Five years on: stuck

As we approach the fifth anniversary of officially leaving the EU, even those who still profess to support Brexit are hard-pressed to explain what the point of it was, and scarcely bother to try. That lack of purpose was underscored by Kemi Badenoch's recent admission that the Conservatives took Britain out of the EU “without a plan for growth”. This wasn’t, as some have taken it to be, an expression of ‘Bregret’, but it was the first time a senior Tory has accepted that the manner in which Brexit was enacted was flawed and, at least by implication, flawed in ways which have done economic damage. Effectively, Badenoch repeated the critique Farage made in 2023 of the Tories’ handling of Brexit, one which Rishi Sunak denied at the time.

In that sense, it was a relatively easy critique to make, since the Tories are no longer in power, and Brexit is always at its shiny best when presented by those without responsibility for its implementation. What, like Farage, Badenoch cannot admit is that this lack of a growth plan (or any plan) was inherent to Brexit and not simply a matter of ‘mismanagement’. On the one hand, there was no way of delivering Brexit that would not have been economically damaging. On the other hand, there was no consensus view amongst Brexit’s advocates and voters as to what the (economic) plan of Brexit was meant to be. So it’s not just that any Brexit plan would have been damaging, it’s that there was no political basis on which to make even a damaging plan.

A Brexit wobble?

Nevertheless, Badenoch’s admission is significant, especially when taken in conjunction with the very different intervention from the LibDem leader Ed Davey, calling for the UK to agree a new customs union with the EU. As Lewis Goodall of the News Agents pointed out on his Substack last week, these developments mark a “wobbling” of the “shallow but broad political consensus in Westminster [whereby] no-one much liked [the Johnson agreement] but few wanted to re-open it, for fear of the daemons therein”. That assessment of Westminster is broadly true, especially given the reduced SNP presence in the current parliament, and it is certainly true that for both Tories and LibDems what their leaders have now said represents a departure from their election manifestos.

It is, however, only a ‘wobble’. Brexit still isn’t, for now at least, a major, overt part of political debate, and I think Goodall is right to say that the immediate consequences for how the government acts in relation to post-Brexit decisions are quite limited. Badenoch’s comments at least give cover for Keir Starmer’s line that the Tories made a mess of Brexit, whilst those of Davey at least potentially extended the terrain of what is discussable. But – and it is a very big ‘but’ – there is very little sign that the government has any desire, or even any idea, of how to escape from the very narrow parameters it has assigned to Brexit.

Labour’s narrow vision

More specifically, it is striking that, the ‘reset’ notwithstanding, Starmer’s government’s approach to Brexit sounds very similar to Badenoch’s, and, actually, to Rishi Sunak’s. Thus, Business and Trade Secretary Jonathan Reynolds dismissed Davey’s intervention as showing that the LibDems “only ever think about Europe” and babbled about how “this is a government that wants to improve that relationship with the EU but also wants to do work with the US, with India, with the Gulf”. That’s boilerplate Brexiter stuff, which could as easily have been said by Sunak.

Where both Reynolds and Rachel Reeves have an at least arguably better case is in saying that part of the cost of Brexit was the political instability and business uncertainty it created, and that revisiting the question of a customs union would mark a return to that. After all, how viable would it be to do so when there is a fair prospect of a Tory, or even a Tory-Reform, government returning, Trump-like, in 2029 to reverse it? On other hand, if economic growth is the government’s central mission, that is what should be driving policy. There’s not much point in banging on about having a ‘Plan for Change’ and then discounting change because it would produce instability. At all events, even if the government judges that a customs treaty is not politically feasible now, Starmer could still have made use of the opportunity Davey provided to nudge Labour’s Brexit parameters just a little.

Even leaving aside a customs union, the most obvious way to do so would have been to signal an intention to rejoin the Pan-Euro-Mediterranean (PEM) Convention on rules of origin. The case for doing so has been discussed again recently by customs expert Dr Anna Jerzweska and, crucially, it is something which would sit within the framework of the existing Trade and Cooperation Agreement (TCA). Significantly, this week Maros Sefcovic indicated that the EU is open to the idea of the UK joining PEM.

Even for the most rabid Brexiter, PEM membership is actually fairly uncontroversial, to the extent that the ‘instability’ argument almost certainly doesn’t apply. It’s not difficult to imagine that the Sunak government would have done it, and it’s quite likely, in my view, that it will eventually become Labour policy (the government had already begun consulting businesses about the idea). But it would have been far better had the overture come from the government when Davey provided an opening (if not, indeed, before) as something the UK is pro-actively seeking as being in the national interest.

As it is, Sefcovic’s comments have already been reported in the pro-Brexit press under the headline “EU plots to drag UK back into bloc”. No doubt something similar would be said had Starmer proposed it, but had he done so it would have put the government on the front foot. Instead, Labour are reduced to making the mealy-mouthed response that the UK “does not currently have plans” to join PEM, whilst confirming that doing so would not cross the government's 'red lines'. This keeps the door ajar, but also invites cries of ‘giving in to the EU’ were the government ever to step through it. It’s truly pathetic.

An even more striking illustration of the continuity of Labour and Tory policy is how, when Badenoch was asked how she would approach Brexit if she were in power, she came out with exploiting areas like technology and AI. This, of course, was Sunak’s pet project and, now, has been adopted by Starmer as the key to delivering “a decade of national renewal” with his rather oddly-worded desire to “mainline AI into the veins of this enterprising nation”. Such an ambition might not, in itself, be related to Brexit, but the government clearly sees it as being so. Thus, according to Reeves:

“There are opportunities outside the European Union, opportunities, for example, like AI, where we have a very different regulatory approach to AI compared to the European Union’s approach. That makes Britain a more attractive place for AI and tech companies to invest than in other European countries.”

Once again, this is boilerplate Brexiter stuff.

Strategic incoherence

The convergence of how Starmer and the previous Tory government talk about AI regulation is the starting point of an excellent piece by Joël Reland of UKICE. In it, he points to other ways in which the current government shows a proclivity to “flirt” with regulatory divergence whereas, in practice, “its revealed preference … is to align with EU standards”. This preference was further revealed by the government’s decision this week not to allow the ‘Stormont Brake’ to be pulled over chemical labelling regulations. This was the latest evidence that, as the BBC’s John Campbell argues, the government’s general approach will be to align the whole of the UK with any EU rules which apply, by virtue of the Protocol and Windsor Framework, to Northern Ireland.

There are several points within Reland’s analysis which are worth flagging or amplifying. One of these is the basic fact “that the UK is a second-order regulatory power”, and always liable to be pulled by ‘the Brussels Effect’ towards EU regulations. This would be the case anyway, because so much of the UK’s trade and supply chains are bound up with the EU, but, as the story about chemicals labelling illustrates, Northern Ireland makes it more so. That’s because, at least as regards goods regulation, UK-EU divergence also has the consequence of GB-NI divergence, so to avoid the latter requires also avoiding the former.

Another important point made by Reland is that Labour’s approach has, or potentially has, numerous contradictions because decisions taken in one regulatory area can conflict with those taken in another. This, I think, is the flip-side of, or perhaps just another way of expressing, the argument I made last August about Labour’s lack of a post-Brexit strategy. That argument was more focussed on what the government wants from ‘the reset’ per se but this is inseparable from a coherent regulatory strategy.

For example, it was reported in the FT on 8 January (£) that UK plans to diverge on gene editing regulation* are being delayed as they would potentially make the government’s key stated reset objective of an SPS deal impossible to achieve. However, the article reported:

“Defra declined to comment when asked whether it was delaying the legislation as a result of the warnings from Brussels. It also declined to repeat on the record its previous commitments to introduce the legislation or set a timetable for doing so.” 

Yet the next day, in the same paper, it was reported (£) that the Environment Secretary had said that the UK (presumably, Great Britain) would go ahead, with the legislation to come into force by the end of March.

It remains to be seen what will happen, but the point is that these reports, in a reputable outlet, written by reputable authors (including Peter Foster, who was a co-author of both of them), and published just a day apart, were able to tell quite different stories because the government itself failed to provide a consistent line.

What this illustrates isn’t (simply) the incoherence of the government’s approach, it is the incoherence of Brexit itself. Specifically, Brexit was wrongly seen as a way of removing regulatory ‘red tape’ and also as a way of gaining regulatory independence. From that, a great deal has flowed for what Brexit has meant in practice, but two issues, in particular, are now coming to the fore.

Lack of regulatory capacity

One, which is highlighted by Reland and by yet another recent piece by Peter Foster in the FT (£), is that it has thrown so much responsibility for regulatory infrastructure on to domestic agencies. It is not just post-Brexit trade and customs bureaucracy which have made nonsense of the Brexiter claim that leaving the EU would reduce ‘red tape’, it is also the repatriation of regulatory functions. Regulatory independence does not simply mean, as the Brexiters’ simplistic slogan had it, “taking back control of our laws.” It also entails developing regulatory capacity, as what was once provided on a pooled basis by the EU now has to be provided by the UK.

Right across the board, the British State is creaking under the weight of these demands, with underfunded, understaffed, and underperforming agencies. Examples given by Foster include the Food Standards Agency, the Competition and Markets Authority, the Health and Safety Executive, and the Medical and Healthcare Products Regulatory Agency. Now, and partly in response to this, the government has created the Regulatory Innovation Office, to update regulation and speed up decisions, with a particular focus on high-tech areas.

This may be no bad idea, including its recognition of the interconnectedness of some of these areas, but that also means that it sits astride a number of existing agencies, including some of those just mentioned. Arguably, that just adds another layer of organizational complexity and cost to an already creaking regulatory infrastructure. After all, there is something rather ‘Yes Minister’ about a kind of ‘regulator to regulate regulators’ in order to ‘cut red tape’. So, for now, the jury must be out on whether all this can possibly add up to the regulatory ‘nimbleness and agility’ promised by Brexiters in the past, and now embraced by Labour as part of its growth agenda.

The cold world of geo-politics

Whilst the Brexit policy of ‘regulatory independence’ creates many new costs, the second issue arising from it is that it is based on an illusion which founders on the rock of geo-political reality. This is partly the familiar matter of there being two or perhaps three regulatory superpowers, the US, the EU, and China. But, more particularly, it is about how, exacerbated by the return of Donald Trump, regulation is both an arena and a weapon of international conflict and competition. That is currently most evident in relation to social media regulation and AI regulation, but it also extends to less high-profile areas.

Many of these issues are highlighted in a recent, excellent, report from Marley Morris of IPPR on UK trade strategy. It is a wide-ranging analysis which is well worth reading in full, but, to take one example, before long, the UK needs to decide about whether to seek linkage of EU and UK Emissions Trading Schemes (ETS). Doing so, as Foster points out in his discussion of the IPPR report, is likely to be seen negatively by Trump. So, whilst this may be a decision for the UK, it is not one which can be taken in isolation.

The wider implication is that Trump’s ‘with me or against me' world view means that he will treat any UK decision – not just about relations with the EU, but with China, Russia, etc. – as a hostile act and a personal affront. And, in Trump-world, that means punishment. It is this world view which, as Rafael Behr argues, is rapidly going to force the UK to make “hard choices” which need to be “informed by a coherent strategic purpose”, and these choices go well beyond, though they include, those relating to trade and regulation.

In turn, this exposes the paucity of Brexit as a project of ‘sovereignty’. Not only was ‘freedom from Brussels’ largely illusory, it also increased Britain’s exposure to international power plays at precisely the time they have become more vicious and less predictable.

Is a strategy even possible?

In this sense, post-Brexit Britain’s problems are not simply those of lacking a plan for what to do with Brexit, they are those of being saddled with something with which little can be done. Having been touted as the solution to all Britain’s problems, Brexit has now become Britain’s foremost insoluble problem.

The Brexiters certainly don’t have an answer, and, if they say anything at all, simply continue to repeat already failed ideas, the most recent example being an embarrassingly feeble analysis by ‘Brexit brain’ Shanker Singham. It includes another outing for wide-ranging ‘mutual recognition agreements’ as the solution to the damage of Brexit. Meanwhile, poor old Robert Tombs, one of the original ‘Brains for Brexit’ is reduced to pondering why he was wrong to have “imprudently predicted that life outside the EU would so quickly be taken for granted that it would be hard to find anyone admitting to having voted ‘Remain’” only to come up with the half-baked idea that “Anti-Brexitism has become part of the ‘woke’ agenda.”

However, the Labour government has no real answer either. And whilst I agree with Behr, Reland, Marley and others who, in various ways, argue about the need to develop a coherent post-Brexit strategy, perhaps the stark reality is that no such strategy is possible: Brexit was strategically incoherent from the outset, and has only become more so. If that is so, there are just different versions of muddling through, some slightly better and some slightly worse, although the difference, small as it may be, shouldn’t be completely dismissed.

Of course, many people, perhaps especially readers of this blog, would say that there is an obvious answer, and it is to join the EU. And, although that wouldn’t resolve every problem for Britain, with Trump embarking on a far more internationally aggressive presidency than his first, and his acolytes explicitly attacking our country, the case to openly re-evaluate Brexit is stronger than ever. But, the recent ‘wobble’ notwithstanding, there’s no real sign of that happening. In May 2019, I wrote about Brexit as “an aporia, a pathless path, with no way forward and no way back”. Five years on from leaving the EU, that remains the case.

 

 

*This has long been seen, not just by Brexiters but by many scientists and commentators, as a regulatory area where the UK could benefit from divergence, and legislation has long been in progress (see my post of February 2022 for some discussion). But my point here isn’t about whether it is desirable or not, but about how it illustrates the lack of a coherently designed and clearly communicated regulatory strategy.

Welcome to 2025

In one way, it has been a quiet period for Brexit news since my previous, pre-Christmas, post. That is hardly surprising, given the season. But it is only true if Brexit is understood in its narrow and literal sense. Understood in the wider sense of the unfolding of populist politics, 2025 has started with a noisy tumult, of a volume and variety which make it hard to analyze. For personal reasons (my mother died this week), this is a much shorter post than usual, but there is already no doubt that this is going to be an eventful Brexit year.

Brexit costs, again

Starting with the narrower and more literal issues, there has been another outbreak of claim and counter-claim about the costs of Brexit, largely sparked by a report in The Independent trying to summarize these costs. It referred to many of the studies and estimates which I’ve discussed previously on the blog, and provoked the usual criticisms of those estimates from the usual Brexiters (£).

Some of those criticisms have a spark of validity. In particular, as I’ve pointed out before, it is correct to say it is misleading to describe the ‘divorce bill’ as a cost of Brexit because they are payments for liabilities the UK had incurred as an EU member so, in that sense, would have been paid one way or another regardless of Brexit. Nevertheless, it shouldn’t be forgotten that many Brexiters insisted, amongst them Nigel Farage, that there would be no ‘divorce settlement’ to pay or, even, that the EU would owe money to the UK. Even when installed as Foreign Secretary, Boris Johnson said the EU could “go whistle” for a financial settlement.

The only research mentioned by The Independent which I haven’t previously covered, because it came after I’d written my previous post, was a recent study by the LSE Centre for Economic Performance. As was widely reported, this estimated that in the in the first two years since the transition period ended the UK had “only” lost £27 billion in trade, and that although this had been a “disaster” for small businesses, this is less, so far, than would have been expected from the long-term (15 year) OBR prediction. This caused much back-slapping in Brexiter circles (where the usual objections of it being too early to tell, impossible to estimate, and academics all being remainer stooges were suddenly forgotten). Yet it is hard to see why they should be so gleeful, since Brexit was sold on the basis that it was going to be of positive benefit.

So this, coming up to five years since the day we formally left the EU, is the level to which the grand promises of Brexit have brought us: arguing over just how bad the damage has been. Not a single leading advocate for Brexit has ever apologized for the promises they made. At best, they shrug them off as having been thwarted by remainers and the EU.

How we got here, again

That, too, isn’t a news item, but I am in the process of reading Tim Shipman’s Out, a massive tome which provides a lot of crunchy detail about the politics of the Brexit process, and it serves as reminder of what actually happened in those years. Admittedly, it is only a reminder of a certain sort, not because it is biased in any crass way but because it takes as its frame of reference the idea that this was a negotiation in which the outcomes were about the political power-plays between Johnson’s government, the domestic ‘Bresistance’, and the EU.

In those terms, it is highly informative. But what is missing (unless it comes further on than I have yet read) is an understanding of the real legal parameters in play. In particular, on the key issue of the Northern Ireland border, it proceeds as if a borderless hard Brexit was, in principle, a possibility, and what was at stake was simply whether or not it could be negotiated. In this sense, intentionally or not, it accepts the essentially unrealistic position of the Johnson-Frost-Cummings period of Brexit.

Good evidence that my assessment is an accurate one comes from the laudatory review of Shipman’s book by David Frost himself. Hailing it as the “definitive” account “at least until [his] own book is written” (an implausible boast, but one displaying all his habitual delusion and arrogance), he praises it as “objective and fair” which, from so partisan a figure, suggests the opposite might be the case. More specifically, Frost sees the book as vindicating all his well-rehearsed criticisms of the ‘remainer parliament’ (£), the Supreme Court and, especially the Benn Act. No doubt he would always have been liable to read it in this way, but the fact that he is able to find Shipman’s book susceptible to such a reading (whilst criticising other accounts as biased) is an indication of its fundamentally uncritical framing.

Even so, precisely because of that, Shipman’s book is valuable, partly because it confirms just how ignorant those enacting Brexit were about its realities, and partly because it confirms just how monocular their focus was on ‘getting Brexit done’, regardless of how it was done. This, in itself, gives the lie to the idea that Brexit was undertaken in a form that was foisted on them: Johnson and Frost chose it. That, in turn, also gives credence to Starmer’s claim that, even within the red lines of hard Brexit’ a somewhat different arrangement could be possible. 2025 will be the year when he needs to make good on that claim, if he is ever going to, but that is likely to mean a year of slow grind rather than great fireworks.

Donald Trump, again

The opposite applies to Brexit in its wider sense. This year is going to be an important one for transatlantic populism, and though the connections with Brexit are indirect, they are real. At the most general level, there has always been a connection, acknowledged on both sides, between Trump and Brexit. But there are two more specific connections.

One is to do with how the UK navigates its relationship with the US, and whilst Trump’s second presidency would always pose issues for that, it does so with particular force now that Britain has cut itself off from the EU. Just how poisonous that relationship may become has already been suggested by the berserk ferocity of Elon Musk’s attacks on the UK, and the Starmer government specifically (£), and the frenzy it has engendered in domestic politics. No doubt there is much more to come and, given Musk’s attacks on other European countries, the sense that the UK’s shared interests lie with the EU will be all the more obvious.

The other is the extent to which Trump’s return will be associated with the continued insurgence of Nigel Farage and his Reform Party. But this has the opposite implication for UK-EU relations, because the more it seems obvious that Farage’s populism is a strong and permanent feature of UK domestic politics, the less likely it is that the EU will regard the UK as a stable and trustworthy partner for any kind of new agreements, even those as limited in scope as Labour’s ‘reset’. Just this week, Brexiter fury about the appointment of Sir Olly Robbins as Permanent Secretary at the Foreign Office was a reminder of the hold of Brexitism in the UK.

Stay cool, again

I haven’t had time this week to give much attention to these developments, which is regrettable given how extraordinary Musk’s accusations have been, and the vile manner in which they have been endorsed by some British politicians. But, in another way, it is not regrettable at all.

I pointed out in a recent post how narcissistic politicians like Trump exert power partly by generating a frenzy of comment around their each and every utterance. That’s also true of Farage. It is probably even more true of Musk, not least because he isn’t, in the normal sense of the word, a politician. It is no coincidence that his latest stuff tries to mobilize the natural revulsion most of us feel about the disgusting crimes of grooming gangs. Nor is it any coincidence that it does so in ways calculated to mobilize counter-revulsion at its opportunism and dishonesty. These people want us – need us – to be excitable, angry, confused, befuddled, and upset. They want us to be freaked out by their freakishness.

So our best response, and, actually, our best resistance, is cool, calm, considered analysis. Not only do they hate it, but it’s also the best way of keeping sane in the face of the mad psychodramas they try to create.

I have a strong feeling that this year, more than most, it is going to be important to remember that.

Beware the Brexit reset backlash

In a post at the beginning of September, when I compared ‘reset means reset’ with the days of ‘Brexit means Brexit’, I pointed out that there is at least one important difference. The Brexit negotiations took place within a process and timescale which was at least semi-defined by Article 50. Any reset process will be more nebulous, and shouldn’t really be thought of as a process, in the singular. At the same time, a virulent backlash against the reset is now beginning and, with it, a new phase in the battle for post-Brexit politics.

The Brexit reset

The reset can be understood in terms of two kinds of process. The first kind consists of the things which the UK can do unilaterally, meaning without any agreement from the EU, such as maintaining regulatory alignment with the EU, both by eschewing active divergence and by avoiding passive divergence. There are many signs that this kind of reset is underway. This is beneficial, as it means that businesses do not have to produce to two different standards, but doesn’t in itself improve terms of trade with the EU. Moreover, as occurred last week with the introduction of the EU General Product Safety Regulation, there are some forms of EU regulatory change which cannot simply be ‘shadowed’ by the UK (or, in this case, and others relating to goods trade, Great Britain), but have to be accepted as new barriers to trade.

The second kind of process consists of things involving negotiation with the EU. Most obviously that means agreeing measures which go beyond the existing Withdrawal Agreement (WA) and Trade and Cooperation Agreement (TCA), perhaps including a Sanitary and Phytosanitary (SPS) agreement, a Youth Mobility Scheme (YMS) agreement, and a Mutual Recognition of Professional Qualifications agreement. It could also include a security and defence pact. However, it also includes negotiations within the various mechanisms built into the existing agreements because there are some things potentially within their scope (such as linking carbon pricing systems) which, if pursued, would contribute to a reset.

Equally, there are other things, including the full implementation of the Windsor Framework, the resolution of ongoing problems in implementing the settled status scheme for EU citizens in the UK, and the full introduction of UK import controls, which are likely to be seen by the EU as a prerequisite for any substantive new agreement(s). This was brought into sharp focus this week with the news that the EU is taking the UK to the European Court of Justice (ECJ) over its failures, going back to 2020, to uphold all the citizens’ rights provisions agreed in the Withdrawal Agreement and some other matters (all of which, be it noted, go back to the Tory government’s alleged failure to do what it, itself, had agreed; note also that it agreed to the ECJ’s role in these matters).

Resolving such issues is part of the reset because it would help to rebuild trust with the EU and to improve the ‘tone’ of the relationship, something which has been underway since the election, and which saw further developments in the last fortnight. These included Rachel Reeves attending the EU finance ministers' meeting and Keir Starmer meeting the President of the European Council. It’s wrong to scoff at such things as mere symbolism: symbolism matters, not least because of the way it relates to trust.

As for substance, there have been further signs that the UK will end up agreeing some form of YMS. Doing so, along with extending the agreement on fishing rights beyond its expiry in June 2026, looks to be the basic requirement of agreeing any wider reset with the EU. How the substance of the reset develops from now on will define Labour’s post-Brexit policy and, indeed, the UK’s post-Brexit polity, and negotiations with the EU look set to be the Brexit story of 2025 and perhaps beyond.  

The reset backlash

Although these two reset processes have barely begun, it is already clear that what the economics commentator Simon Nixon calls “the Brexit reset backlash” is now underway, and it has gathered force just in the last two weeks. Thus last weekend saw the reset being denounced in the Mail on Sunday as what David Frost called, with his trademark dreary predictability, the work of a “Surrender Squad” which is set on “betraying” Brexit. An accompanying editorial warned that Starmer’s plans will make Britain “a rule taker” rather than “a rule maker”.

The next day, again in the Mail, Boris Johnson fulminated about the need to “fight, fight and fight again for the freedoms people voted for in 2016”. Meanwhile, in the Express, Johnson again appeared, this time to warn that the UK’s accession to the CPTPP, which occurred last Sunday, was in danger of being sacrificed by Starmer (a particularly disingenuous comment, as there is nothing in the reset which is anticipated to preclude CPTPP membership, including an SPS deal). And in this week’s PMQs Kemi Badenoch accused Starmer of being “about to give away our hard-won Brexit benefits” whilst the Sun launched a “campaign to stop Brexit betrayal”.

These and many other examples of the backlash reprise all the rancid arguments of the last eight years with the ever-present accusations of betrayal along with those of ‘submission’ to the EU and lack of patriotism. There’s something particularly fatuous about calling the reset a ‘betrayal’ when it comes, as it often does, from those who have spent those eight years calling every single aspect of Brexit a betrayal. Just how many times can Brexit be betrayed? However, the backlash is also distinctive, or at any rate specific, in being aimed at particular possibilities envisaged within the reset such as a carbon emissions agreement and an SPS agreement. In particular, the backlash has, rather belatedly, honed in on Labour’s longstanding omission of ECJ jurisdiction from its ‘red lines’.

A new phase in the battle for the post-Brexit narrative

Thus this reset backlash can be understood as a new phase in the battle for the post-Brexit narrative. The first phase of that battle began in earnest after the transition period ended in January 2021, and it was decisively lost by the Brexiters. That is evidenced by the now well-established negative public view of Brexit. For example, according to the Statista data series, since June 2021 the view that it was ‘wrong to leave’ has always been greater than the view that it was ‘right to leave’, with the gap between those rising steadily. In June 2021 44% said ‘wrong’ and 43% said right, but by May 2024 (the latest date in this data set) those figures were 55% and 31%. Many other polls and similar polling questions show the same pattern. At the same time, Brexiters became increasingly unwilling to defend Brexit and increasingly convoluted in such defences as they offered. 

The arrival of the new government has provided Brexiters with an opportunity to regroup. In addition to opposing the reset itself, this regroup has two main axes.

The first axis consists of trying to give the impression that all the false claims made for Brexit were, in fact, being delivered on by the Tory government and are only now being squandered, or failing to materialise, because the Labour government has turned its back on them. Thus the fact that the Tories found that substantial regulatory divergence was impractical, and regulatory freedoms were largely an illusion, is being glossed over, and the failure to deliver them blamed on Labour. In a similar way, Badenoch and others are pretending that it is only Labour’s lack of commitment (£) which stands in the way of a supposedly (though actually fictitious) “oven ready” UK-US trade deal, especially once Trump returns to power.

The second axis is to re-write the ongoing damage of Brexit as being, in fact, the failure of the Labour government. Though minor in itself, a strikingly brazen example was an article in the Telegraph (£) last week bemoaning that “London’s stock market is in danger of sliding into irrelevance under Labour”. Yet, last January, an article in the same paper (£) reported that Brexit was “the prime suspect in the death of the stock market”. Not only were they in the same paper, but both articles were co-authored by the very same journalist, Chief City Correspondent Michael Bow.

This is only a small foretaste of what is likely to come. In particular, sooner or later (and sooner, if a reset with the EU is going to happen), the government is going to have to introduce full import controls. These are a direct consequence of Brexit, but one the Tories postponed multiple times, as did the Labour government this autumn. Undoubtedly when it happens it will be blamed on Labour mismanagement and, very likely, twisted round to be blamed on the reset itself (i.e. as a ‘concession’ in order to get the reset).

Labour’s culpability

In a sense, Labour have only themselves to blame. Promising to ‘make Brexit work’ was always likely to lumber the government with responsibility for all the ways in which Brexit does not, and will never, work. Nor has the government helped itself since coming to power. For example, treating, and initially rejecting, YMS as an ‘unacceptable EU demand’ simply plays into the hands of Brexiters, enabling them to present it, if (and almost certainly when) accepted, as a ‘capitulation’. It would have been much better to treat it as a great prize, and evidence of the potential value of the reset.

Another example is the UK’s accession to CPTPP. Of course the Trade Secretary, Jonathan Reynolds, was bound to speak positively about this, but he was not obliged to do so in terms almost identical to those which would have been used by his Tory predecessors, saying it showed that “Britain is uniquely placed to take advantage of exciting new markets” etc. Here, again, the government is too willing to accept the Brexiters’ framing.

In the same way, the Brexiter attack line that the reset will make Britain a ‘rule taker’ ought to be challenged head-on by emphasising that Brexit created a situation where Britain is, in practice, a rule-taker (think tethered plastic bottle caps). The reset is partly designed to deal with this reality in a more efficient way, by facilitating alignment through, for example, the Product Regulation and Metrology Bill, and perhaps in due course by agreeing to, for example, dynamic alignment of SPS regulations. So, far from being the cause of rule taking, the reset is a consequence of it and, in turn, a consequence of the delusions of Brexit.

In short, if the reset is to be successfully defended against the backlash, it will be necessary to challenge, and to not to reproduce, the underlying framing Brexit of itself. Just talking of the Tories’ “botched Brexit deal” isn’t enough. What is needed is a positive justification of the reset.

Justifying the reset

The most crucial justification is that the Labour election manifesto was quite clear about its intention to seek to reset relations with the EU. Conversely, the attempt the Brexiters are now making to depict the reset as undemocratic and a betrayal of the 2016 vote is, unequivocally, a lie. To the ire of many of its supporters, the Labour government is not reversing Brexit, and there is nothing at all in the referendum or what happened afterwards to say the UK-EU relations are bound to remain in the form Johnson and Frost negotiated (a form which, anyway, included provisions for future changes). Indeed, the crux of the Brexiters’ argument was that the British parliament should be free to pursue the policies which British electors had mandated. The reset has that mandate.

The second justification is that the reset also has popular support. The latest evidence for that came with a report from the European Council on Foreign Relations (ECFR) which includes a lot of crunchy survey data about public attitudes in the UK and in EU member states to UK-EU relations. I won’t even try to summarise it here but, as regards UK opinion, a couple of figures are worth flagging. One is that, overall, 55% favour closer relations with the EU, 22% favour relations as they are and 10% favour more distant relations. The other is that, amongst ‘Red Wall’ voters these figures are 44%, 14% and 18% respectively. Additionally, and prominently reported, the survey found majority support, even amongst leave voters (54%), for the return of freedom of movement in return for single market “access”.

These figures, especially the latter, attracted a certain amount of exuberant comment from ‘remainers’ or ‘rejoiners’ along the lines that the Labour government no longer need fear public opinion, not just as regards a reset but as regards reversing the entirety of, at least, ‘hard Brexit’ (i.e. no single market). I don’t think it is anything like as simple as that, whether viewed in terms of the narrow calculus of Labour electoral advantage or from the broader terms of the politics of Brexit.

On the first, it may well be the case (and, though I don’t have the data, I suspect it probably is) that a relatively small number of voters who don’t want closer relations and don’t want freedom of movement, and who feel strongly about both, could prevent Labour winning the next election. The wider issue is that opinion polls have many limitations, and can’t capture how voters would react if Labour followed where these ones point, given the backlash that would result. Most importantly of all, for Labour now to abandon its ‘red lines’ would immediately deprive the government of the democratic legitimacy which the election has given to its reset policy.

It may be tempting to think that, since that reset in itself attracts the ferocious and dishonest backlash we are seeing, the government might as well go the whole hog and pursue a reversal of Brexit, just as its Brexiter critics claim it to be doing. Actually, if anything, the backlash shows how limited Labour’s space for manoeuvre is. But the more important point is that there is a huge difference between defending against a false charge and against one which would be true. Moreover, if there is ever to be a durable rejoin policy it would have to be one which clearly had democratic legitimacy. So whilst the opinion polls give strong support for Labour’s reset, that is all they do.

The third justification for the reset is its substantive benefits. Just last week saw the publication, for the first time so far as I know, of a credible estimate of its economic impact. It came from John Springford of the Centre for European Reform, and, whilst necessarily rough and ready, suggests that the reset could deliver an annual uplift of 0.3% to 0.7% in the long-term, defined here as ten years.

Of course this is fairly trivial compared with the foregone GDP growth resulting from Brexit (and, actually this is Springford’s main point). However, in a generally low-growth economy, it is not nothing. For example, on present OECD predictions, UK growth in 2024 will be 0.9%. Moreover, on this estimate the reset is of considerably greater benefit than the long-term annual uplift of the CPTPP deal, estimated to be 0.04% to 0.08% of GDP. Even the Brexiters' much-vaunted UK-US trade deal would only be worth an estimated 0.07% to 0.16% of GDP. So, small as the value of a reset may be, those who dismiss it as worthless should be careful not to inadvertently give the backlashers a free pass on how it compares with such ‘Brexit benefits’.

In any case, the reset has more than an economic value. For one thing, if achieved, it would have a defence and security value, and that at a time of huge international turmoil. For another, it could act as a confidence-building measure to be built on subsequently. Indeed - and this, too, ought to concentrate the minds of those ‘rejoiners’ who dismiss the reset as trivial or even pointless - if there is ever to be a route to joining the EU again it seems all but certain it would need to pass through something like the reset along the way.

The bigger picture

It is in this latter respect that the Brexit reset backlash is most important, and most dangerous. At one level, it is just about domestic politics. It is a transparently opportunistic attempt by both Tory and Reform parties to re-kindle the populist anger of the referendum, and the ‘Brexit wars’ which followed, in order to boost their electoral fortunes.

At another level, those attempts are inseparable from UK-EU relations. The Brexiters’ visceral hatred of the EU makes them determined permanently to pollute those relations with their political faeces. They know that the more anti-reset opposition they can whip up, the less likely it is that the EU will have the confidence to entertain even minimally closer relations, let alone anything else. Already Jacob Rees-Mogg is urging “both the Tory and Reform leaders … to promise if elected to leave any new Labour deal”, and that is quite deliberately designed to wreck EU confidence in the reset. It is hideous and, if anything deserves the label, ‘unpatriotic’ in its attempt not just to derail the elected government’s reset policy but to engender perpetual hostility with Britain’s neighbours and allies. But it is happening and it can’t be wished away.

In that sense, this new phase in the battle for the post-Brexit narrative is a crucial one for the government but, more widely and in the longer-term, for anyone who rejects the vicious and self-harming politics of Brexitism. Labour’s reset may be frustratingly timid, but the backlash against it is a reminder of the obstacles even to timidity. If it is defeated by that backlash, or even if it allows the Brexiters to regroup, the hold of that vicious and self-harming politics on our country will be strengthened. Conversely, if the Brexiters lose this second phase in the battle for the post-Brexit narrative, as they did the first, those politics will be weakened. At one level, the reset is about technocratic tinkering with the UK’s relations with the EU, but there is much more stake than that. Hence, indeed, the Brexiters’ desire to destroy it.

 

With that, another year of Brexit blogging ends. Many thanks to all who have read this year, taking the total visits to this site to well over the 10 million mark, and the number of posts to over 450. Your readership is always appreciated, and never taken for granted, especially with the huge volume of blogs, newsletters, vlogs, and I-don’t-know-whats that compete for attention. Thanks, too, for the (generally) urbane and (often) interesting comments made since I re-opened the facility a bit over a year ago. Best wishes to all readers for Christmas and the New Year. The next post will be on Friday 10 January 2025. I think I will continue in the new fortnightly pattern, but if (as seems possible) there is a lot of Brexit-related news next year then I might revert to the weekly format.

Where is post-Brexit Britain?

I always try, and am usually able, to create an overall theme to each post on this blog. There are times, though, and this is one of them, when there is no particular shape to the latest Brexit-related events. Instead, there has been a ragbag of news, but that in itself is revealing of a more general drift.

Brexit still not done

So where to start? Perhaps with that part of Brexit which is still not, in the most basic meaning of the term, ‘done’: Gibraltar. As long ago as April, under the previous government, it was being reported that a deal was finally ‘imminent’, but nothing came of it. Last time I wrote about this, in October, I suggested that completing the deal was a key test of Keir Starmer’s ‘reset’. That wasn’t an unreasonable claim given that, just a few days afterwards, Nick Thomas-Symonds, the EU Relations Minister, said that doing so was “at the heart of” the reset policy. Yet the territory remains in post-Brexit limbo, leading to a large protest against the delays at the end of October.

Some of the urgency has been removed by the latest postponement of the new EU Entry/exit System, but that still leaves an inherently fragile ad hoc arrangement in place. Their fragility is well-illustrated by a row that broke out two weeks ago. In brief, under the ad hoc arrangements, Gibraltarians may enter Spain without having their passports stamped, so long as they have their Gibraltar ID card. However, last Friday fortnight, the Spanish border police instigated a check and stamp regime. It only lasted for a couple of hours before being countermanded by a higher official, but seems to have arisen because the local border commander did not have clear orders about whether or both Schengen area controls should be applied or not.

This is the second time the same local commander has taken this action, apparently from concern that he and his officers may be in breach of EU law by not applying normal controls. That is now a matter for the courts to decide, but it illustrates the consequences of the lack of a clear, formal agreement. Of that, the latest reports suggest only that the barriers to a deal are of a “deeply technical nature”, but that was also said last April.

In the meantime, the entire saga of Brexit and Gibraltar is the subject of an excellent new House of Commons Library Research Briefing by Stefan Fella, which amongst other things serves as a reminder of the complex issues which were obvious from the outset, but which Brexiters denounced as ‘Project Fear’. There are also signs of the situation receiving more media coverage in the UK, with a BBC Radio Four documentary on ‘the Rock that Brexit forgot” airing this week.

Reset still barely started

It may be that an agreement about Gibraltar will emerge this month or, perhaps more likely, in the new year, and be a sign of, so to speak, a reset of the reset, which began with some energy but appears to have foundered since. That seems possible because there is a sense in which any real progress was always likely to be deferred until the new EU Commission, and the second presidency of Ursula von der Leyen, were confirmed. This has now happened and, relatedly (though not necessarily directly so), Starmer has been invited to meet with EU leaders next February, the first time a British Prime Minister has done so since the UK left the EU.

That meeting is billed as being focused on security and defence issues, but the already planned EU-UK summit, which will take place next year, is likely to have a wider remit, taking in trade and regulatory relationships. A good indication of what the EU agenda for this might be was provided recently in a Bruegel policy briefing written by Ignacio García Bercero, a significant figure in the world of EU trade policy. Many of the issues it covers will be familiar to readers of the blog, and without rehearsing them here the main point I would make about the document is that it is deeply pragmatic, in the sense of recognizing both the constraints of UK and EU red lines and the possibilities that remain despite them.

That’s important because there are people, on both sides of the Brexit divide, who persist in saying that there is no prospect at all of improvements, whether they ascribe this to EU ‘punishment’ or a kind of Brexit ‘hair-shirtism’. On the remain side, in particular, there is sometimes the impression given that, for so long as Starmer remains committed to the ‘hard Brexit’ negotiated by the Tories, nothing can change. But that ignores the way that, even within the Frost-Johnson agreements, there was scope for a closer relationship, illustrated by the non-binding Political Declaration which they signed, even though they chose not pursue it. In other words, even within hard Brexit there exists a range of hardness.

Obviously, the significance of that shouldn’t be overstated. There’s a big gulf between the softest of hard Brexits and the hardest of soft Brexits. But there is an agenda, that in the past I’ve called ‘maximalist’, which whilst still ‘hard Brexit’ is different to Johnson-Frost, of the sort articulated by Peter Foster in the UK and, now, by García Bercero. Of particular relevance is a point the latter makes early on, about the apparent dropping of the UK red line against ECJ involvement under the Labour government. More generally, his key point is that “a repetition of Brexit discussions can be avoided if there is political will to explore the margins of flexibility around the red lines.”

Political will (or won’t)?

That clearly begs the core question of whether there is such a political will. If voices like García Bercero’s hold sway within the EU then, from that side, the answer might be yes. But what about the UK? One sign of a new seriousness might be the announcement of a new post of a second Permanent Secretary to the Cabinet Office, with a specific focus on the EU, and undertaking a ‘sherpa’ role there. The interview panel will, with depressing irony, be chaired by Gisela Stuart, who chaired the Vote Leave campaign, though not because of that but because she is now the First Civil Service Commissioner. It can only be wondered what attributes she will prioritise for the post, but the appointment will be made by Starmer.

At all events, the appointee is expected to be a heavyweight figure, and it is hard to see the point of creating this role unless it reflects real political commitment to the reset. That said, my general observation about this government is that it seems to place a premium on creating structures (delivery groups etc.) as if these, in themselves, solve problems. They don’t, although they may be a necessary precondition of doing so, and in particular they don’t, in and of themselves, create political will.

In this particular case, it remains to be seen what the political will is as regards a youth mobility scheme (YMS) which, even if under some different label, is evidently going to be a, if not the, key issue for the EU (a “threshold issue” as García Bercero calls it). We’ve repeatedly seen the Labour government dismiss this on the absurd grounds that it would somehow amount to ‘free movement of people’, but the question is how intransigent it will be.

As always, the problem is that Labour remains deeply neuralgic about anything relating to immigration. This was illustrated by Starmer’s response to the latest immigration figures, which he denounced as showing that “Brexit was used … to turn Britain into a one nation experiment in open borders”. It’s nonsense, and what’s worse is that it is the same nonsense that Farage is talking. What actually happened was that Brexit was used to create exactly what the Brexiters, including Farage, said they wanted, a wholly UK-determined immigration policy which used a points system set according to the needs of the UK economy.

For various reasons, not all economic, that led to an increase in the net migration figure, and a re-distribution of the countries of origin of immigrants away from the EU. That figure is now falling, also for various reasons, but these include new restrictions which are doing profound damage, especially to social care and to universities. What the Labour government needs, as Professor Jonathan Portes, the leading academic expert on this policy area, argues, is to be honest about immigration.

That raises bigger issues than that of a YMS with the EU, but honesty about that would, just in itself, be desirable. It’s an oversimplification, but not a huge one, to say that Britain left the single market, specifically, to appease public hostility to immigration. The country is paying a substantial economic price for that, yet without even assuaging the hostility. It is certainly freedom of movement of people, rather than a commitment to regulatory divergence, which explains why Starmer’s government will not even entertain the idea of single market membership, and is apparently willing to go on paying that price.

So the question now is whether that extends even to the YMS, with Starmer sacrificing things he undoubtedly wants, and the country undoubtedly needs – most obviously an SPS deal – on the altar of this immigration fetish. Just how high a price are we all meant to pay to pander to the sensibilities of a noisy minority who will never be satisfied anyway? It’s not even as if agreeing a YMS would take much political courage: opinion polls suggest 58% of the public think it is a good idea, and only 10% that it is a bad idea. Some reports in the last few days (£) suggest the government is coming round to agreeing some version of it, and my guess is that this will be true. If so, it would have been far better in terms of creating conditions for a maximalist reset to have accepted the idea wholeheartedly rather than being dragged to it reluctantly.

Meanwhile, things don’t stand still

With the new Commission in place, and Trump installed in the White House to concentrate minds, next year is probably going to be the crucial one in determining whether or not there is going to be any kind of substantive reset in UK-EU relations (though it would take longer than that to be brought to fruition). Even for that to happen needs some urgency of purpose to be brought to bear. For the reality is that any reset is not happening against a static background. That is most obvious in relation to the broad geo-political situation. But it’s also the case UK-EU relations are themselves changing, irrespective of any negotiations about them.

Two recent examples illustrate this (others can be found in the latest UKICE regulatory divergence tracker). One is the only now emerging realization that new EU product safety rules mean that British (in the sense of Great Britain) companies selling goods to the EU (including Northern Ireland) need a ‘responsible person’ within the single market to confirm compliance. As with so much of the Brexit-created red tape this will impact most heavily on small businesses, and it comes into force at the end of next week. At a stroke, this is a new non-tariff barrier to trade with the EU, and a thickening of the Irish Sea border. It won’t, to my understanding, be helped by the government’s Product Regulation and Metrology Bill because the issue isn’t alignment with EU standards, it is the certification of compliance (i.e. a version of the issue, discussed many times on this blog, that ‘alignment doesn’t mean access’).

A second example is that the EU Carbon Border Adjustment Mechanism (CBAM) is now beginning to bite (£) on British exporters to the EU, again with small businesses worst affected. In some ways it is a similar issue to the product safety one, in that exporters now need to provide evidence of the embedded carbon content of their products. However ultimately it will also mean not just reporting but, if necessary, tax being levied on that content.

Both of these examples are potentially within the scope of a UK-EU reset, though the word ‘potentially’ is doing a lot of heavy lifting. The first of them might conceivably be dealt with through formal dynamic alignment (note the tentative formulation). Less tentatively, because it is within the scope of the existing Trade and Cooperation Agreement, the second of them could be addressed by linking both UK-EU Emissions Trading Systems (ETS) and CBAMs (the UK version has yet to be created). Linkages of these are two different, though potentially related things, as García Bercero says. That is, it might be possible to link either, both, or neither (it’s also worth noting, as trade expert Sam Lowe explains, that these different possibilities could have different implications for the UK’s relationship with Trump’s US).

Everything is connected

Although I’ve bracketed that last point, because in a sense it’s a technicality, it does indicate the deep inseparability of all of the issues facing post-Brexit UK. That is to say, the more-or-less economic questions of terms of trade, including regulatory barriers to trade, with the EU cannot ultimately be separated from geo-political issues of the UK’s relations with the rest of the world. This means that not only do discussions of UK-EU relations take place within a dynamic landscape (e.g. new EU regulations) but also they do so as part of the UK’s positioning in an international order which is itself rapidly changing, and not only because of Trump’s coming presidency.

There are many moving parts in this, but they mean that my argument in a post at the end of the summer that the government needs a post-Brexit strategy already looks inadequate. I talked there as if UK-EU relations are a discrete issue. I’m not sure I actually meant to imply that but, at all events, it is now quite obvious that such are relations are imbricated in the entirety of UK economic, industrial, foreign and defence policy. It is equally obvious that articulating what this means for the UK is an urgent task.

There are limited signs that Starmer understands this, especially in the major speech he gave on foreign policy at the Lord Mayor’s Banquet this week. In it, he did at least attempt to do what Olivia O’Sullivan, Director of the UK in the World programme at Chatham House recently urged and “make an energetic case” to voters explaining the domestic importance of foreign policy and international relations. Whether it was as ‘energetic’ as needed is another question, but it was certainly an attempt to make the case. However, the content was anodyne, and didn’t give any real sense of the choices and trade-offs the UK faces.

By that, I don’t so much mean the headline reports that Starmer denied there was any need to choose between Trump’s US and the EU. That was entirely unsurprising, not least because, at this point, it’s not yet clear exactly what those choices may be (a situation which is unlikely to last, however). Rather, what was missing was an acknowledgment that Brexit has de-anchored the UK internationally, and created new constraints on its options. Instead, there were airy platitudes about Britain being “a strong, still point in a changing world.” Which, as politics professor Simon Usherwood of the Open University put it “leaves us... somewhere. With all the talk of a reset, there remains minimal evidence of a plan on Europe, in either abstract or concrete terms, which intrinsically weakens the ability to pursue whatever course is taken.”

Where is post-Brexit Britain?

It’s not enough. At the very least, there needs to be an explicit acknowledgment that the immediate post-Brexit strategy of ‘Global Britain’, already effectively abandoned by the previous government, does not provide a framework for the present government’s policy decisions. Which in turn requires specifying the framework which does. That could and should mean that where closer relations with the EU come into conflict with other demands it is the former which will be prioritised now. That wouldn’t be outrageous. Only the other day Foreign Secretary David Lammy said, as he has in the past, that a European reset is the UK’s “number one priority in foreign policy”.

Yet Starmer did not say or even imply that. Why not? Is this government policy or not? Without such consistency, Starmer’s promise that his country will be a reliable, dependable, and predictable international actor is virtually meaningless, since it gives no insight into where its priorities lie. How, then, can its actions be predicted? Conversely, unless relations with the EU are prioritised, how seriously should anyone, most notably the EU, take the reset?

That wouldn’t, in itself, entail an argument to ‘reverse Brexit’ by seeking to rejoin the EU in any form (which Starmer again ruled out in his speech). But it would entail publicly acknowledging that Brexit has created new problems, not new opportunities. Doing so would attract a flaying from the pro-Brexit commentariat, but would chime with public opinion by recognizing both that Brexit has not been a success and that there isn’t much public appetite to return to the Brexit battles in the immediate future*. In the longer run, admitting that lack of success would also be a necessary step to re-visiting Brexit itself, of course, but even those who want to rejoin at the earliest possible moment need to recognize that, whatever ‘earliest possible’ means, the UK needs, at least, an interim strategy.

However, I don’t really expect Starmer will do any of this. At best, he may put more energy into reset discussions with the EU in the coming year. At worst, he will drift along without much happening to show for the reset apart from warmish words. In that sense, the ragbag of this fortnight's Brexit events reflects more than my failure to find any shape to them. Rather, it captures the shapelessness of Labour’s post-Brexit policies and, more fundamentally, the shapelessness of the UK’s post-Brexit condition. It is a grim irony that on one edge of Europe there is war and civil unrest in countries which dearly wish to anchor their place in the world by joining the EU whilst here, on the other edge, we have given that prize away in order to drift into confusion.

The final words of Starmer’s Lord Mayor’s Banquet speech were that “Britain is back.” He didn’t say where.

 

 

*That is, support for holding another referendum doesn’t begin to approach a majority until posited as ten years hence. Interestingly, put at that time scale, Reform voters are the most supportive of it.  Admittedly the polling data I cited in the link is over a year old, so things may have changed but I haven’t found anything more recent on the specific question of timescales.

I can’t even bring myself to discuss the cretinous attempt to resurrect ‘Mutual Enforcement’ as an ‘alternative arrangement’ for Northern Ireland `(the Allister Bill) but may come back to it next time. It isn’t going to pass, but it does have a purpose in the context of the forthcoming ‘consent vote’ under the Windsor Framework in the Northern Ireland Assembly. For now, see the Best for Britain Blog on this, which notes, correctly but over-politely, that “the notion that such a process of mutual enforcement is remotely achievable is remarkably misguided.” 

Post-Brexit Britain’s Trump problem goes much deeper than trade tariffs

Brexit is back in the news again. That is partly the aftermath of the budget, discussed in my previous post, which was followed by speeches at the Mansion House by Chancellor Rachel Reeves and the Governor of the Bank of England Andrew Bailey. The latter highlighted the economic damage of Brexit and called for a re-building of relations with the EU “while respecting the decision of the British people”.

It's true that, as economics commentator Simon Nixon observed, this marked a notable break with official Brexit omerta. Still, it was not exactly dynamite stuff. The economics are well-known and the political message was identical to the government’s own stated policy. Indeed, Reeves’ own Mansion House speech said the same thing. In that sense, Bailey’s comments showed the limitations of government policy in that, as he must know, closer relations with the EU will only marginally reduce the ongoing costs of Brexit. So, despite being accused by Matthew Lynn in The Spectator of “reopening the Brexit debate”, Bailey hardly did that, unless even the barest mention of Brexit is now to be described that way.

If his comments attracted attention, it was mainly because of the wider context of now intense discussion about what the coming Trump presidency is going to mean for post-Brexit Britain. In my previous post I suggested that ‘hot takes’ on this were not wise, and to an extent I think that is still the case. Apart from the fact that he isn’t yet in office, he is by any standards a capricious politician. What he may actually do when he comes back to power is highly unpredictable.

Trump’s psychodrama

I don’t mean, of course, that it isn’t already abundantly obvious that it is going to be dire. The choices he is already making for key appointments demonstrate he is going to oversee a depraved, intellectually and morally bankrupt, regime. About the only thing which may save us from the worst is that it may well also be too incompetent and too prone to infighting to deliver what it threatens.

However, within that broad picture, it remains to be seen exactly what he does in terms of the two issues most obviously of concern the UK: defence posture as regards NATO generally and Ukraine specifically, and a blanket hike in trade tariffs. I’ll discuss the latter shortly, and whilst I won’t discuss the former in this post there is a good analysis by Benjamin Martell of Edinburgh University in The New European, building on his and others’ report for the Independent Commission on UK-EU Relations earlier this year.

Beyond the difficulty of predicting what he will do, I think there is an undesirability in doing so. One of the ways in which narcissistic bullies like Trump exert power – and it’s the same in playgrounds, prisons, and some businesses as it is in politics – is precisely to generate a psychodrama of fearful uncertainty around themselves: ‘what will he do? What will we do if he does that? What will he do then if we do that?’

In this way, those around the narcissist become unwittingly complicit in his way of exercising power. It is very difficult to find a way of resisting that kind of power, but one possibility might be to stand back a little from the frenzy. To play it long and cool, rather than short and hot. Admittedly, that is not a luxury open to the heroic defenders of Ukraine, but it might be good advice to the UK. However, as a matter of fact, political actors and commentators here are currently engaged in trying to work out what Trump means. So the frenzy can’t be ignored.

Trump’s tariff threats

In the UK, and very directly connected with Brexit, much of that frenzy has been to do with trade. Specifically, if Trump does impose a blanket 10% or even 20% on imports to the US it would mean, at the upper end of that range, an estimated 0.8% fall in annual UK economic output. That it is not even worse is because the bulk of UK exports to the US are services (which do not attract tariffs) rather than goods. But, in the context of already anaemic growth forecasts, and the very urgent political and economic need for improved growth, that would be quite bad enough. That seems to be the baseline assumption in most commentary, but of course if it turned out to be 10%, or if the uplift was only applied to certain sectors (and depending what these were) the impact would be less. But it still wouldn’t be good.

If any of these scenarios happens, then one response, and it may well be the EU’s response, could be to impose retaliatory tariffs on imports from the US. A trade war, in other words. The UK could do that on its own account, but it is far too small to be able to win a trade war with the US. So this exposes the weakness of post-Brexit Britain. For many of those opposed to Brexit, it re-presents a choice between the EU and the US, to which the answer must be the EU. According to Brexiters, though, the opposite is true (£), and being outside the EU means that the UK could strike a deal with the US on its own account.

Others, by no means confined to Brexiters, see a less stark choice. Peter Mandelson, tipped as the possible next Ambassador to the US, sees a third way, with the unfortunately worded suggestion (£) that the UK could “have its cake and eat it”. It’s a possibility endorsed (£) by the generally acute Financial Times commentator Robert Shrimsley. Similarly, Andrew Haldane, the former Chief Economist at the Bank of England, believes a deal is possible without prejudicing relations with the EU. One reason for making such a claim is that not only are most UK exports to the US made up of services, but it is services trade where the UK has a trade surplus. Given that Trump’s tariffs are aimed at those countries with surpluses in goods trade, the UK isn’t so much his target as potential collateral damage.

What does a ‘deal’ mean?

However, the discussion of all this has already become mired in confusion. That is principally because it has conflated two potentially very different things. One is the old Brexiter dream of a UK-US Free Trade Agreement (FTA), meaning, at its most basic, an across-the-board removal or reduction of all or most tariffs, but potentially including the removal of some non-tariff barriers to trade. The other is a specific deal to be exempted from the blanket imposition of Trump’s new tariffs. An FTA would improve the current terms of trade. An ‘exemption deal’ would simply return terms of trade to the status quo ante.

They are also different in that FTAs typically take a long time to negotiate, whereas an exemption deal, at least in principle, need not. And that reflects the fact that the things required of the UK for an FTA would be likely to involve substantial concessions on regulatory issues (‘chlorinated chicken’ being the symbolic one), especially as regards agriculture and pharmaceuticals. What would be needed for an exemption deal is less easy to predict, but could be things like voluntary export quotas, restrictions on Chinese imports, or agreement to import large quantities of US military equipment – but not, necessarily, regulatory concessions. [1]

These two scenarios therefore have different implications for the other side of the coin, UK-EU relations. An FTA, to the extent it entailed regulatory change, would move the UK further from the EU regulatory orbit. That would derail the current direction of Labour’s ‘reset’ policy, which is primarily based on continuing alignment with the EU. It would certainly derail the centrepiece of that policy, a UK-EU SPS deal (which would entail regulatory alignment on agricultural standards, especially). It would also have implications for Northern Ireland, which would remain bound by EU goods regulations, and thus would ‘thicken’ the Irish Sea Border. A more limited exemption deal might well avoid these things, but would certainly do political damage to the reset in terms of trust, assuming that it left the EU fighting a trade war with the US which the UK had managed to slide out of.

A trade deal with Trump?

Some Brexiters would undoubtedly argue that the distinction I’ve drawn is irrelevant, in that an FTA would also be an exemption deal (even though an exemption deal wouldn’t be an FTA). That’s true, but it doesn’t affect the point that an FTA would take longer to agree, and in the meantime there would be no exemption from the blanket new tariffs. Nor does it recognize the profound political difficulties any UK government would face if it met likely US demands on regulations.

But there is a more fundamental issue. Brexiters, both in the Tory and Reform parties, are now talking as if a UK-US FTA was there for the taking under Trump’s first presidency, and will now be available again. Kemi Badenoch is even claiming (£) that there is an “oven ready agreement negotiated by the last Tory government”. This is nonsense. There was no such agreement [2]. In fact, Trump blew hot and cold about a deal first time round. That’s actually a specific example of my earlier point about how narcissistic bullies use uncertainty to exert power. And even if he ever did offer such a deal, it would be on one-sided terms (that would probably be true under any US administration, but certainly under Trump’s ‘winner takes all’ version of deal-making).

In any case, this latest upsurge of talk about trade talks is exhibiting some of the same deficiencies as the earlier version. One concerns the relative importance to the UK of trade with the US and the EU. Brexiters, including Badenoch, are already wheeling out the misleading claim that the US is the UK’s largest trade partner. That’s misleading because it treats each member of the EU as a separate trade partner. They aren’t, to the extent that all are part of a single market and customs union. Brexiters really can’t have it both ways, saying that EU membership prevented the UK from being independent, especially in trade policy, but then talking as if each EU member is a separate trading entity. Secondly, it resurrects the misleading idea that a UK-US FTA would be much of an economic prize anyway. The previous government’s figures suggest it would provide an additional 0.07% to 0.16% per annum to GDP over 15 years.

Nevertheless, what we are going to see, and are already beginning to see, is Brexiters pretending that there is an easy, perfect solution to the Trump tariffs, but one that the Labour government is refusing to take because it is anti-Trump and pro-EU. We will see, as is also already beginning, Nigel Farage claiming with smirking self-importance that he has his own special relationship with Trump, giving him a unique influence and insight, just as he did first time round. Along with that will be noises from Trump supporters, and again they are already beginning, suggesting a deal is possible if only the UK abandons ‘EU socialism’. Trump will undoubtedly throw fuel on to that fire (‘I offered them a great deal, it was a beautiful deal, but they didn’t want it. I d’know why, I hear they preferred the EU, I d’know, but it was a beautiful deal’).

Beneath this, there is a still more fundamental issue. Trade policy is never wholly about economics, or economic rationality. But this is unusually so for Trump. If it wasn’t he would hardly even be contemplating the blanket tariff, which will increase prices in the US (though, despite what some think, that probably won’t bother his supporters). Instead, trade policy for Trump is about beating his enemies, in this context meaning the EU and China (which may face 60% tariffs). So there’s no point in thumbing through Ricardian theory on comparative advantage to try to understand Trump’s policy. But the corollary is that there’s no point in trying to frame responses in these terms.

In concrete terms, this means that the UK government should not weigh its (distinctly limited) options simply in terms of economic effects. An exemption deal might reduce the immediate economic damage, but its longer-term costs to the UK, both economic and geo-political, would be considerable in terms of the EU and, very possibly, China. The potential Chinese dimension is worth stressing, because at issue for the UK is not a just a two-way tug between the EU and the US, but being stuck between all three blocs. That was brought into focus by Keir Starmer’s attempts this week to improve relations with China, which might well be jeopardized by any form of deal with the US. To put all this another way, the only deals Trump does are those that favour him.

The cleavage in 21st century politics

This brings us to the final, and deepest, level of what is at stake here, and it is far more important than tariffs on this or that, or small percentages of GDP. It is that what Trump represents, as Brexit does, is what I’ve elsewhere discussed as ‘anti-ruleism’. In the most basic way, his anticipated blanket tariff policy makes a mockery of WTO rules. But his entire approach to politics is one which rejects the rule of law, scientific rationality, and, ultimately, the concept of ‘rational-legal authority’. I try to avoid social science jargon on this blog, but I think it may be useful here.

The sociologist Max Weber developed the idea that modern, industrial societies were increasingly characterised by systemic, codified rules and laws, objectively formulated and applied. So we obey X because s/he is the legitimate holder of the office (of President, or CEO, or whatever), not because of the person holding it. Weber contrasted that with authority that was ‘traditional’ (e.g. monarchy, church) or ‘charismatic’ (derived from the persona of the leader).

Trump fairly obviously seeks to elevate charisma over rules, but more to the point he embodies a hostility to ‘rules’ as a concept of social organization and politics. In this, he shares a common ideology with the ‘disruptor’ tech bosses, like Elon Musk, who now support him, and, in the UK, with their fanboy Dominic Cummings (£). He also shares it with Vladimir Putin, who relies on a peculiar admixture of charismatic and traditional authority, fused with nationalism, and is equally disdainful of the rules-based international order.

It is also shared by Boris Johnson, exhibited by the way that he (for perhaps idiosyncratic reasons) and the Brexit Jacobins (for reasons of fanaticism) believed it was acceptable to dispose of all conventions and institutions, including parliament itself, in order to ‘get Brexit done’. It is shared by Liz Truss, who still insists those institutions caused her downfall. Emblematic of this is the hostility of both Trump and the Brexiters to bureaucracy and, especially, the civil service, which, not coincidentally, was emblematic, for Weber, of rational-legal authority. That hostility is shared by Kemi Badenoch, in her aggressive diatribes against ‘the bureaucratic class’. Such anti-ruleism is obviously connected with populism, but it isn’t identical to it (there’s a book to be written there). The disjuncture is what did for Boris Johnson, when his disdain for the Covid rules fell foul of the populist idea that ‘rules should apply to all of us’. 

There are many different ways of understanding these developments. One way might be to see them in terms of the latest phase in the unwinding of the politics of the Cold War (that would need another book). Another, even more epochal, would be to see them as a kind of Counter-Enlightenment, in which the eighteenth-century battles over rationality are being re-fought but in the other direction (that’s a third book). Of course, the Trump presidency will not last forever. But there is a sense that deep and profound changes are now established in the US and elsewhere. And why not? Despite the brief moment when some claimed ‘the end of history’, history never ends.

However they are framed, the key point is that these developments are about far more than international trade. That is not surprising, because Brexit itself was about far more than trade with the EU; more, even, than membership of the EU. Needless to say, these are not the terms in which most people are framing the current situation, although Rafael Behr of the Guardian comes close to doing so. If it were framed that way then, indeed, the whole question of Brexit would be re-litigated. It is clear that the government have no intention of doing that.

Will Starmer’s government rise to the challenge?

Nevertheless, in terms of the division I have presented here, Keir Starmer is very much on one side, being almost the epitome of rational-legal authority or, so to speak, ‘ruleism’. That is something to be grateful for, yet even framed in the narrower terms of trade and tariffs his government’s response so far is rather wishy-washy. Reeves has spoken of seeking to do a deal with the US “whether that's through a free trade agreement or through further improvements in our trade and investment flows”. But in the same interview she pledged that “we’re not going to allow British farmers to be undercut by different rules and regulations”, effectively ruling out an FTA. As for some exemption deal on new tariffs, she just says that “we'll make the case for free and open trade”. What does that mean in practice? Who knows.

Perhaps, when Trump’s intentions become clearer then so will those of the British government. But my hunch is that they won’t. I don’t think that the government is, as I put it earlier, playing it long and cool. I think it will simply try to muddle through, dodging or fudging the choices in the hope that they become irrelevant, if only through the decisions made by other countries. Arguably, in a situation in which the UK has so little leverage and so few good choices available, that has a certain pragmatism. But as a response to the bigger framing of those choices gestured towards in this post it is wholly inadequate.

Why are Labour in this situation? In some ways it is because, faced with Trump, any British government, like the governments of many other countries, has an almost impossible problem. But, just as, for Britain, Brexit adds to all the economic problems that other countries face, so too does it add to the Trump problem. For this government, in particular, that is compounded by its commitment to a Brexit policy which it does not believe in but is unwilling, and perhaps unable, to repudiate.

 

Notes

[1] This is my amateurish take on the question. For more detailed analysis (though I think it is pretty much compatible with mine) from trade experts, see Sam Lowe’s Substack newsletter, David Henig on the UK Trade Policy Observatory blog, and Dmitry Grozoubinski’s guest post on Ian Dunt’s Substack newsletter.

[2] It may be that Badenoch was referring to the previous government’s statement of the case for such an agreement (2020) Even if so, that was, emphatically, not an agreement with the US, still less one which is now ‘oven ready’ to be signed with Trump.