Friday 3 November 2017

Now politics is moving fast - but in what direction?

In my previous post, I argued that economics is moving faster than the politics of Brexit. Further confirmation of that came this week when the car industry urged the government to provide clarity “within months” because investment decisions cannot be postponed much longer. Meanwhile, financial services have been saying the same thing but making the sharper point that from early 2018 the value of agreeing any transition period will “start to erode” as the relocation decisions will have already begun to be made. Although people talk of the danger of a ‘cliff edge’ in March 2019, in a sense there is a mini-cliff edge much earlier than that, perhaps in March 2018.

But we are no longer just in the terrain of making predictions about the effects of Brexit. An NIESR report this week shows that households are already an average £600 a year worse off and that this is “directly attributable” to the Brexit vote. We also now have food rotting unpicked in fields largely because of the difficulties of recruiting EU workers and, similarly, growing problems in nurse recruitment and in other sectors. Also this week the Bank of England identified Brexit as having a damaging effect on the economy leading, in part, to the raising of interest rates.

However no one could deny that politics is now also moving very fast. The trouble is that whereas the economics is going in one direction only it’s not clear where politics is going at all. On the specifics of Brexit there are occasional signs that, belatedly and at snail’s pace, the government are admitting some of the complexities of Brexit, for example with Liam Fox’s recognition that his previous assertion that the UK could just cut and paste EU trade deals after Brexit was incorrect. But for every such small step forward there are contradictory statements on such basic issues as whether no deal means no deal or a “bare bones” no deal (i.e. no trade deal but deals on discrete matters such as air travel); on whether or not there could be a trade deal with the EU completed (£) by March 2019 with an implementation period to follow; on whether and how talks might be speeded up, and on a raft of other things.

Overall, there is very little sign, publicly anyway, of the government taking heed of the detailed technical realities such as those spelt out again this week by Sir Ivan Rogers in his evidence to the Treasury Select Committee. Rogers, it will be recalled, was formerly the UK Ambassador to the EU until he was hounded out of office by the Brexit Ultras back in January. It’s possible that we may get some further clarity on Brexit if (and depending on to what extent) the government’s sectoral impact assessments get released. Forcing this has been perhaps the only effective thing as regards Brexit that Labour have done since the Referendum. It’s conceivable that if they are detailed and alarming then this will change the terms of debate considerably. It is notable that the extremely pro-Brexit Daily Express has this week begun to publish stories reporting, rather than ridiculing as ‘Project Fear’, the likely adverse consequences of Brexit. As the bad news piles up there’s just a sense that things are shifting, but not fast enough to make a difference yet.

Of course the big political story of the week concerns sexual harassment and the unfolding events around this seem likely to further destabilise an already highly precarious minority government. It is more than conceivable that we are not very far away from the government falling, both as a result of scandal but also because, in any case, it just isn’t going to be possible to keep fudging all of the detailed issues around Brexit. Once the fudge ceases, the Tory party will almost certainly implode and/or the support of the DUP that enables the Tories to govern will collapse.

If that happens, it will open up highly unpredictable possibilities which could give an opportunity for a government to do what should have been done by Theresa May right from the start. Namely, to provide some proper political leadership not just of Westminster but of the country as a whole. Such leadership would acknowledge and respect the divisions within the country, acknowledge the full complexities of Brexit, acknowledge the unavoidable trade-offs and constraints, and acknowledge in particular the yawning gap between what leave voters were promised and what is actually deliverable. Parroting about ‘the will of the people’ is no longer, if indeed it ever was, good enough. In short, there needs to be a comprehensive rejection of the politics of “easy answers” which was superbly dissected by David Allen Green in the FT this week.

It is almost certainly too late for May to provide this kind of leadership now. Even for a new government with a new Prime Minister it would need political skill of an extraordinary kind. Nor could it just be a matter of the Prime Minister: what is needed is leadership from across the political class but also a kind of multi-lateral rhetorical disarmament from all of those, on both sides and at all levels, who are passionately engaged in all this. That includes, on the one side, dropping all of the relentless nastiness about saboteurs, traitors and enemies of the people; and, on the other side, dropping the endless derogatory insults about thick, racist Brexshitters. In particular, it means almost all of us accepting that we won’t get everything we want, whatever the government does (including following its present course).

In such a climate we might then be able to seek some form of extension to the Article 50 period and to pursue what is probably the only politically and economically viable solution to the current mess which is single market membership via EEA/EFTA, and membership of the various other agencies such as Euratom which are precluded by the ECJ redline. The entire UK approach deriving from the Lancaster House speech would therefore have to be abandoned – not because it is going to fail but because it already has failed. We already know for certain that what was set out then and in the White Paper cannot be achieved within the time available, and almost certainly that it cannot be achieved within any time frame.

So another approach is needed. This would not, to say the least, be easy, either domestically or diplomatically. But nor is the present approach. Indeed, there is no easy course of action available. But if we don’t get to a situation something like I’ve just described within a very few months then it will be too late to avoid catastrophe. A side-effect of the current scandals afflicting the government might – just – be to take politics quickly enough to the point where it is possible.

Update (5/11/17): Consistent with the argument in this post, the President of the CBI is today reported as suggesting that a transition deal needs to be agreed by March 2018, and that the government should drop its existing ‘red lines’ over the form that a deal should take.

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