Friday 27 March 2020

Brexit in lockdown

Unsurprisingly, there is little Brexit news since – rightly – most attention is elsewhere. Yet, as argued in my previous post, for as long as it remains ongoing it remains legitimate and important to discuss it notwithstanding the coronavirus crisis. That is the more so when that crisis is being used to justify Brexit – as with the gleeful repetition of the essentially inaccurate story that EU State Aid rules would preclude the UK’s coronavirus business support package – or to claim that it will somehow bestow a negotiating advantage on Britain (£). And when Brexit is still being falsely used as reason for not taking advantage of EU procurement systems for desperately needed ventilators – although subsequently the line changed, with the government risibly claiming it was because the emails about it hadn’t been received.

That said, there is not much to add to my previous post in that nothing much is actually happening with Brexit which, in itself, underscores that the only substantive question now is whether, and more likely when, the transition period will be extended. The government remains silent on this beyond previously issued denials, but that’s unlikely to last.

Since that previous post David Frost has gone into self-isolation with suspected coronavirus, and with Michel Barnier already having tested positive that in itself is indicative of the difficulty of continuing with business as usual with both chief negotiators quarantined. It’s reliably reported that the Brexit Cabinet sub-committee has been suspended and won’t meet again ‘until further notice’. The Freight Trade Association have become perhaps the first major trade association to publicly call for an extension. The only real obstacle from the UK side to an extension is the obduracy of what Tony Barber in the Financial Times calls the ‘Brexit millenarians’ (£).

So for now Brexit is in limbo, although several thinktanks continue to produce informative reports. These include, this week, Georgina Wright and Joe Owen’s Institute for Government analysis of the role of the Joint Committee, and the UK in a Changing Europe’s multi-authored study of Parliament and Brexit. It’s worth mentioning just how well-served the public have been by these two organizations – and others, such as the Centre for European Reform – in providing freely available expert analysis throughout the Brexit saga.

Excellent as that ongoing work is, most of us, including the most Brexit-obsessed, are inevitably more preoccupied with the current crisis, which in some ways is erasing the remainer-Brexiter distinctions and conflicts of the last three years. Yet it would be intellectually dishonest not to record that there are some carry overs. For one, important, thing we have a Prime Minister who is, more than anything, a Brexit Prime Minister but who has been forced by events to become the coronavirus crisis Prime Minister, something calling for very different qualities than those that come naturally to him.

Connections between Brexit and coronavirus

More broadly, there is a set of intellectual and cultural connections between some of the most hardcore Brexiters and those who are dismissive of the dangers of and/or responses to coronavirus. I don’t want this to be misunderstood: this is not an ‘all Brexiters are thick’ comment (and I have never made such comments). Nor is it denying that plenty of Brexit supporters are making huge contributions to dealing effectively with coronavirus whilst, no doubt, plenty of remainers are responding foolishly to the crisis.

One connection is the resonance between what is reported to have been Dominic Cummings’ initial response to coronavirus and his (and others’) ‘disruptor’ view of Brexit. They both seem to grow out of an idea that any shock to ‘the system’ is to be regarded as desirable simply for being a shock. Adverse consequences are just so much collateral damage to be ignored if not, indeed, welcomed. That’s not quite the same as the ‘disaster capitalism’ idea, in which massive shocks such as this pandemic represent an opportunity for economic and political exploitation. It’s more a kind of adolescent infatuation with instability as ‘exciting’ and it links to the wearisomely predictable ‘contrarianism’ of the peculiar, yet peculiarly influential, leftist-libertarian Spiked Online sect who have lashed out against the coronavirus restrictions and who, of course, tend to be ardent Brexiters. One might speculate on the affinities between such an infatuation and the psychology of the “misfits and weirdos” who are Cummings’ preferred hires.

Another connection is the overlap with the bluff ‘commonsense’ of a certain strand of Brexiter thinking. There’s more to it than the infamous ‘we’ve had enough of experts’ line, although it links with that. Rather, it’s to do with the way that, starting with the campaign ‘take back control’ strapline, through the claims about ‘German car makers’, the na├»ve beliefs about ‘alternative arrangements’ and the imaginary possibilities of ‘GATT Article XXIV’, Brexit has been presented as a simple choice with a simple process. Arguably, the Leave campaign’s Referendum success was largely attributable to this ‘simplism’, whereas remainers’ arguments have relied on often impenetrable complexities.

It’s surely no coincidence, therefore, that Tim Martin, the Wetherspoons boss and one of the relatively small number of leading business people to vocally support Brexit, who for years propounded the simplicities of Brexit has made similar pronouncements about the coronavirus crisis. It links no doubt with the deep-rooted English aversion to intellectuals, who make things complex when they need not be, and also to a perhaps related machismo so that Martin is “happy to take his chances” with catching the virus.

The same attitude is evident in the comments of Paul Bullen, former UKIP leader on Cambridgeshire County Council and Brexit Party candidate. He thinks “the majority don’t care” about coronavirus and wants to just “get back to normal”. It might be called a ‘hand washing is for sissies’ mentality (which could have important consequences for coronavirus spread (£) given the higher infection and mortality rates amongst men). Another variant on the same theme is, like Telegraph columnist Allison Pearson, to condemn alarm about the virus as “scaremongering” just as she (and countless others) dismissed warnings about Brexit as ‘Project Fear’ (£).

The lure of nostalgia

But simplism isn’t just about anti-intellectualism and macho bravado. It’s also a big impetus behind nostalgia and the imagination that ‘life was simpler back then’. Nostalgia has been an incredibly important feature of recent British politics – even before the Referendum it was evident in what at the time I called the “grotesque historical spoonerism” of Austerity nostalgia – and the role that World War Two nostalgia has played in Brexit is well-known.

We see, again, the overlaps with responses to coronavirus. The most bathetic, perhaps, is Godfrey Bloom’s crotchety puzzlement at pubs being closed now, when they weren’t during the Blitz (hint: bombs dropping from planes and viruses being transmitted between people aren’t the same thing). Bloom, a former UKIP MEP who lost his party’s whip, is, admittedly, an outlier even to the wilder fringes of Brexiteer thinking. The fruitcakes’ fruitcake, so to speak. But that idea that the coronavirus crisis is, somehow, like the Blitz has a much wider and more mainstream currency. It very much resonates with the sentiment, commonly expressed but summed up perfectly by former England cricketer Geoff Boycott, that (no-deal) Brexit will be fine “because we fought two world wars and came out on top”.

I suppose, to be charitable, that given the unprecedented nature of the coronavirus it’s understandable that people reach for analogies and to the extent that the war is the only comparable moblization of State economic and social control in (just about) living memory it makes a sort of sense. And, in passing, it bears saying that wartime administration, especially in the early months, was marked by multiple inefficiencies and – as Mass Observation diaries show – plenty of civilian scepticism about the wisdom of the authorities. So there may be analogies to be found beyond the mythologization of the Blitz (or Dunkirk).

Why it matters

But the key point is that, as in relation to Brexit I’ve tried to chronicle throughout the posts on this blog, simplism in all its forms is inadequate. Like Brexit, coronavirus presents multiple and complex challenges for public policy and for individuals. Defiantly invoking the Blitz to say that we should not ‘give in’ to the virus by abandoning our normal ways of living is useless because dealing with the virus is best done precisely by abandoning those normal ways of living. The cultural and intellectual attitudes that delivered the Brexit vote have proved totally unsuited to delivering Brexit itself, and are totally unsuited to responding to coronavirus.

Understanding those attitudes is not about point-scoring or finger-pointing at the expense of Brexiters. These attitudes exist, and understanding them matters. It matters, in the present crisis, because they impact on how some sections of the public view and respond to the restrictions needed to deal with it. It matters, in relation to Brexit, because at every step of the way over the last four year those attitudes have both been proved wrong and yet remained dominant. And it matters in relation to the only currently important Brexit issue. For it is precisely the prevalence of those attitudes amongst the ‘Brexit Millenarians’ which constitutes the sole block to the transparently obvious fact that the transition period has to be extended.

It perhaps also matters in the longer-term. The linked themes of irresponsible disruption, contrarian drivel, common sense simplism, and nostalgia have proved remarkably resilient even in the face of the last few years of Brexit turmoil. The coronavirus crisis may well serve to discredit them, if the population wearies of turmoil, sees contrarianism as tedious frivolity, recognizes the importance of expertise in dealing with complexity and, perhaps, comes to see the crisis as its own rather than a re-run of those of decades ago. The world – Brexit included – already looks rather different to how it did just a couple of weeks ago. By the time this crisis is over, it may be unrecognizable.

Note: I am not sure that I will continue to post every week on this blog given the lack of substantial Brexit news, but will certainly do so as and when there is such news.

Friday 20 March 2020

Extending the transition period: Johnson’s chance to lead

As foreshadowed in my post two weeks ago and amplified in last week’s post (most of which remains relevant, although last week feels almost a lifetime ago) the key, pressing and now really sole Brexit issue is whether the coronavirus pandemic is going to lead to an extension of the transition period. If so, that is going to have to be applied for by the end of June. Hence it really is a pressing issue in the context of the near certainty that all of the current coronavirus restrictions - if not even more stringent ones - in both the UK and EU countries will still be in place by then. Attempts to run this week’s scheduled negotiations remotely foundered, and they were cancelled. Subsequently, Michel Barnier tested positive for the virus.

In any logical world an extension would be a no-brainer (£), and clearly in the interests of both the UK and the EU. Yet, as a very good discussion of the issue by Luke McGee of CNN shows, it presents a massive political dilemma for Boris Johnson. This flows directly from his own insistence that there will be no extension but, beneath that, from the implacable opposition to it from within his own party. The Brexit Ultras do not work on normal logic, and could punish any backsliding on the date. As has been the case throughout the Brexit saga – but with consequences which are now more dramatic than ever - these diehards have a hold on the fate of the whole country which is quite disproportionate to their numbers.

Brexit still matters

For as long as the current timetable remains in place, it is both legitimate and necessary to go on talking about Brexit. It is becoming increasingly common to hear it said that, in the face of coronavirus, Brexit is unimportant and neither it nor the extension question should be discussed. That is an inane proposition unless or until the government pause and postpone. For without that happening Brexit will still be underway and decisions being made that will affect us for a very long time. It’s entirely asinine to say simultaneously that Brexit must go ahead despite coronavirus but that we shouldn’t discuss it because of coronavirus.

In any case, it’s perfectly reasonable to recall that Brexit is making coronavirus more difficult for the UK to handle. The number of nurses from the EU who have been put off working in Britain since the Referendum is one obvious example. The potential delays it will cause access to a future vaccine, mentioned in my last post and analysed in more detail by Professor Martin McKee and others this week, is another. The reluctance of the government to avail itself of the EU’s accelerated procurement process (£) for ventilators and testing kits is a third (even if it is dropped, that reluctance is telling).

The latter example, in particular, bespeaks of the continuation – despite coronavirus – of the Brexiter’s enthrallment with their culture war. Witness the glee with which Nigel Farage and others greeted the UK being exempted from the US’s European travel ban. It was mistaken in its own right (the initial ban was on Schengen area countries, not EU countries per se) but in any case the ban was rapidly extended to include the UK. But the point – as with all the articles suggesting that coronavirus somehow justifies Brexit (£) – is that, once again, Brexiters cannot stop making bogus claims as if they are still campaigning for Brexit, rather than accepting its real consequences.

Extension isn’t about stopping Brexit

Stuck in that culture war groove, many Brexiters are wrongly treating the growing calls for an extension as some kind of remainer rearguard action against Brexit. That’s total, paranoid nonsense. As of 31 January that battle was over. The issue is how Brexit is done and the need for a common sense recognition that coronavirus has massively reshaped the political and economic landscape. Even before its economic effects have fed through into official data the UK economy was at a virtual standstill and manufacturing exports at a three year low (£). There is only so much damage that can be absorbed in such a short period – this week’s dramatic sterling falls show how coronavirus and Brexit are interacting to inflict further damage - and ending the transition, whether with a deal or without, at the end of the year will increase it totally unnecessarily.

I suppose it is possible that, in the end, the magnitude of government economic intervention to mitigate the effects of coronavirus may also cushion the additional Brexit damage. But, even if so, the effects of post-Brexit terms of trade will matter for many years. Equally importantly, so will the long-term effects of all the other arrangements for regulation and cooperation (or otherwise) over security, education, energy and so on.

Nor is the issue just about mitigating the simultaneous economic effects of coronavirus and the end of the transition period. It is also about the lack of governmental capacity to undertake the negotiations at the present time, as civil servants, rightly, prioritise work on coronavirus. As is widely remarked upon, the coronavirus measures are the biggest set of social restrictions since the Second World War. It just can’t make sense to try to undertake at the same time the biggest re-configuration of international economic and political relations since the same date. For that matter, governmental capacity within the EU is also heavily circumscribed by the coronavirus crisis (and, note, the EU also has the right to apply for transition extension, seeking UK agreement).

The same is true for businesses. They now face all of the damage and disruption of coronavirus whilst also having to prepare for whatever the end of the transition period may bring (here’s Professor Anand Menon, giving Select Committee evidence to that effect this week). It’s not even just a matter of dealing with two independent events, but of the trade-offs between them. As one business leader, quoted by the Daily Telegraph’s Europe Editor, Peter Foster, pithily put it “am I supposed to be making ventilators or hiring customs agents?”

Beyond the capacity of the British economy and polity to deal with Brexit and coronavirus simultaneously lies another important consideration. The magnitude of the virus crisis is such that there is really no way of knowing what the British, European and global landscape is going to look like once it is over. In the absence of that knowledge, the kind of relationship that Britain is going to need with the EU, and vice versa, is also unknowable. Even if it could be done, any deal struck this year may be completely unsuited to those future needs. Why rush into it blind?

There’s nothing magical about 31 December

Overall, the key point is that there is absolutely nothing magical about the date of 31 December 2020. It has been made talismanic by Johnson and the Brexiters, but it can be unmade. Yes, it is ‘enshrined in law’ (by the Withdrawal Agreement Act), but that could be re-legislated. In any case it only arises as the legacy of May’s deal, and, at that time, was linked to the original departure date of 29 March 2019 which would have allowed for a much longer transition period. It also arises from synchronizing with the EU budget cycle, but it would seem strange if Brexiters regarded that as sacrosanct.

As things stand, there are now numerous well-sourced reports that the UK will seek an extension. Yet this continues to be publicly denied by Boris Johnson and other ministers. The government is pushing on with the Trade Bill (though a straw in the wind may be that it does not give a date for the end of the transition period). Indeed according to the Foreign Secretary Dominic Raab this week the coronavirus crisis strengthens the case for sticking to the current timetable. This amounts, as the MP Ben Bradshaw put it, to “reckless insanity”. And David Davis (£) – the former Brexit Secretary who is invariably wrong about Brexit – after repeating the usual nonsense about the deal that Donald Tusk supposedly promised proposes that since coronavirus will depress cross-border trade it will make it easier to handle customs delays. About the best that can be said of that is that it shows that he has finally grasped that the UK is not going to have the “exact same benefits” as an EU member.

The sheer wart-hog obstinacy of the likes of Raab and Davis is beyond belief. I get that they want to leave the EU, and they’ve got their way. But faced with this unprecedented crisis, with an entire country and continent in or close to lock down, how can they not even concede the existence of the case for delaying the settlement of future terms? Of all the mad and irresponsible stances the Ultras have taken in recent years, this is surely the worst and most dangerous.

When not if?

Even so, I agree with the many commentators who think it almost certain that an extension will be applied for and agreed, perhaps badged in terms of ‘Britain’s Special Status’ or similar, which will appeal to some voters. It will most likely be announced when the coronavirus outbreak is at its height, so as to attract less attention and also to mute Ultras’ objections. If so, the key issue to watch will be whether a one-year or two-year extension is sought. Either is possible under the terms of the Withdrawal Agreement but – at least in principle – the decision can’t then be changed. That is, one year can’t later be upgraded to two (though I wonder if it came to it whether it would really be impossible to find a way), although two years could be truncated were a deal to be reached.

If the UK only seeks a one-year extension, it is unlikely to be enough (especially as we have no way of knowing how long the coronavirus crisis will last) and the inference will be that it has been kept to a minimum to, once again, try to placate the Ultras. If so, it will be folly. Much better, if there is a political hit to be taken for extending, to extract the maximum ‘reward’ for it in terms of time for manoeuvre (not that even two years gives much breathing space). But, more likely, the supposedly easier route will be taken and, before we know it, that new deadline will be looming.

Not, of course, that there is absolute certainty that there will be an extension. Despite, as stated above, its obvious logic, if these Brexit years have taught us anything it is that normal logic no longer applies. But perhaps that should be refined a little. Whilst Brexit Ultras may not work on normal logic, they do have a logic of their own in which expectation of betrayal is central. Thus they fear that, even now, Brexit might somehow be reversed and that an extension to the transition period might allow that.

I do not think they are right, and my reasons for advocating an extension are not animated by an expectation that it will have that outcome. In any case, reversal would presumably have to mean an application to rejoin – there is no other mechanism now that the UK has left. Even so, it’s not inconceivable that post-coronavirus the world will look so different that Brexit is very widely seen by the electorate as a terrible mistake and rejoining gains popular support. Yet that is just as likely – possibly even more likely – to be so if a botched deal (or no deal) is rushed through as it is if an extension occurs. Indeed Brexiters should be very wary about this. For whilst there is currently little public clamour for an extension, if we begin to emerge from the coronavirus crisis only to immediately face a fresh Brexit crisis toward the end of the year the backlash would be substantial.

Johnson’s chance to lead?

Given this and the near inevitability of extension, Boris Johnson actually has an opportunity – and also a need – to make a virtue of that necessity. Rather than have it forced on him by events in a few weeks’ time, he could advocate it now. In the process he could throw down the gauntlet to the ERG and, in the circumstances, very likely face them down. Thereby, he would have a reasonable claim to have transcended the gulf between leavers and remainers and be governing in the interests of the whole country.

More than anything, his biggest challenge now, which will likely define his political legacy, is to gain public trust and to repay it. Whilst he is remembered as the man who repeatedly fronted the £350M Brexit bus lie, despite the corrections of the UK Statistics Authority, his pronouncements about “sending the virus packing in twelve weeks” come across as more dodgy sloganeering and appeals to “follow the science” ring hollow. But if he were to tell the truth about the need for an extension, he might finally move beyond being the Brexit campaign leader to being the ‘nation in crisis’ leader he clearly craves to be seen as.

Friday 13 March 2020

Viral Brexit

Despite news coverage being inevitably swamped by the coronavirus pandemic Brexit is still ongoing and indeed there are several points of comparison or connection between the two. For Britain, unlike any other country, is now embroiled in these two simultaneous upheavals - one of which is entirely of its own making.

One comparison comes with the scenes of panic buying of, in particular, toilet rolls, soap, hand sanitiser, paracetamol and some dried foods, like pasta. It’s been widely remarked upon that this shows little of the Blitz spirit that some Brexiters are so fond of invoking. In fact, a better point to make is that the Blitz spirit is itself something of a myth, as the historian Angus Calder has shown, and, anyway, we really need to drop this constant preoccupation with World War Two.

Panic buying and supply chains

In any case, the real connection is the complexity, and accompanying fragility, of modern supply chains. It has now been widely discussed how manufacturing firms, especially in the auto and aerospace industries, use cross-border just-in-time (JIT) production techniques which mean that even small delays have a massive impact on them.

Perhaps less widely understood is that similar techniques are commonly used in retail and distribution industries. The days of carrying massive stocks of inventory ‘just in case’ (JIC) of demand peaks are largely gone. Rather, JIT distribution has become the norm. This, combined with the consumer expectation of a wide variety of goods being available, especially year-round supplies of seasonal foods much of it sourced from the EU, creates a situation where extra delays very quickly translate into shortages which in turn provoke panic buying. It is not a sign of some degeneration of national spirit, but simply an artefact of modern economies since, at least, the 1980s.

Of course, some may say that it is a terrible system that ought to be supplanted by a more locally-based economy, more extensive inventory holding and a changed expectation of speed of delivery and extensiveness of availability. Against that, many would resent the reduction of choice and the higher prices such a shift would entail.

But regardless of that debate, it is a fact that once the transition period is over, even if a trade deal is done, there will be – on the government’s own admission, now that the promise of frictionless trade has belatedly been dropped – new border frictions because of customs checks and formalities. For frictions, of course, read delays. These will be somewhat greater than they would have been if the government sticks to its latest decision that the UK will also leave the EU’s ‘safety and security zone’ (£). In the absence of a trade deal, the frictions will be further increased, and there will also be price increases due to tariffs.

Thus it is a reasonable expectation that the panic buying occasioned by coronavirus fears is only a small taste of what is likely to occur next January, because some and perhaps many businesses will not be able prepare in that timescale. In due course, that will settle down as businesses adapt to the new situation, but in doing so the costs which frictionless trade and international JIT production and distribution had stripped out will be re-instated, meaning either that businesses will cease to be viable or that prices will increase, or both. Other things being equal, those costs will be permanently locked in to the British economy.

Regulation and Brexit at any cost

Beyond the complexity of modern supply chains lies the complexity of modern regulatory systems. Again, the vast majority of consumers are, entirely reasonably, completely unaware of these. As with the plentiful supply of a cornucopia of goods in the shops it is simply assumed, in countries like the UK at least, that these will be of a certain standard and quality, and will be safe. Most of us don’t know much more than that ‘they’ wouldn’t allow goods in the shops otherwise - and have little idea who ‘they’ are or what ‘they’ do. That only changes when something goes wrong and regulation is revealed as being the necessary infrastructure for a safe and commodious life.

The European single market might better be described as a regulatory union, and that would certainly be a better description of the EU than a ‘federal super state’. But of course such a regulatory union does imply a supra-national system for making and enforcing regulations, hence removing the need to do this on a national basis. Yet it is this to which Brexiters object and it is now driving the government to ever more hardcore and, frankly, bizarre extremes. I wrote in last week’s post (in an analysis quoted in the FT this week [£]) about how this has led to the ridiculous decisions not to participate in the Unified Patent Court, the European pandemic warning system and the European Arrest Warrant (leaving the safety and security zone, mentioned above, is yet another example from last week).

Within hours of posting that blog it was announced that, additionally, the government will not seek to maintain any form of membership of the European Union Aviation Safety Agency (EASA), and will develop its own national system. This is to cost an estimated £30-40 million a year to develop, against an annual EASA contribution of £1-4million (£). Less widely commented on, at a Select Committee session this week Michael Gove also confirmed that the government would not seek participation in REACH, the chemicals industry regulatory system, a major blow to that industry which will add significantly both to costs and supply chain friction.

These are yet more, and perhaps the most significant, examples of how Johnson’s government is taking an even harder line than May’s, yet more examples of doing so despite the very clear warnings of the damage they will do to some of Britain’s most important industries, and yet more examples of Brexit being enacted in ways not even mentioned in the Referendum or in the recent election campaign.

As for cost, it hardly seems to matter anymore, witness the National Audit Office report this week showing that last year the government spent £4.4 billion on preparations for Brexit*. Hence, presumably, the government’s latest refusal (£) to publish economic assessments of its preferred trade deal with the EU, whilst happily doing so for the tiny benefits of a deal with the US (all of 0.16% more GDP growth over the next 15 years). It is not unduly cynical to suppose that those assessments show how damaging such a deal will be, not least because we already know from the 2018 assessments that a ‘Canada-style’ deal, as the government is seeking, would mean a 6.7% reduction in GDP growth over 15 years compared with not leaving the EU, and a no deal (pretty much what the government now call an ‘Australia-style’ deal) would mean a 9.3% reduction.

Of course, to the Brexit Ultras it is perfectly clear. Brexit does indeed mean exiting any and every body that has any connection whatsoever with Europe, and cost is totally irrelevant. Yet it is highly doubtful whether that is what most voters, or even most leave voters, want. On the contrary, I would imagine that most people understand very well that, as with international sporting bodies, there’s no terrible loss of ‘sovereignty’ in belonging to such regulatory organizations. Equally, if they were widely understood, the mounting costs of Brexit would surely alarm voters – they certainly increasingly alarm businesses (£). If the Labour Party elects an even half-way competent leader, s/he will have plenty to work with.

Coronavirus and expertise

The need for international bodies and cooperation is another Brexit-relevant lesson of the coronavirus pandemic. It is a reminder of how interconnected we are. People travel around the world for work or for leisure and with them they carry diseases, the responses to which may be nationally inflected but entail international cooperation and information-sharing. This is not just a general observation. As regards coronavirus specifically, by the time a vaccine is (hopefully) developed the UK will be outside the European Medical Agency (EMA) and therefore its fast-track drug approval system as well as its joint procurement scheme. Potentially, this means Britain getting any vaccine later and at greater cost than the EU.

Notably, the coronavirus epidemic shows the importance of expertise. No doubt people find this easier to accept about medical and scientific matters than they do about economics and business. Yet one shouldn’t draw too sharp a distinction. For one thing, the epidemiology of a new virus isn’t a precise science and is open to interpretation amongst experts. In any case, the scientific evidence about the virus still requires political judgment in order to formulate policy. On the other hand, although economic and business knowledge often entails assumptions and contested facts it also contains a wealth of technical expertise and practical experience which politicians are foolish to disdain. Equally, there are just as many crackpot theories and claims about the virus swirling around social media as there about Brexit.

The point is more that the response to coronavirus has not so much discredited the Brexiter ‘we’ve had enough of experts’ line as it has served as a reminder of how Brexit has debased trust in politicians. Having seen the lies and incompetence of their approach to Brexit, it is very hard to trust Johnson and the other Brexiters who now run the country to be honest and to make sensible decisions about coronavirus. Personally, I’ve never held the view that politicians in general are liars and charlatans (I think that the Paxman [sic] ‘why is this lying bastard lying to me’ line is part of a mindset that has traduced politicians and deformed politics). But Johnson and some of the other Brexiters seem congenitally incapable of telling the truth, and in winning Brexit they have come to believe that this doesn’t matter and, even, that it is a strength. That is a serious problem in the context of coronavirus policy, where public trust is central.

Coronavirus and Brexit entwined

That aside, the backwash of Brexit runs through almost all that is happening in politics. The revolt against the Huawei decision was led by prominent Brexiter Iain Duncan Smith, supported by Liam Fox, Esther McVey and David Davies and is partly about their desire to see post-Brexit UK in lock step with the US. And although, for now, Johnson has seen them off it also reveals how, despite his large majority, the Prime Minister is still vulnerable to backbench rebellions of the sort that the ERG would be only too willing to mount if he ever showed any sign of softening (or just being more practical in) his Brexit stance.

As for the budget, whilst largely reconfigured in terms of coronavirus mitigation, and in any case apparently unconstrained by the once sacrosanct notion of ‘not maxing out the credit card’ (one can only imagine the screams of horror from the Tories had a Labour government delivered it), it was underlain by the fiscal damage Brexit has already done and will continue to do. The costs of Brexit didn’t even get mentioned in the budget speech but, lurking in the undergrowth of the OBR report, they were there. There was no Brexit dividend – on the contrary – and real business investment has scarcely grown since the Referendum. Even before the effects of coronavirus started, economic growth had sunk to zero.

Indeed, this really points to what is emerging as the central issue for the coming months. Brexit on its own implies a major national upheaval. Coronavirus on its own implies the same. The two together are overwhelming, and this really matters given the time frame of the negotiations. It’s clear that the UK and many EU countries are going to be fully occupied by the virus for at least three months and very likely more. So that alone brings us to June when decisions about extending the transition period will have to be made and when the UK has already threatened to leave the talks if an acceptable deal is not in sight.

Time and governmental capacity

The government has stated that it won’t seek an extension to the transition period because of coronavirus (I still think that might change, as per my last blog, and next week’s face to face negotiations have been cancelled, though it is not clear if they will occur remotely), which means that even if the talks continue the already tight timing gets tighter. Hardly will coronavirus outbreak be, hopefully, slowing down than it will be the summer holiday season, and many medical experts anticipate a second coronavirus spike later in the year. And apart from having to negotiate a future terms deal, the government has also to develop all of the new regulatory systems to replace REACH, EASA etc in the same rapidly shrinking time frame.

Even without coronavirus, but especially with, it’s very unclear that the UK government has the administrative and political capacity to do all that it has set itself, or that businesses and organizations which are also grappling with both coronavirus and Brexit can have the necessary processes in place for the end of December. Apart from anything else, civil servants, business people and indeed politicians get sick just like anyone else. And that’s if you can get the staff – it was reported this week that the government is struggling to recruit trade negotiators, not just for the EU talks but for all the other trade deals it wants to make.

A self-inflicted double whammy

It seems inevitable that coronavirus will continue dominate the news and public concern for several weeks, at least, whilst much less will be heard of Brexit. But it is important to realise that, uniquely amongst the countries suffering from the virus, Britain has the double whammy of combining that with dealing with Brexit. Whilst it is tempting to think that coronavirus has shown the relative triviality of Brexit (and globally that’s probably true) it will hopefully be a relatively short-term crisis, whereas Brexit will impact over a longer time frame. For Britain, the two are now intertwined shocks, interacting with each other.

Of course they are also very different in that, unlike coronavirus, Brexit is a totally self-inflicted damage. Granted, Brexit is now a fait accompli, but driving it on in such a tight timescale and in such a doctrinaire and costly form is solely down to government dogma. It is entirely unnecessary anyway, but doing so whilst facing the biggest public health crisis in decades is little short of demented.

*This spending was on work for both ‘deal’ and ‘no deal’ (i.e. no Withdrawal Agreement) scenarios. It is not possible to fully disaggregate the money spent on each, but on my reading (see especially p.22 of report) at least £1.2 billion of spending (not allocation, which was higher, but spending) was specifically on no deal preparation.

Friday 6 March 2020

Negotiating events

With Britain having left the EU, this week saw the beginning of the negotiations about the future terms of UK-EU trade and other relationships. That anodyne sentence ought to anger leave voters as it is not what they were assured by the Vote Leave campaign which stated that “we will negotiate the terms of a new deal before we start any legal process to leave “ (p.11 of link). Given that we are constantly told that the government is enacting what people voted for it is perfectly reasonable to continue to record that what is happening is very far from that.

The talks begin in an atmosphere of deep distrust (£). Many believe that they will collapse with no deal being done, and some believe that this is actually the government’s plan. By contrast, the respected trade expert Sam Lowe of the Centre for European Reform makes the ‘relatively’ optimistic argument that a deal is still possible. But this, he says, is “largely due the UK’s lack of ambition”. In other words, a quite limited zero tariffs, zero quotas deal is conceivable although, as Lowe notes, even this will entail compromises to be made by both sides.

Here, too, we are a long way from what was promised. Not only was a deal supposed to be easy, but it was supposedly going to be a deep and special relationship, going well beyond a basic Free Trade Agreement. The flaws in that claim have been widely remarked upon, but the more fundamental – though related - issue is, indeed, that of the distrustful atmosphere, since it is this which now makes an extensive deal so unlikely and no deal at all quite possible.

The consequences of Brexiter negativity

There was no inevitability about that. I’m not by any means someone who imagines the EU to be perfect or faultless. But very little of this is down to them. The Referendum result was greeted with sadness and some bemusement, and subject to reasonable conditions as extensive a relationship as the UK wants has been on offer. The EU has been remarkably consistent about this, and has behaved very much as the UK would have wanted it to had it been another country leaving and the UK remaining a member. It has certainly been fairly rigid in its approach, but that’s an inevitable feature of being a multilateral rules-based entity. If it were not, Brexiters would be the first to denounce it for doing shabby back-room deals without regard for the consent of its members and the rules that bind them.

Rather, it has arisen because, from the beginning, Brexiters have reacted to their victory not with happiness but with anger, and this infected first Theresa May’s approach to Brexit and now Boris Johnson’s. Immediately, there was talk of not paying the divorce settlement, suspicion about the EU’s motives, disparaging comparisons with the USSR or Nazi Germany, and bellicose sabre-rattling.

Ridiculous expectations of what the UK could have as an ex-member were held even as the red lines ruling these out became harder and harder, and as it became clear these expectations would not be met the invariable reaction was to treat this as punishment. And when agreements were made, as at the end of phase 1 of the Article 50 talks, the UK immediately repudiated them as non-binding. This has developed to the current situation where radically different claims about what the Northern Ireland Protocol means threaten to derail the negotiations entirely. Here again we should recall that this only arises because of the false claim of the Leave campaign that Brexit would have no implications at all for the Irish border.

This is not ‘remainer negativity’. It is about, precisely, ‘Brexiter negativity’. Had they approached Brexit in a confident, positive, generous even joyful fashion then the outcome might have been very different. But instead the story has been one of hostility and dog-in-the-manger resentment, stoked up by a vitriolic media. Moreover, the onus was on Britain, as the initiator of the divorce, to set a magnanimous tone. Only at brief moments, such as May’s Florence speech, has there been such a tone, and that speech sounded more like a case for Britain joining the EU than for leaving. Johnson’s passive-aggressive references to ‘our European friends’ certainly lack any such magnanimity, whilst the childishly insulting antics of Farage and other Brexit Party MEPs in the European Parliament have undoubtedly done much damage to UK-EU relations. No such discourtesy has been evident from the EU.

Brexit beyond logic and reason

So we have now arrived at a point where out of sheer, dogmatic, remorseless antipathy to anything and everything remotely connected with the EU the UK is ripping up almost every form of co-operation, regardless of the costs. Examples include the Galileo Global Navigation Satellite System programme. This is a complicated story, involving two different aspects, the first being British companies’ rights to bid for certain sorts of contracts and the second being British access to its full military capabilities. In both these respects, what was offered to Britain, as a third country, was very limited. Still, negotiations were ongoing, and there was potential scope for an agreement, but in 2018 Theresa May pulled out of the talks and announced that the UK would develop its own system at massive expense, initially estimated to be £3-4 billion. This week, it emerged (£) that this system was delayed, over-budget, and mired in disputes.

Needless to say, Galileo did not even figure in the Referendum campaign, any more than did Euratom which the UK is also leaving in order to replicate its functions at national level at huge cost. Even Dominic Cummings has described that decision as “near-retarded” and, far from being the will of the people, only 10% of the public support it.

Certainly no one knew Brexit meant, or wanted it to mean, the latest government decision to pull out of the Unified Patent Court (UPC) – having ratified membership well after the Referendum, in 2018 - which is not even an EU body. This decision will have major consequences for knowledge-intensive businesses, in particular. Nor, especially now, is it likely to be a public priority to leave EWRS, the EU’s pandemic warning system, but that is what the government have just decided to do along with also deciding not to pursue participation in the European Arrest Warrant. Needless to say, again, none of this was set out even during the recent election campaign.

These last three examples all show a hardening of the UK’s position under Johnson even compared with May, and, along with other cases, they flow from two things. On the one hand, an almost pathological aversion to even the most minimal and peripheral roles for the ECJ. On the other hand, an idea that anything sought in the non-trade arena that is outside of a ‘Canada-style’ relationship will give the EU a negotiating advantage in the trade arena by conceding that the UK wants more from Brexit than such a relationship.

This assumes that the EU would drop its Level Playing Field (LPF) conditions for a trade deal since, on non-trade issues, the UK demonstrably ‘only wanted to be like Canada’. But that is a non sequitur, as the LPF demand is connected to the size and proximity of the UK economy to the EU – and hence to the trading relationship – and will exist quite independently of the non-trade considerations.

So, on either of these rationales, all that is achieved is a quite spectacular British cutting off of its nose to spite its face. And this is where, certainly, there is a distinction to be drawn between the EU and the UK in their approaches to Brexit. For the EU has been both rigid and, yes, ruthless in pursuit of its interests. There’s nothing wrong with that, and nothing wrong with the UK doing the same. But the UK is doing things which can in no conceivable sense be in its interests. That isn’t the same as saying that Brexit is not in the national interest – I think that is so, but clearly the government and a large part of the population disagree – it is saying that Brexit can be pursued without this attempt to totally eviscerate even the most limited and benign forms of mutually advantageous administrative cooperation.

Of course, some will say, that is because the Conservative Party is just acting in its own interests. But there are few votes in leaving the EWRS, for example. Of course, others will say, but it’s all about their shadowy hedge fund backers. But there is little money to be made from leaving the UPC, for example. And neither the EWRS nor the UPC will do much to stoke up the culture war, and are certainly not needed to do so.

In the absence of any discernible logic it’s difficult, therefore, to overstate the total insanity with which Britain is now approaching Brexit. It goes way beyond anything that is remotely necessary to ‘respect the 2016 vote’ and way beyond what any but a tiny handful of voters ever imagined Brexit to mean. It is certainly way beyond even the hard Brexit that Theresa May embraced for all that, as noted, some of it roots back to that time.

A question of loyalty

In these circumstances, it is hardly surprising that the conflict between the government and civil servants is intensifying, as discussed in my previous post. As if in confirmation of that analysis, almost immediately after that post came the dramatic resignation of Sir Philip Rutnam. In the post I alluded to the conflicts in the Home Office and also said that we could expect further push back from the civil service against the position in which it has been put by Brexit. These conflicts certainly shouldn’t be complacently downplayed as just the familiar fights between ministers and civil servants that have long occurred.

Whilst the issues about Priti Patel’s alleged behavior go beyond Brexit, it does lie at their heart in that the clashes with Rutnam began over the workload entailed by Brexit, and the risks entailed by seeking to deliver that work in the very short time frame the government is insisting upon in order to meet its self-imposed refusal to seek an extension to the transition period. Certainly the media and social media debate that followed Rutnam’s resignation demonstrated that it split along remainer versus leaver lines. Perhaps the most dangerous aspect of that debate was the suggestion that since Patel is pursuing ‘the will of the people’ any behavior would be justified.

It is also hard to resist the conclusion that the resignation, and its manner, were part of a much wider battle in which, in the words of Sir Mark Sedwill, Head of the Civil Service, in a statement the week before, the civil service is asserting its “enduring work to protect and promote the interests of our citizens, communities and country”. The wording is crucial here, since this work is posited as something additional to (and therefore different from) serving the government and, unlike the government, is “enduring”. That is a direct contrast with the convention articulated in the 1985 Armstrong Memorandum that “the Civil Service as such has no constitutional personality or responsibility separate from the duly constituted government of the day”.

Senior civil servants use language with great precision: Sedwill’s message was clear and intended, and it makes sense precisely in the context of a significant gap opening up between serving the government and serving the national interest. It’s a complicated distinction (for who is to say what is in the national interest, and why should civil servants have any particular role in defining it), but it does differ from simply disagreeing with policy.

Perhaps it is more akin to whistle-blowing in organizational contexts. Some may condemn particular instances of it, but most will agree that, in principle, there is a point at which individual conscience and professional values take precedence over organizational loyalties and legal undertakings. We don’t nowadays think much of the ethics of those German military officers who served the Nazi regime whilst not subscribing to it, because they treated their oath of loyalty as sacred (and, no, I’m not comparing the government to the Nazis, just making a point about the principle).

Not that the issue is necessarily, at least not yet, one of a complete divergence between politicians and civil servants. But the latter clearly have to be able to tell ministers if – as seems to have happened – the work needed for Brexit cannot be done in time. There’s no disloyalty in that, nor is there even necessarily any disagreement with Brexit. The problem arises if, as discussed in my previous post, stating such facts is taken to connote such disloyalty, and arise from a lack of true faith and belief. It is the importation of the Brexiter culture war into the corridors of power, bringing with it precisely the distrust and toxicity which has infected the negotiations with the EU, not to mention the entire country.

The power of events

So that brings us back to this first week of negotiations. As they ended, Michel Barnier spoke of the “serious divergences” between the two sides, with the expected issues being named – fishing, LPF, governance – but also security. In the past, the latter might not have figured in the list, and might have been seen as a potentially less contentious area, but the UK has decided not to open this chapter of the talks yet and the reasoning must presumably be that the government sees this as an area of leverage given Britain’s greater resources in this area, especially as regards intelligence capacity.

That has been hovering as an idea since Theresa May’s Article 50 notification letter, but then seemed to be softened in her Munich speech. Now it seems to have been weaponised again.  Even so, the overall sense of the first week’s talks was that they were less confrontational than might have been expected.

It is clearly far too early to predict how things are going to develop, but for what it is worth I am beginning to think that the government is going to become less bellicose and more flexible in its Brexit approach than has so far been the case. The reason for this is not so much Brexit itself but that, having started office in a very gung-ho manner, thinking that its parliamentary majority and disruptor ideology would enable it to sweep all before it, the experience of governing has already been chastening. The resignation of Sajid Javid, the flooding emergency, the court judgment about Heathrow expansion, the now growing row over Priti Patel, the Flybe collapse and, especially, the developing Coronavirus crisis have all played their part.

Suddenly, this feels like a beleaguered administration. The hubris I wrote about just last week is, already, looking just a little faded. In particular, Coronavirus has forced Johnson to bow to pressure to appear in public, forced ministers to appear on shows they had been boycotting, forced politicians and the public to recognize the need for experts and technocratic planning, and demonstrated the power of unexpected events to derail economic and political plans.

This analysis may be premature and flawed – over-reacting to what may be ephemeral news - but if it is right then it could lead to a limited, partial deal being struck in Brussels, under cover of the Coronavirus causing postponement of meetings (£), and this then used to justify some extension of the transition period under a different name in order to resolve outstanding issues. There are already a few speculations to that effect, as the links given show.

That’s not to say that this would be an especially desirable outcome. It might avert a new cliff edge next January, but would mean a continued slow burn of economic damage, deferred investment and so on. And that would further bolster the denialism about the adverse effects of Brexit, as these would be more gradual and more difficult to disentangle from other factors such as, indeed, the economic impact of the Coronavirus as well as all the other expected and unexpected things which will occur. Indeed, one reason to think that this scenario might have some appeal to the government is that it would be consistent with the attempt to lose all talk of Brexit and have it merge with the wider swirl of events.