The current process is that the EU decides whether a country's rules and supervision can be deemed at par with its own standards and regulations.

PM Johnson is set to ratify immigration check on the low-skilled workforce.

Also, it looks that immigration is set to become the latest cliff-hanger between the government and businesses this week as PM Johnson is all set turn its back on a vow meant to delay new restrictions on low-skilled workers coming into the country after the EU-UK withdrawal.

The white immigration paper that was released in 2018 had recommended a two-year time-period for interim short-term workers to come to Britain in response to pressure from employers.

But recently one official from PM Johnson’s government stated that the cabinet was expected to discuss plans this week with the political wish is to consider not allowing the transition but stressed that no decision has yet been taken.

After the December 2019 electoral victory, PM Johnson has not signalled whether he would back the transition period sought by the businesses based out in the UK, which argues that a new points-based immigration system would leave a skills shortage in the country.

The business lobby wants the government to phase-in the changes over two years rather than suddenly implementing the new rules in January next year.

The UK business community also under the impression that an immediate introduction of the rules, primarily hinged on Australia’s point-based immigration system, could lead to skills shortages in the country's cornerstone industries.

Business leaders said they were concerned over the potential change in the implementation of the new rules, which had already been a worry given the importance of lower-skilled workers to many areas of industry and services.

Jane Gratton | Head of people policy at the British Chambers of Commerce said that at a time of critical skills shortages and substantial changes, these proposals would create further barriers to firms from accessing the staff they need.

The major concern among the British employers is that the new system would make it difficult to employ an EU staff or worker in low-paid industries such as food processing, construction and social care. As per a media report, the minimum average annual salary for non-EU skilled worker visa is currently set at £30,000, but more than 75% of EU workers in the UK earn less than this.