Friday 20 July 2018

What will the impact of 'no deal' planning be?

For many months now, Brexiters have been urging the government to step up planning for a ‘no deal’ scenario. In the weird and confrontational way that they have approached Brexit – acting as if Britain were being forced to leave by the EU, rather than choosing to do so – the idea is that this will bring the EU to its senses and offer a great deal.

That in itself is, as noted in my previous post, is a remarkable volte-face from all the pre-Referendum promises about an easy, quick and good deal being inevitable. But it also (or, rather, as a result) poses a conundrum for Brexiters. They have got what they wanted from the government, but haven’t they in the process given credence to a new ‘Project Fear’?

For now the government are spelling out the consequences of a no deal Brexit (£) and they do, indeed, inspire fear. Lorry parks, queues at ports, disruption to travel, stockpiling of medicines, food shortages and much more. This is the stuff of pre-war planning, akin to the digging of trenches and distribution of gas masks during the Munich crisis of 1938. Apparently, briefings are to be sent regularly to households and businesses from August onwards.

What the effect of this will be is difficult to judge. Large businesses are already making, and will continue to make, contingency plans. They can afford to – although that doesn’t mean that we won’t all pay for them indirectly – and they can also more easily relocate, and are already doing so, with long-term consequences for jobs and taxes whatever the eventual outcome.

For smaller businesses, typically operating on tighter margins, it will be much more difficult. And this also presents the government with a dilemma: if it plays down the likelihood of no deal happening, the contingency planning is less likely to happen; if they play it up, the prospects of alarm increase. What is in any case alarming is the pivotal role that the HMRC will have to play in relation to customs in a no deal scenario. Its track record in recent years does not exactly inspire confidence, and it may not be wise, to say the least, to rely on technological innovations given the problems of its Making Tax Digital initiative.

And what of individuals? What exactly are they supposed to do? Some will soon notice if they book air tickets for use after next March the insertion of a Brexit exemption clause in the terms and conditions. But there’s not much they can do about that other than book and take the risk or not book at all. Those who recall how fairly small fuel blockades in 2000 quickly led to empty supermarket shelves may stockpile cans of food, and those with longer memories of the 1970s might put in a store of candles.

However, the reality is that in todays’ highly interconnected and complex economy individuals can do very little to protect themselves against supply chain disruption for more than a few days, and they expect the government not to put them in the position of having to do so. The basic proposition of Brexit was that the UK could detach itself from the global economy and then re-attach itself on unknown terms in an unknown timescale. The no deal planning just underscores the extreme risks of doing so, especially when undertaken without any idea of how to achieve it.

By far the worst situation is faced by EU-27 citizens living in the UK and UK citizens living in the EU-27, meaning perhaps 5 million people in total, most of whom had no vote on Brexit. They have been in limbo for over two years, but have constantly been told that they will be looked after and their rights assured. Now, they are being asked to plan for a no deal situation in which that is not so. What kind of planning can they do? They can up and move – as many already have – but why should they, given that they have built their lives on the perfectly reasonable expectation of freedom of movement? And why do so without knowing whether or not it is necessary? And what damage, cultural and economic, will be done to all of us if they do?

In any case it’s not so easy to uproot. For many, it means tearing up years of residence to go to countries they may hardly know; or is next to impossible because of employment, relationships and children. This is the human side of the global interconnectedness of the economy and the risks and dangers of ripping that up. More precisely, it points up the difference between ‘freedom of movement’ as a right and a way of living and ‘immigration’ as a mechanistic, economistic transaction.

There are also questions about how the general public will perceive this no deal planning. A recent opinion poll showed 51% agree that “no deal is better for Britain than a bad deal” and only 20% disagree (the rest, presumably, don’t know). But it is almost certainly the case that many respondents did not know what ‘no deal’ means, and may well have thought that it just means sticking with the status quo. By contrast, respondents will very likely have thought that ‘bad’ means, well, something bad, whereas no deal sounds more neutral. If it begins to be understood just what no deal would mean, that might make a big difference to public opinion. Which could in turn impact upon politicians and, if it were to happen, the result of another Referendum.

However, that reaction can’t be assumed. So polarised is the Brexit landscape that those on either side are likely to interpret things through their own lens. Thus remainers will see the prospect of no deal as confirming what they had always warned of, whilst leavers will see it as indicative of EU ‘punishment’, or as just more Project Fear, and it will re-enforce their position. Some – a minority, perhaps – will actually be excited by the chaos of a no deal, whether because of adolescent anarcho-liberal dreams of purification through crisis or Dad’s Army nostalgia for Lord Woolton Pie and digging for victory. Even so, there must be many voters, especially lukewarm leavers, who will conclude that nothing remotely like this was what they were promised.

Regardless of how that plays out, the big danger emerging is one I warned of some months ago. It is that Brexit, and especially the form in which Theresa May’s government have pursued it, is almost certain to bring humiliation to Britain – either through being forced to back down on what Brexiters promised in the face of reality or through the kind of catastrophe than no deal will unleash. Either way, the political fallout will not, to put it mildly, be pretty since, as pointed out in that previous post, history and psychology tell us that the consequences of humiliation are almost always rage and violence.

No comments:

Post a Comment