Boris Johnson must strike a deal to extend the EU transition period because of the coronavirus crisis, the Labour leadership contender Lisa Nandy has said.
Nandy, who is one of three candidates, said it was necessary because businesses and communities could not cope with the uncertainty of leaving the transition as well as the impact of the growing coronavirus crisis.
Writing for the Guardian, she said: “British companies who trade with the EU do not know what terms they’ll be trading on in 10 months’ time. Add to this the falling demand and disruption created by coronavirus and it is reasonable to expect many businesses will not survive.”
Nandy’s intervention comes as concerns grow over the scale of the economic impact likely to result from coronavirus, with the FTSE index falling more than 7% on Monday and fears of a global recession rising.
The government has categorically ruled out extending the Brexit transition period, with the chancellor, Rishi Sunak, saying there was no need for that to happen under any circumstances.
But Nandy argued that the government had left itself without options. “The government has boxed itself into a corner by legislating to end the transition period in December come what may,” she said.
“It now faces a direct choice between narrow partisan ideology and the interests of the nation. An extension will mean that British citizens living abroad will be able to access free healthcare for at least another year, that we are able to continue to access the early warning and response system (EWRS) that helped us coordinate Sars and bird flu. Public safety is at stake. This must happen now.”
She argued that the government must “take a long-term approach to this crisis” and look to minimise uncertainty where it can, as Labour did during the financial crisis.
And she suggested the Bank of England could also reduce interest rates and introduce a government-backed guarantee to ensure loans were provided to companies that fell into trouble.
“We should immediately establish an emergency economic council and include those who have experience of dealing with the 2008 financial crisis, unions and business leaders to monitor the economic situation as it evolves – introducing further measures such as reducing VAT rates and allowing for payment holidays to keep firms afloat, as well as help for people at risk of losing their homes,” she wrote.
Her other suggestions included extending statutory sick pay to avoid a “public health disaster waiting to happen” if self-employed people and those working in the “gig economy” could not afford to self-isolate, and a “Marshall plan” to protect over-65s, with a greater focus on social care and funding charities that help the vulnerable.
Earlier on Monday, the shadow chancellor, John McDonnell, said the government should have acted sooner to protect the economy from the effects of coronavirus.
“The prime minister should have called Cobra sooner. Days and hours matter when you are dealing with a crisis of this significance and urgency,” he said in a speech on Monday morning. “The chancellor also should have made clear immediately, 10 days ago, in a major public statement and to arliament that the government stood ready to do everything necessary to support our economy and to participate in global action to maintain market confidence … Attempting to let out assuring noises in dribs and drabs is not enough and has proved to be not enough.”
He also called for the coordination by the Treasury with the Bank of England, the Office for Budget Responsibility and the business bodies and TUC of an overall and regular ongoing assessment of the potential impacts of the spread of the virus.