Friday 27 January 2017

The (lack of) consequences of the Supreme Court judgment

This week has been an eventful, but strangely inconsequential, one for Brexit. Eventful because the Supreme Court upheld the judgment that parliament, rather than the government, must trigger Lisbon Article 50, leading to the publication of a draft Bill to enable that. Inconsequential because it currently seems almost inconceivable that parliament will not ratify it. There might be some amendments trying to constrain what the government can do, and there might be some outright opposition in the House of Lords. But it is highly unlikely that Brexit will be either delayed or significantly shaped by parliament, still less rejected.

Last October I posted that parliament seemed to be prepared to assert itself in opposition to Brexit, but this now seems a forlorn hope. It’s worth recalling that, indeed, parliament is – or at least was - opposed to Brexit. If, rather than having a Referendum, there had been a parliamentary vote in June remain would have resoundingly won, and would have won on the basis of majority support within both major parties. So why it is now a forlorn hope that that same parliament will reject Brexit or even oppose the hard Brexit that the government have decided on?

It isn’t, so far as I know, that MPs have changed their minds. The majority of them still realise that Brexit will be a disaster for Britain. But the rhetoric – fuelled by the Brexit media – that ‘the people have spoken’ has become almost unassailable. For Tory remainers, it has been made clear that opposing Brexit will be regarded as an act of gross disloyalty, and it seems likely that only veteran (and soon to retire) Europhile grandee Ken Clarke will oppose the Lisbon 50 Bill. That this entails the bizarre spectacle of Tories abandoning their traditional interest groups (and funders) in business and the City seems to matter not at all to them (nor that 40% of habitual Tory voters voted remain). And that Tory Brexiters have never been remotely bothered about party loyalty does not seem to have inspired an equal ruthlessness amongst the Tory remainers.

So the Tory Party, which has long been deeply divided over Europe, is shaping up to be united behind Brexit. Meanwhile the Labour Party has newly re-opened some old divisions that date back to the 1970s. Since then (or at least since 1983) they have been broadly pro-EU but Jeremy Corbyn is a throwback to the 1970s Bennite mantra of the EU as a capitalist club to be rejected in favour of socialism in one country. No matter that the world has moved on, and that globalization of capital demands trans-national politics and regulation. Hence Corbyn’s lukewarm and grudging support for the remain campaign.

Now, although the Labour position is often confused and contradictory, Corbyn is insisting that his MPs vote to support the triggering of Article 50. His view of what Labour should be pushing for from Brexit – the only real difference from the government’s plan being continuation of labour and environmental standards – is completely absurd in the context of a Tory government advocating a hard Brexit that is all but certain to tear such things up. So if Labour do not oppose Brexit hook, line and sinker they certainly won’t get a Brexit that upholds labour and environmental standards. Many on the Left realised in the 1980s that EU membership offered, for the UK in particular, the best hope of keeping some form of social democracy; which is also why hardcore Thatcherite Tories hated the EU. Now that the latter have their way, it is crazy to think that Brexit is going to keep any of the social democracy of the EU under the aegis of a Brexit deal.

So Corbyn is putting his MPs in an impossible position in pursuit of an unachievable goal (for more detailed analysis of Corbyn’s position on the Article 50 vote, see this insightful article by Ian Dunt on On the core political issue of the day, Labour could hardly have a more disastrous leader than Jeremy Corbyn, but the New Labour segment of the parliamentary party is scarcely less disastrous in its capitulation to the populist hostility to immigration. In essence, Labour’s leadership is hostile to the single market but pro-free movement of people, whilst much of its parliamentary party is pro-single market but now cautious about free movement of people.

This is compounded by the widely accepted narrative that Labour MPs who oppose Brexit will be punished by their constituency electorates if they continue that opposition because in many traditional Labour heartland constituencies in the English regions the vote was, resoundingly, to leave. This analysis is very deeply flawed. Despite Corbyn’s lukewarm support, 65% of habitual Labour voters voted to remain in the EU. In Labour 'leave' constituencies, many who voted leave would never have voted Labour anyway, and many do not normally vote at all. And in any case, EU membership has never been a top issue for most voters and there is no reason to think that it will be so in a future general election, even for those who voted leave in the referendum. So there is almost certainly far more latitude for Labour MPs, even in leave constituencies, than current received wisdom suggests. However, precisely because it is received wisdom, it seems likely that the only Labour MPs who will oppose Brexit are those whose constituencies voted remain. There are quite a few of those, especially in London, but even with SNP and LibDem (such as it is) support it won’t be enough to make parliament reject the Lisbon 50 Bill, or even to amend it in any significant way.

The huge irony in all this – apart from the even huger one that a campaign based centrally on the concept of parliamentary sovereignty is enacting a policy that parliament is opposed to – is that Theresa May has shown herself to have a strange combination of stubborn resolve and capitulation during her months as Prime Minister. This was first obvious not in relation to Brexit but over the Chinese investment in the Hinkley Point nuclear power station. Initially, May seemed to oppose it and called for a review of the plan but under pressure went ahead with it. So with Brexit. For months she resolutely said that revealing her plans would be to provide a ‘running commentary’ and that she would never do it; under pressure, she did just that last week. Then, this week, again under pressure, having said she would not do so she conceded that there would be a White Paper on Brexit.

So, under pressure, May is flexible and thus it is not surprising that with all the hardest pressure coming from the fanatically anti-EU wing of her party she has largely pursued a hard Brexit policy. The Supreme Court judgment opened up a huge potential for pressure to be put in the other direction. That this seems unlikely to be made use of is down to the cowed and cowardly inaction of Tory remainer MPs and the incompetence and incoherence of the Labour Party. It bears repeating yet again that there is no majority in parliament for Brexit, still less for hard Brexit; possibly no majority, now, in the country for Brexit and almost certainly not for hard Brexit. And, yet, despite this week’s events, hard Brexit is now a near inevitability.

Monday 23 January 2017

A Brexit for all seasons

It is now seven months since the British people voted in a referendum born of the then Prime Minister’s attempt to placate the Eurosceptics in his own party and the perceived electoral threat from UKIP. That referendum asked an apparently simple question: do you want to remain in or leave the European Union?

If the vote had been to remain then it is a reasonable bet that nothing much would be being said about it now. Of course, doctrinaire leavers would be continuing to agitate for exit. Indeed, had the vote been 52-48 to remain then, as Nigel Farage said before the vote it would have been unfinished business (how strange, then, that he and other Brexiters now insist that a 52-48 vote to leave is the incontrovertible will of the people, to which all opposition is treason?). But the vote was 52-48 to leave and that result is now being held up to mean all manner of things.

First and foremost, it is now being held to mandate not just leaving the EU but leaving the single market. In this post-truth era it is crucial to hold on to truth, and before the referendum the ‘leave’ side either refused to say whether voting to leave the EU meant voting to leave the single market or explicitly denied it. That is clear and on the public record for all to see. It is important to keep saying this, because of the dishonest re-writing of history that is now occurring. It is no defence to say that the remain side said that leaving the EU would mean leaving the single market since a) this was a rebuttal of the leave claim to the contrary and b) the Treasury modelling (and that of others) made it clear that leaving the EU could imply at least three scenarios, of which leaving the single market was only one. It is simply untrue to claim that both sides in the campaign said that a vote to leave the EU was a vote to leave the single market.

Beyond that, the leave vote is now being claimed to have meant something way beyond what was on the ballot paper. Thus, today, the government launched its industrial strategy with a preface from the Prime Minister saying that “last summer’s referendum was not simply a vote to leave the European Union, it was an instruction to the Government to change the way our country works – and the people for whom it works – forever”. Really? I’ve got no particular objection to an industrial strategy (and this isn’t the place to discuss this one) but it certainly wasn’t what the referendum was about.

Then again, the Brexit vote is being universally spoken of as if it were the John the Baptist forerunner to Trump’s victory and a harbinger of a far-right European Spring by Marine le Pen, mandating a nationalist anti-globalization agenda. But the vote did not ask for an endorsement of Trump, Le Pen or anyone else, and if it meant a rejection of globalization then how is it that Brexiters like Liam Fox are taking it as an endorsement of global free trade?

In a more diffuse way, too, all roads lead to Brexit. Today’s big news story is about the reliability of the Britain’s Trident nuclear weapons, and those same weapons were invoked by Theresa May as a key aspect of why Britain mattered in the Brexit negotiations. Again, this isn’t the place to discuss the pros and cons of British nuclear weapons policy, but if it is to be made central to what post-Brexit Britain means then it needs to be absolutely clear that it works. But how did we ever get into the position where our main trade relationship needs to be negotiated by reference to our nuclear warfare capacity?

It is certainly true that the Brexit vote has swamped everything else in British politics, probably for decades. But that vote has not given licence to the government to do whatever it wants. There is much talk about the need to respect the vote as a matter of democracy. But democracy does not just occur on one day; it’s not the Cup Final in which one side loses and another wins. It's a process, not an outcome. Its meaning is, and should be, contested.

Friday 20 January 2017

Paying for hard Brexit: the first three days

Theresa May’s confirmation that Britain will leave the single market was greeted with almost unanimous approval from the British (though not the foreign) press, and with only muted opposition from politicians in her party and the supposed Labour opposition. But now the bill payable is beginning to be presented. International finance guru George Soros, who has consistently warned of the dangers of Brexit warns that the British people are ‘in denial’ about the costs of leaving the single market. Former Times Editor Simon Jenkins who wrote just two weeks ago that ‘Project Fear’ had been comprehensively discredited today (without apology) argues that it is coming true.

The reason was the first of what will undoubtedly be many job losses being announced. HSBC and UBS will move 1000 jobs each and billions of pounds worth of business from London. Goldman Sachs, J P Morgan and insurance market Lloyds of London are reported to be considering even larger shifts out of London, and no sensible person can doubt that many other financial institutions will do the same.

Few may shed tears for the loss of bankers who, since the financial crash, have been the most unpopular section of society. But losing them and their business activity will impact significantly on tax revenues and therefore public services. Financial services contribute 11% of UK tax revenues and employ 1.1M people (2015 figures). Equally, many may feel that the British economy has long been far too skewed to financial services and the City of London. But the shock treatment of hard Brexit will not re-balance the economy, it simply diminishes it.

In any case, it is not just the finance sector that has reacted with dismay to the announcement on the single market. Toyota, although not threatening withdrawal at this point, is ‘examining how to survive’ in the UK. For companies like these, the crucial issue will be whether it proves possible to negotiate the half in, half out deal on customs union membership that the government is seeking. Anyone who doubts this should read the Japanese government’s statement on Brexit last September.

The crucial point to note here is that there is no upside to the single market announcement. That is to say, whilst some companies are and will continue to pull out, and for others it will make no difference, no company is saying that they will come to the UK or expand their operations because Britain is leaving the single market. And it is not possible even in theory to imagine how leaving the single market could provide any rationale for a company to do this.

The only way of imagining that a company would make such an announcement would be if, as a result of leaving the single market, the UK were to change its tax or regulatory regimes – for example by lowering corporation tax or by scrapping EU regulations on the environment or labour protections. In due course, I suspect this will happen, and it is undoubtedly what many prominent Brexiters want. But if it does then it will directly contradict Theresa May’s claims in her Davos Forum speech yesterday that a post-Brexit global economy must work for everyone. The losers in this will be precisely the ‘left behind by globalization’ constituency that swung the Brexit vote. Indeed, to the extent that May described the Brexit result as a vote “to build a truly Global Britain” she is flying in the face of precisely the ‘nativist’ sentiment that drove both the leave campaign and many of its voters.

Apart from the reactions of some companies to the news that Britain is exiting the single market, it is worth considering the reaction of sterling. The pro-Brexit press made much of the rise of sterling during the Prime Minister’s speech, but it only amounted to a cent or so, and that on the back of falls in advance of the speech that was heavily-trailed to announce hard Brexit (and also instability in the dollar around Trump’s inauguration). Interestingly, the point in May’s speech that saw the sharpest rise was when she promised a parliamentary vote on the final deal with the EU, reflecting the remote possibility that Brexit might, even at the last moment, be reversed. Overall, sterling continues to languish some 20% lower against the dollar than before the referendum vote and, in consequence inflation has risen and will continue to rise and retail sales are beginning to fall. There’s certainly no indication that currency markets see any good news in the hard Brexit announcement.

The underlying reason for this is easy to understand, and has been re-iterated over and over again by EU leaders, most recently by the Maltese Prime Minister who is the incoming rotating chair of the EU: any exit deal from the EU must, by definition, be worse than being within the EU. That is not a ‘punishment beating’ to use Boris Johnson’s infelicitous phrases, it’s just an obvious reality and one chosen by the UK, not forced upon it by the EU. That being so, an economy that is fully integrated with the EU and heavily trade-dependent upon the EU is inevitably going to get poorer by leaving.

Since it was announced that we will leave the single market, the first few billions of the bill have been presented. That is only the start of what will be an enormous price to be paid by the UK in order to, possibly, slightly reduce what in a few recent years have been fairly high immigration levels in some parts of central England. That immigration has repeatedly been shown to be a net benefit for the economy, and far from causing unemployment the UK is now essentially at full employment.

It is hard to overstate the craziness of what is unfolding. But no one should be under any illusion: this craziness is going to cost the UK very dear indeed in lost jobs, lost taxes, lost public services. To put it slightly glibly, but essentially accurately, we are (almost) all going to be much, much poorer for many years to come to pay for the fact that pensioners in the English regions don't like hearing foreign accents and having foreign shop signs in the streets. We won't even be paying to stop them having that experience, just paying for them to record their displeasure at having it. And that is just the economic bill, of which we have just paid the first small instalment: the cultural and political bill for hard Brexit has not even begun to come in yet.

Tuesday 17 January 2017

The end of ambiguity: May announces hard Brexit

After months of ambiguity, hints and counter-hints, Theresa May has given a clear statement about what the government seeks from Brexit. I had expected that the speech would retain some ambiguity and wriggle room. It did not. She came out unequivocally for hard Brexit and in particular clearly stated that Britain will leave the single market. Instead she will seek a free trade agreement with the EU. Regarding the customs union, she envisages some re-negotiated partial membership which would allow the UK to make trade deals but would keep point of origin rules. That, by the way, almost certainly explains why Nissan was persuaded to re-invest after last year’s secret deal. The only slight softening of hard Brexit was, first, to promise a parliamentary vote on the outcome of the negotiations (though what a ‘no’ vote would mean is unclear) and, second, that she would seek a phased transition to the new arrangements (already being criticised by UKIP and, anyway, dependent on EU agreement).

How this position, whilst clear in itself, will play out is another matter. What can actually be agreed with the EU and in what time frame, especially as regards a free trade agreement, will not be clear for many months if not years. All of the objections to and difficulties with this course of action remain. And although her speech struck a conciliatory vote as regards the EU it contained scarcely veiled threats to them as well, including the possibility of launching a corporation tax war and withdrawal of intelligence co-operation.

In effect May has decided that controlling immigration from the EU matters more than economic prosperity. It remains to be seen how the electorate will react to this when the effects become clear, as with rising inflation is now beginning to happen. And it is not just a matter of economic effects. By this decision, British people have today been definitively told that they will lose their rights to free movement and will soon find that living, studying or retiring in Europe have got much harder. Even holidaymakers may end up needing visas. In the meantime, those already living in other EU countries, like EU citizens here, are stuck in limbo.

Mrs May ended her speech with a call for national unity, regardless of how people voted but her speech made that a remote prospect. By now clarifying her position she has also clarified her complete contempt for those who voted to remain and indeed many who voted to leave. For it was never the case that voting to leave the EU necessarily meant voting to leave the single market. Many leave campaigners explicitly said that it did not, others fudged and obfuscated the issue.

So the government have chosen to interpret the vote to leave in the most extreme, disruptive and divisive manner possible, with no concession whatsoever to the almost half of voters who voted remain, to the majority who did so in Scotland and Northern Ireland, to the majority of people who favour staying in the single market ahead of immigration controls, or to the majority of MPs who also do. It is just about conceivable that the latter will derail the government’s plans, but that seems highly unlikely at the moment. Much depends on whether remainer MPs are willing to be as ruthless as their leave counterparts would certainly have been were the situation reversed, something made much more difficult by the lack of a coherent opposition policy (and, bizarrely, Labour Brexit spokesman Keir Starmer has said that May’s speech means she has “ruled out hard Brexit”!).

Instead of seeking any sort of conciliation, the Prime Minister has backed the hardline Eurosceptics in her own party and in UKIP. She has that right, of course, but in exercising it she cannot reasonably expect those she is treating with such disdain to support what she is doing.

[For more analysis of today’s speech, see excellent discussions by Steve Peers on the EU Law Analysis blog and by Ian Dunt on the site. The implications for trade, specifically, are explained by Billy Melo Araujo and The Conversation site.]

Monday 16 January 2017

Prospects for a UK-US trade deal

Interviewed by leading Brexiter Michael Gove for The Times, Donald Trump has spoken of doing a quick trade deal between the US and the UK which could be ‘signature-ready’ in 2019 when Britain is expected to leave the EU.

This has been greeted with much joy by Brexiters, but considerable caution if not downright scepticism is called for. First, there could only be trade deal if the UK leaves the EU customs union. That has been strongly hinted at by the government, but not definitively stated and at other times the opposite has been said, including by Liam Fox as recently as last month. Tomorrow the Prime Minister is due to give more detail on her plans, but if the speech is as trailed it will only go so far as saying that the UK would be prepared in certain circumstances to leave the customs union.

Second, even if it is known that the UK plans to leave the customs union, it cannot formally undertake negotiations until it has done so. If that is not to be until 2019 then a deal with the US could not be ready to sign by then. Of course the prohibition on negotiation might be flouted, and would be hard to enforce, but even then two years would be too short to complete a free trade deal of any great scope (deals come in many shapes and sizes). And, in any case, it is hard to see how the US or anyone else could sensibly negotiate terms with the UK without knowing what shape future UK-EU trade relations will take. Trump may well be long gone before any deal is ready for signature.

Third, if and when it happens, a deal is one thing; a good deal (for the UK) something entirely different. Given that Trump’s core economic policy is to put America first in trade deals, and a hostility to the kind of deals the US has done in the past, it seems unlikely that he would agree good terms for the UK. On the other hand, a Brexit government determined to show that leaving the EU can work is likely to accede to almost any terms simply to get a deal at all. That might have severe consequences not just economically but in terms of farming, environmental regulation, labour standards and public service provision. It is ironic that during the campaign Brexiters used the prospect of TTIP as an argument for leaving the EU, yet regard a bi-lateral with the US as highly desirable.

With all that said, Trump’s election does have a significance for Brexit. Just by saying what he has said he has boosted the confidence of Brexiters. There is also no doubt that (like most commentators) he sees the Brexit vote and his own election as in some ways linked and perhaps feels some desire to support it. Equally, his hostility to the EU creates the possibility he would want to do so in pursuit of his wider foreign policy strategy. What that adds up to in concrete terms and priorities is difficult to gauge, however (notably, when Gove asked him if the UK was now ‘front of the queue’ for a trade deal Trump dodged the question). It’s difficult to imagine it is going to be his top priority.

Meanwhile what is beyond speculation is that the pound has fallen again in anticipation that Theresa May is going to be clear tomorrow that she plans a hard Brexit (personally, I suspect that she will continue to leave some ambiguity on that but I will post about that once the speech is made). Yet currency traders do not appear to regard Trump’s comments as heralding good future news for the British economy.

Friday 6 January 2017

The debate about economic forecasts

The statement by the Bank of England that its forecasts of the effects of Brexit have proved wrong has been greeted with glee by Brexiters and led to economic forecasting in general being denounced. There is no doubt that economic forecasting is a problematic activity, but it is important to make several points about the Brexit forecasts.

First, they were an attempt to respond to the Leave campaign’s claims that the UK would flourish or at least come to no harm if people voted to leave. Those were every bit as much forecasts as those of the Remain campaign, even though they were not backed up with any analysis. Similarly, claims about the £350M a week for the NHS if we left, the fall in immigration if we left, and the prospect of Turkey and other countries joining the EU if we didn’t leave were all forecasts, and they have all now been disowned by leading leavers.

Second, like all economic forecasts, those made during the Referendum campaign were based upon assumptions and simplifications. Most importantly, many of them, including that made by the Treasury, assumed what was then believed to be inevitable namely that Article 50 would be triggered immediately after a vote to leave (see paragraph 1.42 of the Treasury short-term forecast). It wasn’t, and instead we have been in a limbo since. So far as the BoE forecast is concerned, it did not (bizarrely, perhaps) factor in the actions that it, itself, would take if the vote was to leave: quantitative easing and a cut in interest rates. Both those things happened, and mitigated the effects of the vote, but they were not cost-free and the price of them is being paid by pension funds and savers. So whilst some of the adverse effects the BoE predicted have not so far occurred, it is because of other adverse effects created by the BoE’s attempts to prevent their predictions coming true: the cost of the vote has been displaced and deferred, not avoided.

Third, it is simply not the case that the vote has passed without very severe economic consequences. The rapid fall of sterling is the most obvious, and would in any other circumstances have been understood as an economic catastrophe. The knock on effects of inflation are beginning to be felt. And there have been significant deferrals or abandonments of investment. Most economists continue to believe that the long-term effects of Brexit will be bad. At the very least, the jury is still out and some things can be said with certainty: whenever the government indicates that a hard Brexit is in prospect, the pound falls; and the government’s fiscal position has deteriorated to the extent of £59 billion over five years as a result of the vote. This isn’t just ‘forecasting’, it means real additional cuts in public services, which will affect real people’s lives, which wouldn’t have occurred if the Brexit vote hadn’t happened. Again, in any other circumstances this huge collapse in public finances would have been seen as a major economic crisis. Post-Brexit it is all but ignored.

Fourth, and it is a version of the first point, although Brexiters are now decrying economic forecasting, they are happy enough to take as gospel those that have recently been provided by lobby group Change Britain saying that hard Brexit would make the UK £450M a year better off and create 400,000 new jobs. If forecasting is so discredited then why should we believe these figures?

Similarly, much Brexiter attention has been given to a report by a group of Cambridge economists saying that the official forecasts were wrong and that there would be little economic effect from Brexit. Seldom can an academic working paper have been accorded such respect! What is striking about that is, first, that we can be sure that had reached different conclusions it would have been derided as the work of the elite (or ignored altogether) and, second, that what is being lauded is the application of a new and as yet unproven model of economic forecasting. In short, there is much confirmation bias in play here.

With all that said, I have always been reluctant to try to quantify the effects of Brexit and in various talks I gave before the Referendum refused to do so. I have adopted the same approach on this blog (for example on last September’s OECD statement, and in the very first post I said that there was no point in following each and every economic indicator whilst we were still in the EU).  Instead, what should command out attention is the logic of different institutional arrangements. What I mean by that is that leaving the EU is a massive institutional change for the UK. That ought be to common ground between Brexiters (or else – why leave?) and Remainers (or else – why care that we are leaving?).

If that is so, then [given that 50% of our trade is with the EU and another 16% via EU trade deals – so – 66% of our trade – and given that some, at least of our foreign direct investment relates to single market membership, and given that many of our industries from agricultural harvesting to the most advanced science are dependent on free movement] how could it be anything other than true that it will have massive economic effects? No country has ever tried to simultaneously detach and re-attach itself to the global economy, with no clear process or timescale or terms for doing so, and that in itself makes predictions all but impossible, except to say that the consequences will be hugely destabilizing. For sure Brexiters might say, as some do, that any price is worth it. For them, no economic forecast matters. Or that in the long run the effects will be positive - and what is that other than an economic forecast, albeit based not on data modelling but on blind faith?

Tuesday 3 January 2017

Ivan Rogers' resignation: a sign of dangers ahead

The resignation today of Sir Ivan Rogers, the UK Ambassador to the EU, would appear to be one of the consequences of what is emerging as a pattern. Rogers was vilified by the press and some Brexit politicians for reporting – as was his job – the likely attitudes of other EU countries to the Brexit negotiations, warning that these were likely to take many years to complete. The treatment of Mark Carney is part of the same pattern, although he has robustly stood his ground.

Rumours abound of civil servants and others, such as business leaders, being frozen out of government discussions if they raise any questions or concerns about Brexit. As I predicted in the very first post on this blog, the civil service is increasingly blamed as the completely unrealistic and unworkable ideas of the Brexiters encounter the hard rock of reality. Brexiters – or at least the hard core ones – will never admit that they are at error and will instead seek to blame others. It seems very likely that we will see a string of resignations and early retirements from the civil service just at the moment they are most needed.

This is a situation that was eminently predicable because of two factors. First, that the central policy of the government is driven by a fiercely ideological, evidence-free, populism combining a sense of both of victimhood, even in victory, and suspicion of ‘betrayal’. Secondly, that the referendum created the unusual situation where the bulk of those who had to deliver it in practical terms almost certainly do not support it. In those circumstances, an enforced or voluntary purge of functionaries becomes almost inevitable.

The dangers of this are really immense, at a number of levels. At the extreme, it paves the way for something not too far from totalitarianism. If civil servants (and judges) are denounced as ‘enemies of the people’, how much longer before any dissent from Brexit orthodoxy becomes forbidden? Alarmist, perhaps, but we are moving very quickly into unknown territory. Brexiters have already called for ‘investigations’ into the supposedly negative coverage of Brexit by the BBC. And as I have pointed out in another post there is a growing narrative that everyone has a ‘patriotic duty’ to get behind Brexit.

At the least, it will result in the wholesale politicization of the civil service, with only true believers in Brexit being able to function irrespective of their expertise. Brexiters, including the ubiquitous Jacob Rees-Mogg, are already calling for Rogers’ replacement to have pro-Brexit views. More specifically, it will create a group think mentality in which no realistic or sensible policymaking is possible, driving the UK headlong into the most disastrous form of Brexit imaginable.

This matters to all of us, but perhaps Brexiters should be especially worried. Having won the Referendum, the onus is now on them to deliver the good outcome that they promised. If they fail to do so, the disappointment of their supporters and the anger of those who do not support them will be huge and the consequences unpredictable and potentially dramatic. I think that Brexit is doomed to a degree of failure anyway, but it will certainly be more likely to fail, and more likely to fail very badly, if policy is developed and implemented by people who know and care nothing about the realities of what is involved.

In my previous post I discussed whether Theresa May’s calls for unity were meaningful. Here is one test of it: is she going to continue to preside over a ‘cultural revolution’ where anyone raising practical, legitimate questions about Brexit is to be hounded from public office?

Sunday 1 January 2017

Will Theresa May deliver on her New Year message?

Theresa May’s New Year broadcast, calling for unity after the divisions of the Referendum, appears to strike a conciliatory note towards those who voted remain, including the passage:

"So when I sit around the negotiating table in Europe this year, it will be with that in mind - the knowledge that I am there to get the right deal - not just for those who voted to leave - but for every single person in this country” (emphasis added).

Although the notion of something that satisfies ‘every single person’ is chimerical, a way of giving some people all that they want and all people some of what they want from Brexit is remarkably easy to envisage. Soft Brexit, where we leave the EU but remain in EFTA/EEA, would fulfil it. It would honour the vote to leave the EU, and would be exactly the form of leaving that some Brexit campaigners and voters favoured.

It would give all Brexiters at least some of what they want: withdrawal from the common agricultural and fisheries policies, exemption from many EU endeavours including those relating to foreign and defence policy, exit from ECJ jurisdiction at least in a formal sense, and the ability to make trade deals with third party countries. For remainers it would give all of them at least some of what they want, in terms of single market membership, continued free movement rights, and participation in European science, education and security programmes.

Of course it would not give many people all that they wanted, on either side of the debate. But it seems likely that it would have the support of the majority of voters judging by recent opinion polls. It also seems likely (given the positions that they took in the campaign) that it would have the support of the majority of MPs. Moreover, it would considerably reduce the massive administrative complexity associated with hard Brexit, end the uncertainty for EU people living in the UK and vice versa, and markedly reduce the problems that Brexit poses for Scotland and Northern Ireland. That is not to say it would be easy, nor that it would automatically be on offer from either the EU or from EFTA/EEA. But it is feasible.

What is striking is that is so blindingly obvious. Popular democracy, parliamentary sovereignty and administrative simplicity would all be satisfied, and most of the economic and some of the geo-political damage of Brexit would be avoided. There is only one reason for not pursuing it: the sizeable minority of her MPs who will accept no compromise whatsoever and want the hardest of Brexits, with complete exit from the single market and all other institutions. If they do not get this, they will announce a betrayal, probably put up a leadership candidate and possibly split the Tory party permanently.

Thus the entire fate of the country is held to ransom by this small group of people and their vociferous supporters in much of the press. The referendum itself was an attempt by David Cameron to deal with the demands of this group (and to head off possible electoral challenge from UKIP, but that challenge never really amounted to very much given the nature of the electoral system). Again and again he conceded to them – first by promising a referendum and then, though it now largely forgotten, on the nature of the question and the framing of the answer as being ‘leave or remain’ rather than ‘no or yes’ (as Brexiters thought ‘no’ would paint them in a negative light), on the right of 16 and 17 year olds to vote, and on the right of long-term expatriates to vote. Each concession gave rise to demands for a new one, because this group of MPs would never be satisfied.

And so it continues now. The referendum has done nothing to mend the divisions in the Tory Party, with the battle line between Eurosceptics and Europhiles just having moved to that between hard versus soft Brexiters. And some of the original Tory Eurosceptics who before the referendum were perfectly content with soft Brexit now insist that only hard Brexit will do. Theresa May in the first months of her prime ministership seems to have sided with them, but she has always left room for ambiguity. Perhaps her new year speech is a coded message of a shift towards soft Brexit – that is how the Daily Mail are reporting it – but she has given so many mixed messages that decoding them now seems impossible. Has she simply been shoring up her support from the Brexiters (given she did not campaign for Brexit) and is now skilfully preparing the ground for a more pragmatic policy? Or is she determined on a hard Brexit and trying to soft soap the country with a seasonal message of national unity? Or does she simply not know how to proceed?

Very soon now, code and ambiguity will no longer be enough. It has already been costly in terms of squandering any goodwill from the EU partners with whom she must negotiate, and in terms of the economic uncertainty it has created. Theresa May is going to have to decide whether she wants to take the only solution that will deliver what she stated in her New Year broadcast as her aim, and if so she is going to have the very tough task of facing down the hard Brexiters in her own party and the press. Or she is going to have to accept that the country will remain bitterly divided, as well as all the economic and political consequences of hard Brexit, and her broadcast will have been no more than warm words with no practical meaning.