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Can the UK really afford a trade war with the EU?

Threats by Boris Johnson’s government to abandon the Northern Ireland protocol are likely to be mere posturing.

By Freddie Hayward

The government is set to announce plans to override parts of the Northern Ireland protocol of the Brexit deal today in a move that risks a trade war with the EU. The government claims that the current arrangement undermines the Good Friday Agreement because it doesn’t command the support of the DUP, which has said that it won’t re-join the Northern Ireland executive until the protocol — which effectively puts a border in the Irish Sea to avoid having one on the island of Ireland — is overhauled.

Mooted proposals include creating a “green lane” without checks for British goods that will remain in Northern Ireland and allowing Northern Irish businesses to choose whether they want to follow EU or UK regulations. In the meantime, negotiations with the EU continue and the government says that today’s announcement is merely an insurance policy in case they fail to reach an agreement.

Although the EU has not detailed how it would respond to the UK overriding the protocol, a potential trade war with our biggest trading partner — on top of the frictions Brexit has already created — would weaken an economy that is in a precarious position. A warning yesterday from the governor of the Bank of England, Andrew Bailey, that the rise in prices will be “apocalyptic” only makes those concerns about the EU’s reaction more acute.

Which brings us to a more fundamental problem for the government. Boris Johnson negotiated the protocol after voters gave him an 80-seat majority in the 2019 general election. Delivering on his pledge to get Brexit “done” was the keystone of his first year in office. Now, however, politics is in a different place. The rising cost of living is the dominant issue for voters and Brexit has slipped down their list of priorities. As the economic hardship of Brexit comes to bear, the prospect of a trade war with the EU in return for rehashing the withdrawal deal will look less and less attractive for voters. That weakens the government’s hand. It also increases the likelihood that today’s announcement is more of a posture than a serious threat.

This piece first appeared in the Morning Call newsletter; subscribe here.

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