A quick EU trade deal will be better than no deal for Boris Johnson – the clock is already ticking

On Brexit, Boris Johnson’s honeymoon will be sweet but short. His huge majority means he will be able to push the bill implementing his withdrawal agreement through parliament quickly, and take the UK out of the EU on 31 January.

Then comes the hard part – negotiations on a long-term trade deal with the EU. Johnson has given this very little attention. Cabinet ministers admit privately they have barely discussed the critical question of how far the UK should diverge from the EU.

In Brussels, the election result has been welcomed because, as one insider told me, “it will provide some clarity and some speed”. Some senior EU figures quietly hoped for a hung parliament and minority Labour government committed to a Final Say referendum that might have kept the UK in the EU club, and its £9bn-a-year membership fee in EU coffers.

But there is “Brexhaustion” among the 27 EU governments as well as among UK voters. The prospect of a further nine-month extension to UK membership to allow time for a referendum, and negotiating a soft Brexit with Labour, filled some EU politicians with dread.

Brussels is gearing up for trade talks that could prove more problematic than the tortuous negotiations over the divorce agreement. EU officials believe Johnson has unwittingly handed them a powerful weapon. To win the tacit support of Nigel Farage and the withdrawal of half his Brexit Party’s candidates, Johnson promised not to extend the transitional period that will keep the UK in the single market and customs union until December 2020. That leaves just 11 months to strike a detailed agreement that some in Whitehall believe will take three years. Brussels thinks Johnson’s timetable is unrealistic, as The Independent revealed this week.

“Time is on our side,” said one EU diplomat. Before long, we can expect Michel Barnier, the EU’s suave chief negotiator, to reprise his favourite line: “The clock is ticking.”

The withdrawal agreement allows the UK to request an extension of the transitional period for up to two years, which EU leaders would need to approve next June. They would do so, believing the extra time would create enough space for a wider agreement on the long-term relationship, covering issues such as security, data protection and financial services as well as trade in goods.

Johnson’s majority is big enough to allow him to break his manifesto promise. The 20 hardline Brexiteers in the European Research Group would hate it, but he is no longer dependent on their votes.

So while he could extend the transition, he might be reluctant to do so. To avoid that, he could strike a deal in 11 months, but might then, in the words of one Whitehall source, “have to swallow a bad deal” in which the UK would remain closely aligned to EU regulations. Such a “level playing field” will be the EU’s top line demand, in an attempt to prevent the UK enjoying a competitive advantage. Charles Michel, the president of the European Council, made this very clear today as EU leaders held their regular summit, without the UK at the table for the first time since it joined in 1973.

Johnson’s instinct will be to diverge from the EU – which, after all, was one of the purposes of Brexit. But he will face conflicting pressures. Some of the newly elected Tory MPs, such as those representing the manufacturing areas of the West Midlands, will want to see frictionless trade with the EU, which would mean swallowing EU regulation. One Tory adviser predicts that such political considerations will push the prime minister into a slightly softer version of Brexit. “He has now got the authority and the parliamentary numbers to do what he wants,” he said. “A majority of 78 is very different to a majority of 20.”

If no agreement is reached by next December and Johnson does not extend the transition, the UK would trade with the EU on World Trade Organisation terms from January 2021, complete with tariffs. This new “no-deal” scenario would alarm business and the economy would surely take a hit. It wouldn’t play well with his new band of MPs.

Johnson will probably want to avoid such a cliff edge. He would never call it a bad deal, but may decide, to paraphrase Theresa May, that a quick deal is better than no deal.