Sunday, 4 September 2016

Where we are now

This new blog will comment on the aftermath of the UK Referendum decision to leave the European Union. It starts from the position that this decision was a national catastrophe to which I was completely opposed, and that it was made on the basis of persistent, shameless lies from the Leave campaign which seriously mislead the British people. However, the blog will not attempt to re-argue the case for remaining in the EU or for the reversal of the decision, as I do not think that this is in prospect. Instead, I will analyse the unfolding consequences. As an opening post, I will summarise the current situation and in future posts discuss issues and developments as they emerge.

As the summer ends, serious consideration of the consequences of the vote to leave the EU begins. Thus far, the British Prime Minister Theresa May has been able to get away with the formula ‘Brexit means Brexit’ and thus avoid the obvious questions about what this actually means. It is not entirely meaningless, as it is a political signal to Brexiters, especially in her own party, that there will be no further referendum nor a parliamentary vote to overturn the result. But it does not answer the question – never answered by the leave campaigners – as to what being out consists of. The crucial fault line is between remaining a member of the single market (‘Brexit-lite’) or being outside it and having perhaps some form of trade deal (‘hard Brexit’).

These are entirely different scenarios (as I explained in a pre-Referendum article) even though both are forms of not being in the EU, and before long the UK is going to have to decide which it will aim for. Some politicians are still talking as if it is possible to remain in the single market but be exempt from freedom of movement. That is a fantasy. It might be possible to have single market membership with an enhanced ‘brake’ on free movement, but it is unlikely that even this would satisfy the Brexiters, many of whom are already insisting that only hard Brexit will honour the Referendum result. May’s own position remains completely unclear and contradictory, in that sometimes she speaks of immigration being the key issue, and other times implying otherwise.

Ultimately May will have to decide whether to take the political hit of continued free movement or the economic hit of being outside the single market. It may be that, by appointing prominent Brexiters to lead the negotiations, she is playing a subtle long-game, anticipating that (as is already beginning to happen) they will fall out amongst themselves and fail to come up with a viable plan. It’s equally possible that having seen her party jettison successive leaders over the issue of the EU she is determined to do anything to avoid alienating its Eurosceptics. If the latter, then it carries some dangers for a party that has always had close links with, and relied on funding from, big business and the City in particular.

How the latter plays out depends on the economic consequences of Brexit, which have so far been contradictory and muted. Initial dramatic fluctuations in currency and stock markets have abated, but this really means nothing. The vote was akin to dropping an economic depth charge: a huge splash, followed by an eery silence. The explosion will come later, perhaps when Lisbon Article 50 is triggered, or perhaps when it becomes clear what kind of deal is in prospect which might happen before or after that. Until then, there is little point in following each and every economic indicator. That does not however mean that beneath the surface important things are and are not happening in terms of, for example, deferred investment decisions, as well as adverse consequences for British science. Politically, too, the strategic damage of the UK ceasing to be the fulcrum of US/EU relations is beginning because this will occur regardless of the form Brexit takes. In fact, this is likely to ultimately be as significant as the economic damage and I suspect that within a few years the already existing calls for the UK to cease to be a member of the UN Permanent Security Council will become greater and will be successful.

The complexity of removing the UK from the EU is daunting to the point of impossibility, and goes well beyond the issue of the single market. The entire framework of legislation and security, as well as (under hard Brexit) the status of British people in rEU and Europeans in the UK will all have to be negotiated. One of the ironies of the situation is that those who will have to deliver Brexit are by and large those who realise that it is as impossible as it is undesirable. As a result, there are already noises from Brexiters that civil servants are obstructing British exit. We will hear much more of that in the future as the complete lack of realism of Brexit becomes impossible to avoid. Over a whole swathe of issues (the leaving process, the nature of the single market, the way that the WTO and trade deals work etc.) the Brexit position is composed of, at best, half-truths or just outright fantasies. It is therefore inevitable that the coming months and years will see a series of collisions between these fantasies and the realities (and equally inevitable that Brexiters will blame this on others).

Crucial to this is that whereas Euroscepticism has hitherto been a matter of domestic UK politics – and the Referendum itself arose from this – the reality of Brexit means that it has to engage with the wider world. That means firstly, of course, the EU itself. It will no longer be good enough to make airy claims about what the EU is ‘bound to do’, or to expect any particular goodwill. Brexit poses serious problems for the EU and there must be a strong presumption that anything that looks like a good deal for the UK will be avoided, for fear of further defections. Indeed, it cannot automatically be assumed that the scenarios of Brexit-lite or hard Brexit are available for the taking, whatever the UK government may decide to aim for.

The non-EU world matters, as well. Part of the Brexit dream is of a world-wide web of new trade agreements. There is some irony in that, as part of the Brexit case was a protectionist, anti-globalization one. But its leaders were almost entirely global free marketers and one of them, Liam Fox, is charged with making new trade deals. That again will be a long-term matter, and one danger is that in a desire to show that deals can be struck, bad deals will be struck. At all events non-EU countries like the US and Japan are already making it clear that their diplomatic pre-referendum warnings that the UK would be isolated were not idle.

It is ironic that the core Brexit claim that leaving would enable the UK ‘to take back control’ actually entails a far greater dependence on gaining agreements with other countries, most of which regard Brexit with bemusement, amusement or outright alarm. Ironic, too, that having supposedly taken back control the Brexiters seem to have no idea what it is that they actually now want to do. It is this strange new landscape that I will comment on in the months and years to come.

No comments:

Post a Comment

Note: only a member of this blog may post a comment.