IMF Urges the EU and The UK To Extend Brexit Trade Talk Date

The managing director of IMF Kristalina Georgieva has urged both the United Kingdom and European Union to extend the Brexit trade talks date so as to give breathing space to the economies of both sides, who are currently battling the slowdown that has been induced by the coronavirus pandemic. It is to be noted here that earlier in the month of March such a request was also made by some European Union Parliamentarians, urging the British side to consider a Brexit transition period extension to which the Irish finance minister had said that the British side is fully committed to complete the Brexit process in time despite the coronavirus inflicted slowdown. However, just as the IMF director was giving her statements in an interview with the BBC, negotiators from both sides resumed their talks via video conferencing and reiterated to complete the negotiation process by 31 December 2020 as had been originally planned.

The latest meeting between the United Kingdom and European Union was scheduled to take place at the end of March, just before the pandemic lockdown was put in place. Though both sides are committing to the negotiations process, it seems the idea of putting off the tentative date of Brexit has more supporters in European union than in the United Kingdom. Despite the constantly growing severity of the pandemic situation being well understood on both sides, the British side is more adamant as it believes, it is in the better interest of the British Public who had voted the new government to power on the poll plank of the pullout. The new British government has drawn up massive expansion plans to drive its economy to new highs, which if materialise will put it in the group of a few select emerging countries, which are currently experiencing very high rates of growth. Prime minister Johnson who had been an ardent supporter of the British pullout from the European Union had promised the country that he will enter into a larger and more lucrative deal than the European Union deal to be chalked up with the United States which will put the country in high gear and several years ahead of its European counterparts. Keeping true to its promises the government has rolled out a substantial public expenditure programme in its budget presented on 11th of March in which nearly £640 billion of spending has been earmarked for rebuilding the infrastructure and rejuvenating the productivity so that it becomes future-ready to propel the country to the forefront and make it one of the most economically and technologically advanced countries of the world.

In the run-up to Brexit, massive logistical bottlenecks had emerged on the flow of goods between the British side the European Union side. Import of high-tech components, niche engineering goods and general merchandise flowing from smaller European countries into the hands of manufacturers and traders in the United Kingdom had helped the country to stay competitive for a long time. However, the British decision to withdraw has put the fortunes of these businesses on both sides in Jeopardy. As the movement of these goods across the border was restricted and started attracting higher tariffs, it forced British producers to look for alternative procurement sources like China to get these materials. Now that China is also in lockdown and its factories are shut shipments of any kind of material from the country are delayed indefinitely. This has put the British manufacturers and traders in a fix as they must turn back to the European Union to keep its production lines running. Given the situation, it is being advocated that extending the Brexit date will open supply lines for British businesses helping them, thereby to restore production immediately, while the situation continues to improve in China. The restoration of supply lines from Europe will not only provide an immediate replacement for suppliers from China but will also provide the domestic businesses with enough scope to work and develop alternative procurement resources so that a repeat of the current situation does not take place.

The coronavirus pandemic has created an unprecedented situation in Europe with most of the countries on the verge of recession. While the European central bank is making an all-out effort to help out all countries in the region who are putting in all their best efforts to keep the adverse economic impact of the pandemic to the minimum possible, a coordinated effort by the regional players will go a long way in mitigating the conditions and ensuring that the whole region comes out of the bad situation fairly quickly. The head of the IMF, while speaking on the subject stated that she really hoped that all policymakers in all countries would be contemplating ways and means to mitigate the uncertainties, which in this situation could be highly detrimental for the economic health of the region. She further stated that the situation had become very tough already and urged the policymakers to not to exacerbate it any further. She advised all that the situation demands that it would be in the best interests of everybody to seek ways in which the current atmosphere of uncertainty is mitigated by the best efforts of all in the best interests each, the United Kingdom, the European Union, as well as the entire world.

On the British side, however, it seems the thinking is somewhat different; they seem to believe that pushing the Brexit date will bring in more uncertainty in the minds of people and businesses in the country. The immediate improvement in the economic fundamentals of the country past the 12th December 2019 general election victory verdict is the reasoning that the current government has to fulfil its promise. Coming back to the day's back started meeting between Brexit negotiators from both sides via video conferencing, both sides have arrived at an agreement on a timetable within which the United Kingdom and the European Union would conclude a trade agreement remotely through video conferencing. The parties have further stated that next negotiation meetings are scheduled for the weeks commencing on 20th of April, 11th of May and 1st of June this year. In furtherance of the discussions being carried out at the negotiations, a statement from Number 10 Downing Street was released which stated that both the negotiators have agreed in the meeting that the two sides would priorities the proper and timely implementation of the withdrawal agreement to the best long term economic interests of both sides.


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