2018: the year that Brexit gets real and the year for getting real about Brexit

It is eighteen months since the EU Referendum and a great deal has happened since then, but most of it has been removed from any sense of reality. For the first six months all we knew was that ‘Brexit means Brexit’, something which lasted until the Lancaster House speech when it was announced that Brexit meant leaving the single market, the customs union and all institutions and agencies that entailed a role for the ECJ; a position then endorsed by the White Paper. It is worth pausing to reflect on this, because that six month delay gives the lie to the claim that the Referendum vote automatically entailed hard Brexit: had it done so, there would have been no such delay in announcing it. We also now know that the Cabinet did not have a formal discussion of the government’s post-Brexit plan until just a couple of weeks ago, and that no detailed impact assessment of it was made. So it would seem that the hard Brexit decision was made by Theresa May and her advisers, rather than by Cabinet, and with little understanding of what its implications would be.

Nevertheless, it was this decision, endorsed by Parliament, which framed the terms of the Article 50 letter and thus fundamentally shaped the way that the phase 1 negotiations occurred. Throughout those negotiations Brexiters continued to spout nonsense – that there would be the ‘row of the summer’ over sequencing; that the EU could ‘go whistle’ for a financial settlement; that ‘no deal’ was a possible or even desirable outcome; that the Irish border issue could be solved by magical, non-existent technologies. All this – along, of course, with the bizarre decision to call an election, and its outcome – was a stupendous waste of time and good will. Thus nine months into the Article 50 period the UK has agreed to pretty much everything the EU set out at the beginning, as was always inevitable unless the government was willing to accept the ‘no deal’ calamity that a breakdown of the talks would mean. Yet even at that point some Brexiters tried to say that the phase 1 agreement wasn’t really binding – only to be immediately disabused of that by the EU.

That, in brief, has been the story so far (for far more detail, see the last 110 posts on this blog!) and it is a woeful one of incompetence, unforced errors and a profound refusal by the government and especially the Brexit Ultras to engage in a serious and realistic way with the policy that they, themselves, wish to pursue. But 2018 is the year that Brexit will get real, and politicians will have to get real about Brexit – real with themselves, real with the public, and real about the EU-27. The crunch date will come, of course, in October 2018 when the final terms of the Article 50 process will need to be agreed for ratification to occur by March 2019 (see Paul Waugh of HuffPost for a great summary of the process).

That is an astonishingly short period of time – really, only nine months - and there is simply no way that it can be achieved if the government continue in the way that they have conducted themselves over the last nine months. But there is another, less obvious, crunch date coming and that is March 2018. That date will mark a year before Brexit actually happens and if by then it is not clear that there will be standstill (i.e. status quo) transition period then really serious disinvestments and relocations will begin to happen because a year is about the minimum timeframe for businesses to make those kind of decisions.

So this is the first and most urgent thing the government need to get real about and they have to do so in the next few weeks. There is going to have to be a standstill transition and if the Ultras don’t like the idea of being a “vassal state” then tough. That’s the consequence of the policy they sold to the British people. The only alternative would be to seek to extend the Article 50 period. It’s highly unlikely, but not impossible, that the EU-27 would agree, of course, but in any case Ultras won’t accept that because they see it as postponing, perhaps forever, Brexit. But the time has come for Mrs May to stop pandering to the foot-stamping Ultras who have so consistently and so conspicuously failed to understand or accept the basic consequences of their own actions. Nothing will satisfy the Ultras because they don’t want to be satisfied and let’s be clear: they represent only a tiny fraction of leave voters, and certainly don’t express ‘the will of the people’.

It is also down to Mrs May, and the government in general, to stop peddling factually nonsensical claims to the British people about what is going to happen now, or what can happen now. Thus, first, what was agreed in phase 1 is not contingent on the outcome of phase 2. It defines the agreed exit terms. Second, phase 2 is not going to yield a future trade deal, it can only (both because of the terms of the Article 50 process, and the timescale) yield a political framework within which that trade deal can be negotiated once Britain has become a third country. There will be no trade deal in March 2019, nor will there be one for a long time after that, and very probably this will mean a significantly longer transition period than is currently envisaged by either the UK or the EU.

Third, whatever the final terms of trade are going to be, May, the government, and Brexiters in general, have got to get real, and quickly, about the incompatible nature of the policies and red lines they currently espouse. That is, there isn’t going to be anything remotely close to the current trade arrangements unless the UK stays in the single market via EFTA/EEA and signs a customs treaty very similar to customs union membership. If the terms are going to be something like CETA then that is going to be a long way from the current situation, especially as regards services, and, in turn is going to be incompatible with having an open border in Ireland. Moreover, as regards non-trade issues then, just as has been accepted for citizens’ rights, participation in all sorts of agencies in areas including aviation, nuclear materials, security and policing will mean accepting some role for the ECJ. There are multiple circles that can't be squared here, and May should give a Prime Ministerial speech or broadcast to explain this to the British people. They deserve, and can for the most part undoubtedly take, some honesty and realism.

There are also some more specific things to get real about. The governmental structure created to handle Brexit doesn’t make sense, split as it is between the Cabinet Office and DExEU, the latter of which has been a mess from the start and which has suffered multiple resignations and staffing problems at both political and administrative levels. This was most sharply revealed by OIly Robbins' move from DExEU to the Cabinet Office. DExEU appears to be dysfunctional and it is not clear that David Davis is on top of his job or, even, what his job is. Whilst rethinking his role and that of his department, it would be a good time for Liam Fox to be told that there is no prospect of him making any substantive progress on trade deals with other countries: it’s not just that no deals can be signed until after the transition period, it’s that no country will discuss the details of such deals until the final terms of Brexit are known. And, finally, all politicians need to get real about the fact that EU leaders and officials do actually have access to the British media: statements made for home consumption can and do adversely affect the negotiations.

So much for the government, but in 2018 the Labour opposition are also going to have to get real and clarify their position. In particular, if they have got any sense, they will clearly and concertedly back staying in the single market as the only way of both ‘honouring the Referendum result’ and avoiding the complexity and damage of Brexit. There are signs that they are inching towards that policy but inching is no longer good enough. Talking about a ‘jobs first Brexit’ or being opposed to a ‘Tory Brexit’ is simply meaningless. The only way to make those slogans meaningful is to support a soft Brexit or no Brexit at all. And that, too, needs to be the position of the Tory backbench ‘rebels’. They will need to do far, far more than they did in backing amendment seven, the one time in 2017 they showed even a fraction of the ruthlessness of their Ultra colleagues.

And, finally, 2018 is also the year when ‘hard remainers’ are going to have to get real. Although it’s conceivable that Brexit might be abandoned completely, this looks less and less likely for the reasons I set out in detail in another post. I don’t like that, and I’d be happy to be proved wrong, but barring a major, sustained change in the opinion polls in the next few months that is how it seems to me. If this is so, it means that the best hope of minimizing the damage now is to seek the kind of soft Brexit which, were it not for the baleful influence of the Brexit Ultras, we might have had and could – just possibly – still get.

In the very first post on the blog, I wrote that it started from the position that the Referendum vote was a national catastrophe, and that is still my view. But even given that – or even for those reading this who do not share this view – what has been striking about all that has happened since the vote is that the botched and incompetent way that the government have approached Brexit has made the worst of a bad job (see this great summary from Jonathan Lis). They have only a few months – really, only a few weeks - left to retrieve the situation and they can only do that by firmly squashing the Ultras. If they do not then any pleasure that we remainers may feel at seeing Brexit crash and burn will be more than offset by seeing the consequences. Because a crash and burn won’t take us back to 22 June 2016 but will propel us into a national evisceration in 2019.

Two cheers for amendment 7

Goodness knows remainers have had little enough to cheer about since June 2016 and so it is not surprising that the passing of ‘amendment 7’ in defiance of the government has been greeted with delight. I am not sure, though, that it warrants any more than two cheers and possibly not even that. Likewise, the Brexiter depiction of it as a betrayal of Brexit is ludicrous, and serves only to demonstrate that victimhood is their comfort zone.

The main significance of the amendment lies not so much in the fact that it was passed but in the fact that it was not defeated. That is to say, had it been defeated that would effectively have represented the moment at which parliament had decided to have no substantive involvement in Brexit. It would also have signalled that there was no point at which the putative Tory rebels would rebel, and it is they who hold the key to any shifting in the government’s position on Brexit. They, or at least some of them, did and should be applauded for that given the undoubted pressure if not intimidation they will have been exposed to. And this in turn may embolden them and others to rebel again – in a sense, having taken the flak once they have less to lose from future rebellions, whilst having won means that other potential rebels can believe there would be some point in sacrificing their careers.

So all of that is on the positive side. But all it really opens is the tiniest keyhole of possibility for affecting what happens with Brexit. On the face of it, it means that parliament will be able to vote on whether or not to implement whatever deal with the EU the government negotiate. What this will mean in practice is far from clear. If it just means ‘this deal’ or ‘no deal’, it means nothing since as even Brexiters now seem to realise any deal is better than no deal. It is, I suppose, conceivable but highly unlikely that things will have changed in such a way by then that the choice got set up as ‘this deal’ or ‘seek to revoke Article 50 notification’. Or it could, conceivably and perhaps just slightly more likely, be that by that point the EU-27 had given a very strong signal that extending the Article 50 period would be agreed. Then, the vote could perhaps be ‘this deal’ or ‘re-negotiate under an extension’.

What all this underscores is that – for all the talk of parliamentary sovereignty and taking back control – what happens with Brexit is now largely beyond the control of the UK and largely in the control of the EU. This has been so ever since Article 50 was triggered. That was the point at which parliament, thanks solely to Miller’s victory in the Supreme Court, really did have a moment of complete control - and gave it away.

Increasingly it is clear that the decision by the government and endorsed by parliament to give Article 50 notification when it did and in the way that it did was a calamitous mistake of historic proportions. It set a shape for hard Brexit the implications of which few in the government seem to have understood and which neither the public nor parliament really support. It was done without, as we now know for sure, any rigorous assessment of the impact of hard Brexit or any serious planning for the negotiations. We can see that both the EU and indeed the Irish government were far better prepared than the UK at the point the Article 50 letter was sent. And the timing of that letter was solely dictated by the political imperative for Theresa May to assure the Ultras that she was ‘sound’ on Brexit.

From that moment onwards, the British parliament became a sideshow to the ineluctable reality of time draining away, and the power balance shifted irrevocably to the EU-27. A lot of the excitement about the amendment 7 vote derives from the fact that British political journalists have not caught up with that fact. They have a huge expertise and a sophisticated understanding of Westminster politics - the procedures, the votes, the personalities, the drama - and are heavily invested in regarding that as central to the plot. By contrast (with some honourable exceptions) very few British political journalists have more than the most superficial grasp of Brexit issues. This is very evident when politicians are interviewed and are allowed to get away unchallenged with glaring, basic factual errors about, for example, how the Brexit process works. It isn’t because the journalists are necessarily biased for or against Brexit, it’s that they don’t have enough knowledge about it. Similarly, there is very little understanding of EU politics, and that has been true throughout Britain’s membership.

There is a parallel here in the way that some politicians seem to think that Brexit is a solely domestic political process. This was most recently and most egregiously manifest in David Davis’ pronouncement that the phase 1 agreement was not, after all, binding. It seems not to have occurred to him that this would come to the notice of – and would dismay – the EU with whom the agreement had so tortuously been made. And this in turn reflects the fact that so much of Brexit is bound up not just with domestic politics but, more precisely, with the internal politics of the Tory party. Davis’ comments seem to have been intended solely to re-assure the Ultras.

Which brings us back to the amendment 7 vote, which is yet another manifestation of the Tory party’s 30 year European war to which, through the Referendum, they have shackled the entire country. But as a result things have now moved on. The games within and between British political parties are no longer centre stage and the over-focus on Westminster has become a grotesque anomaly since Article 50 was triggered. Of course parliament may, depending on how things develop, come to re-gain a significance in the Brexit process. It would be very foolish indeed, given the instability of the government, to bet against the possibility of some new parliamentary conjuncture leading to a dramatic change or reversal of policy. But, for now at least, it is a sideshow. Last night’s vote was significant to the extent that it put a bit of life into the show but it was very little, and probably too late.

[This is probably the last post I will write on this blog this year. I’m really very grateful indeed to the large number of people who have read the blog this year and hope that you will continue to do so and find it of interest. I’m sorry that I have had to disable comments – the reason was the combination of abuse and spam bots. I don’t see why I should provide a forum for either.]

The phase 1 deal: initial thoughts

The most obvious feature of what has been agreed is that in all but a few minor details Britain has accepted all the terms set out by the EU at the beginning of the negotiations. That was always inevitable unless we simply pulled out of the talks and committed national suicide, and it would have been far quicker and squandered less goodwill had the government accepted it on day one. That they did not reflects the glacial pace at which Ultra Brexiters have to be forced, piece by piece, to face reality.

Thus past financial commitments will be honoured and the ECJ red line has been broken on citizens’ rights and by implication in other areas as well. As for the Irish border, the situation is exactly as outlined in my previous post. A word fudge - ‘full alignment’ between the UK and the EU if no alternative deal is reached which keeps the border open - has postponed but not resolved the fundamental issue. There is no known way of having a fully open border other than membership of, or at least complete conformity with, the single market and customs union. So although the British position is still that we will leave both of these we have also agreed that in the absence of solving this insoluble contradiction there will be a soft Brexit.

So where does this take us? It seems to mean that hard Brexit is not going to happen, because no free trade deal can solve the border issue, despite what hard Brexiters imagine. But it also seems to mean there will probably not be a ‘no deal’ Brexit, because the default position outlined in the phase 1 agreement effectively defines no deal as soft Brexit. I suppose it’s conceivable that Britain could at that point rip up the phase 1 deal, and make itself an international pariah, but that is far less likely now that we have agreed to that deal.

It might be wondered, then, why it seems as if the ultra Brexiters in the Tory party are willing to endorse the deal as a triumph for Theresa May. The answer to that is that although soft Brexit now seems much more likely, the possibility of reversing Brexit and simply remaining in the EU is now far less likely. If the Ultras do not support May now, her government collapses and everything gets thrown into the air again, which certainly would not ensure remaining in the EU but might make it possible. Now, she will probably limp on until after March 2019 at which point remaining in the EU becomes impossible. Moreover, to the extent that Brexiters really do believe that there is a form of free trade deal that can avoid a hard border they may not realise that hard Brexit is now very unlikely.

It’s a different situation for the Ultras outside of government, of course, who need take no responsibility for avoiding chaos and have nothing to lose from the government falling. Thus Nigel Farage and others describe the deal as a humiliation and a complete capitulation. And he is right – the consequence of the policy that he successfully urged on Britain was always going to be humiliation in one form or another, as I argued a while ago. In fact, the way Britain has conducted itself since the referendum compounds this: it is now a real possibility that rather than have a soft Brexit via EFTA/EEA, with the various rights that brings, by choice, we may have a soft Brexit with absolutely zero involvement in the ‘full alignment’ we have agreed to, ending up in a kind of ‘bespoke limbo’.

In the meantime, attention will now turn to trade talks but perhaps more significantly to the question of the length and terms of a transition period. It is already clear that this transition will be on the terms that the EU has set out – meaning continuation of every aspect of membership including ECJ jurisdiction and freedom of movement, but with no political representation at all. Brexiters will protest about that but will accept it, for all of the reasons they have had to accept the phase 1 agreement. It also seems obvious that this transition will last for more than two years – five or even ten seems likely – and therefore probably beyond the next General Election. Again, this will have to be extracted tooth by tooth from the howling mouth of the Ultras.

During that period, however long it lasts, we will continue to travel endlessly around the Mobius Strip of Brexiter madness. That is to say, on the one hand the Ultras will keep finding new ways to imagine that it is possible to have all of features of being in the single market without being in the single market, whilst the EU will keep finding new ways to explain that this cannot be so. To put all this another way, the trade choices will remain something like Canada or something like Norway. But something like Canada doesn’t prevent a hard Irish border so is effectively precluded by this phase 1 agreement; whereas something like Norway could (with some significant adjustments) prevent a hard border. Moreover, it should not be forgotten that phase 2 is not just about trade but about all of the non-trade co-operations and agencies, for which Canada does not offer a model but Norway does.

Thus it would be far better – but still, as yet, politically impossible – for the government to accept this and have as its negotiating aim, rather than its default position, something like Norway. That will require real leadership, both to build some kind of national consensus for it and to swallow what remains of the Lancaster House speech. Since that is likely to be where we end up, it would be better to make a virtue of a necessity. In fact, building carefully around and upon that model it could even become meaningful to talk of a ‘deep and special partnership’. Less good than EU membership in my view, but a better outcome than the other alternatives.

Update (08/12/17): A couple of updates to this rather hastily written post. First, on the conundrum of having a fully open border without being in the single market or customs union there is an excellent explainer in a recent article by Dr Emily Lydgate on the UK Trade Policy Observatory website.

Second, on Twitter Simon Carswell raises a good point – if soft Brexit is the end point, why is a 5-10 year transition needed? I think there are two issues here. One is that I anticipate a long period in which the Brexiters keep banging their heads against the brick wall of the incompatibility of hard Brexit and an open Irish border. But, secondly, even when the penny finally drops, no one should think that soft Brexit is some straightforward walk in the park where nothing really changes. For a start, the Norway model does not – as intimated in this post and discussed in greater detail in previous posts – solve the border issue in itself. That is partly because Norway is not in the Customs Union but also because it is outside many other aspects of the EU including – to take a particularly significant issue for the Irish border – the Common Agricultural Policy. So there would still be a great deal of detailed and complex negotiation, both political and technical, to get to this end point.

Finally, I don’t want to give the impression in this post that there is anything particularly good about any of this, even assuming it is an accurate analysis (and it may not be: don’t underestimate the potential craziness of the Brexit Ultras to drag us over the cliff). At the very most, it just avoids complete economic catastrophe at a very high cost, and does nothing at all to mitigate the geo-political and cultural damage done by Brexit. It might – just about – have been possible in the immediate aftermath of the Referendum to build some kind of national consensus for soft Brexit as an acceptable outcome for most, to have planned it properly for it both domestically and diplomatically, and then to have triggered Article 50. None of that happened, and so haphazardly falling back to soft Brexit by default will leave many – perhaps most – voters on either side dissatisfied if not bitterly angry. What May has managed to do is, first, to alienate remain voters by treating them with contempt by catering only for the hardest of Brexits and, now, to alienate hard Brexiters by having to concede that she cannot deliver what she promised them, and what they, so mendaciously, promised leaver voters.