Rishi Sunak treading fine line over hated Brexit bill over EU threat

Rishi Sunak 'more mindful' of market movements says Usherwood

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Rishi Sunak has been warned moving forward with the Northern Ireland Protocol bill could backfire on the UK’s already bruised economy. His Chancellor Jeremy Hunt is trying to get the country’s economy back on track after Liz Truss’ disastrous mini-budget and restore trust of foreign markets with a flurry of spending cuts and tax hikes. If the Prime Minister decides to go ahead with the Brexit bill, the European Union could deal a fatal blow to Rishi Sunak’s hopes of recovering the economy, a political analyst at The Open University warned. 

When asked about how Rishi Sunak’s EU policy will differ from his predecessor, Dr Simon Usherwood told Express.co.uk: “There is a lot more continuity that I see at the moment [between Rishi Sunak and Liz Truss]. 

“But Rishi Sunak is, I think, much more aware of the impact on the markets, on policy-making. 

“So, we saw that with the reaction of markets to Liz Truss’ mini-budget and that spills over into the EU issue that if the UK does continue to go down a track of wanting to disapply all or parts of the Northern Ireland Protocol, then that’s going to get a response from the EU, which will include some form of retaliation. 

“Likely some form of sanctions on trade.”

Rishi Sunak’s Chancellor Jeremy Hunt is pulling his whole weight behind a series of austerity measures to revive the economy and restore trust of foreign markets, as the country is heading for a recession. But it could lose the foreign markets’ trust by adopting the Northern Ireland Protocol bill.

Dr Usherwood said: “And that’s going to be an issue and that’s going to provide a lot of reasons for markets to say: ‘This doesn’t look like a responsible move by the governrment that has many other things on its plate’. 

“I think there is a difference in that Sunak is more mindful of the impact of market movements and the potential for the EU issue to spill over in that way. 

“I think we might see a continuation of Liz Truss’ warm words but whether that results in a change of policy, I think the jury is still out on that one.”

When asked how the EU could sanction the UK, Dr Usherwood said: “The EU has clearly spent a lot of time thinking about this preparing for it should it become an eventuality. And it’s been the case ever since the Internal Market bill a couple of years ago that this was something that they had to hink about. 

“What the EU has said publicly is that the move to have the Northern Ireland Protocol bill would be seen as an unfriendly move by the UK and would get a response. 

“What they’ve also done is they’ve not said exactly what that response would be because they don’t want to get into a situation where British politicians make calculation about what the hit is and decide that they’re prepared because that’s going to make the situation worse. 

“So, there’s a degree of uncertainty about precisely what that would involve.”

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Pressed to detail what retaliatory measures the EU could adopt, Dr Usherwood said the EU could trigger the dispute settlement mechanism within the withdrawal agreement. 

The move would involve imposing tariffs, raising duties on UK goods, more stringent checks, which have not yet fully come into force. 

Dr Usherwood said: “So, the EU would potentially be a bit more bureaucratic about the way that it does things and go by the letter of the agreement, which would result in a considerable stiffening of friction at borders, whether that’s the Irish border but also more significantly for the UK across the Channel into France, Belgium and The Netherlands.

“If you think of the queues and the disruption that there has been at various points over the summer, we could well see much more significant delays just by having a more systematic checking of passports, checking of paperwork, everything done by the book.

“All of that is a possibility but I think until the UK actually goes down this road, you won’t actually know quite what it is.”

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