Friday 29 January 2021

This period will shape the post-Brexit narrative

The stories of Brexit disruption catalogued in my last few posts continue apace, not least because firms which had built up stockpiles in anticipation of the end of the transition period are now starting to replenish them. However, remaining stockpiles and the new* trade barriers, plus the pandemic, mean that freight movements between the UK and the EU are still 38% down on this time last year. Some 65% of trucks returning to Calais/Dunkirk are empty, over twice what is normal, and there are daily reports of companies struggling, or failing, to deal with export processes (£).

The UK is not yet imposing full import controls, but even without that there are numerous reports of customers astounded to find that they have to pay customs duties, import VAT and handling charges on goods delivered to them from the EU. This links with reports of uncollected incoming freight piling up at ports (£).

There are now the very beginnings of hard data about the aggregate effects, including indications of a harp drop in services exports. Obviously Covid is playing a big part, but the fact that the UK figures are worse than the US, France and Germany amongst others is suggestive of a Brexit effect, and the IMF has reduced its forecast for UK output growth for the first quarter of 2021 by 1% as a result of Brexit disruption.

The long-term effects of Brexit on trade have yet to be seen but the fundamental reality remains, not as a matter of doctrine but as matter of plain definition: Brexit creates new barriers to trade with the EU and so suppresses trade with the EU. As I argued in a piece in Byline Times this week these barriers are in the process of becoming structurally embedded, and small firms are the biggest losers (£). Of course it may, now, be creating new opportunities – for customs agents, say, as when the government said Brexit was ‘growing the customs sector’, or for staff at Kent lorry parks – but it would be perverse to call these, in any substantive sense, ‘benefits’.

That is not to deny that there are numerous business benefits of Brexit. It’s just that they don’t accrue to British businesses and people. EU countries are the happy beneficiaries of financial services leaving London (£). Irish ferry companies are mopping up business by creating new routes to bypass Brexit Britain to the detriment of Welsh ports (activity through Holyhead has dropped by 50% and through Fishguard by a whopping 75% since the end of the transition period). Dutch, and no doubt other, warehousing and logistics firms are experiencing a boom as UK firms seeks bases in the EU.

The latter connects with the most extraordinary Brexit story of the week, with it being reported that government officials are advising British firms to set up EU subsidiaries (and, hence, to shift employment) to avoid the problems of Brexit. The reason this is extraordinary is not in the idea of firms doing so – that is simply the economic logic of the situation Brexit has created – but in the fact that a government extolling the virtues of Brexit is providing such advice. That said, it’s a story that needs to be treated with a little caution in that it’s not clear how widespread this advice is, nor whether it is official advice as opposed to informal suggestion.

Brexiters’ reactions

It is interesting, and politically important, to see how leading Brexiters are reacting to what is happening, not least because this may set the tone for how leavers, especially, in the general public respond. It’s a mixed bag, but mainly depressing. Some are simply boneheaded refusals to understand it, as with John Redwood calling for the government to intervene to ensure the free flow of goods between Great Britain and Northern Ireland. But of course the end to such a free flow was integral to the Withdrawal Agreement. Since Redwood stood on a manifesto to which that agreement was central, voted for it in parliament, and the government signed it his comment is either stupid or dishonest.

Others resort to sophistry, to put it more charitably than is probably warranted, such as former Brexit Party MEP Ben Habib. He claimed this week that the plight of the fishing industry was not down to Brexit but caused by the pandemic suppressing demand as restaurants in the UK and EU were closed, by the Trade and Cooperation Agreement (TCA) having given EU fishing boats unfettered access to UK waters so that EU fishermen could supply EU restaurants (even though Habib says these are closed), and by the bureaucracy created by the TCA for UK fish exporters to the EU.

Where to begin? The pandemic has been going on for a year, but the rotting fish piles only began when the transition period ended, so they plainly are very much to do with Brexit. It can’t be because EU fishermen have taken all the fish, or these fish piles would not exist, and these fish piles are there not because there are no customers for them but because they can’t be shipped to those customers. That is, indeed, because of the bureaucracy that now attaches to UK exports, including fish, to the EU. Which is, precisely, down to Brexit because it was created by leaving the single market and customs union, as advocated by Habib.

A different account was given this week by another Brexit Party ex-MEP Lance Forman, who himself works in the fish industry (he owns and manages a smoked salmon business). He offered a more coherent argument, yet one which still denies that what is happening is a problem of Brexit. Rather, he suggested it is a problem of lack of preparedness for the bureaucracy entailed by Brexit. It’s a fine distinction, in that the bureaucracy is, itself, a problem of Brexit which adds new costs to trade with the EU. But it’s true that some of the export delays might well have been avoided with better preparation. However, a big reason for that lack of preparation was that, until far too late, Brexiters refused to admit that there would be new bureaucracy – denouncing warnings as Project Fear – and because they regarded any extension to the transition period, which might have aided preparation, as unconscionable.

Forman also bemoaned the fact that the EU is applying import controls when the UK is not doing so. But that arises simply because the UK government is not ready to do so, again an argument for extending transition, but not some unreasonable disparity of treatment. Thus, whilst the tone is more urbane, it is all of a piece with reports, such as the Daily Mail’s, which speak of the “dirty tricks” of “pernickety jobsworths” in enforcing the rules which the 17.4 million – who, don’t forget, knew exactly what they were voting for, and it is remainer elitism to suggest otherwise – voted for.

Whatever the tone, the meaning is the same: a refusal to accept that the damage that is being done to British business, well beyond fishing, is the direct consequence of Brexit and the unavoidable responsibility of those who advocated it. This isn’t surprising, because it has long been the hallmark of Brexiters that they abjure responsibility – it’s always someone else’s fault or because, as its apologists are wont to say of Communism, Brexit inevitably hasn’t been done ‘properly’. In May 2018 I compiled a list of six excuses that Brexiters make for why the consequences of Brexit are nothing to do with them. They continue to be rolled out.

Brexit really does mean Brexit

But I think there are some other features of Brexit mentality lurking in all this as well. One is the frequent implication that the EU is some kind of cuddly uncle who will or ought to be ‘nice’ to Britain. That’s sometimes found amongst remainers, too, but it is far more bizarre from Brexiters who, having spent decades denouncing the EU for every evil under the sun, now seem to expect that it will just benignly waive the rules in order to help the UK out of a mess of its own making. Linked to that is the phenomenon, which I have also noted in the past on this blog, whereby some Brexiters seem to think that leaving the EU was a kind of symbolic act, rather than one with concrete legal effects. So it seems to come as a surprise and, somehow, ‘not fair’ when the EU applies the rules to Britain that apply to other third countries.

It is neither surprising nor is it ‘petty’ or ‘vindictive’ to do so, as was said during the recent row (£) about the confiscation of a ham sandwich. This rule exists and is enforced because of the very real dangers of African swine fever, which can devastate pig farming, or even of foot and mouth disease. Indeed this is why, back in 2019, the British government launched a campaign warning tourists not to bring such items back home with them. So what, exactly, do Brexiters expect EU border officials to do? Just shrug and say that because you’re coming from Britain the rules don’t apply? Or let you off because you didn’t realize these rules existed and that Brexit would mean they applied to Britain?

What of the future?

There is an obvious linkage between this lack of realism and the idea that the adverse effects of Brexit are the fault of the EU, or ‘punishment’ from the EU. To the extent that this narrative takes hold there is little chance of any honest appraisal of Brexit. Equally, it contributes to the continuing antagonism with which the Brexiters seem determined to conduct relations with the EU post-Brexit.

The ongoing row over the diplomatic status of the EU’s Ambassador is a good example of this. It’s not just that this is – indeed – petty, it’s also, as Georgina Wright argues on the Institut Montaigne blog, misguided in terms of the UK’s interests and global standing. Britain’s stance on this is causing serious anger across the EU’s member states (£) and it is intensifying, with the EU now cancelling a meeting with the UK’s Ambassador (£).

That matters, because apart from growing the economic costs of Brexit, the geo-political ones have also been profound. As Dr Rudolf Adam, of the University of the Federal Armed Forces Neubiberg (Munich), writes “the enduring legacy of Brexit is a massive loss of respect and sympathy for a country that for centuries was admired as a bastion of pragmatism and liberal values. The UK is losing soft power faster than hard power.”

Amongst other things, that implies the UK needs to work constructively with the EU through the TCA partnership apparatus and also, especially, to make the Northern Ireland Protocol work via the Joint Committee. Moreover, there are and will be a huge range of security and foreign policy issues – Hong Kong, Russia – where the UK will need the support and friendship of the EU and, no doubt, vice versa. And any idea that the UK can take a leading role in international responses to climate change, or anything else, whilst maintaining a ‘dog in the manger’ attitude to the EU is absurd.

From that point of view, there’s no conceivable benefit to Britain in taking this position of the EU Ambassador. It would seem to be explained partly by the visceral hatred that Brexiters have for the EU. It may also be a prelude to far more substantive conflicts over the TCA and may have the effect, if not the intention, of providing a ready-made narrative to justify pulling out of it.

Equally, again in effect if not intention, continued and growing antagonism towards the EU serves to divert attention from the Brexiters being held to account for what they have done, because it enables them to present the consequences of Brexit as being the fault of the EU and to deflect anger onto the EU. In this way, Brexiters can continue to re-fight the battles of the referendum.

It’s hard to resist the conclusion that this lies behind current attempts to justify Brexit by reference to the failures of the vaccination programme in the EU or the row over vaccine delivery (£), which needless to say is more complicated than the tabloids allow (see also, for the wider context of the issue, this report in Politico). Tellingly, as Maria Tadeo, Bloomberg TV’s Europe reporter, says, within EU countries, the narrative of this row is not generally framed in terms of Brexit at all. It certainly has little to do, or should have little to do, with the case for a long-term strategic partnership between the EU and the UK.

Shaping the narrative

The coming few months will therefore be very significant for two reasons. Firstly, because this is the period during which the effects of Brexit will be most visible and, therefore, during which the possibility of holding Brexiters to account is the greatest. This is why it is important to keep highlighting those effects and challenging attempts to deny them. If they manage to implant a narrative that these effects are nothing to do with Brexit, or are down to the EU being unreasonable, that may well become established and much more difficult to challenge later. For, by then, the visible effects will have declined (though the underlying damage will continue) and, of course, the longer-term effects will be difficult to definitively disentangle from those of Covid, in particular.

That cuts both ways, of course, in that it makes highly dubious the current attempts to claim that, had Brexit not happened, the UK’s vaccine programme would have suffered compared with how it actually is. That may or may not be true – any such claim requires a long string of counterfactuals about what would and would not have been done by multiple actors in that alternative universe. Clearly that isn’t so for straightforward cases such as that leaving the customs union creates new processes and costs for exporters.

Secondly, and even more importantly, although the damage of Brexit itself is now unavoidable regardless of who is held to be responsible for it, it is not inevitable that post-Brexit UK-EU relations have to be added to the list of that damage. As I have been arguing for months, the mandate of the 2016 referendum has now been fully discharged. Nowhere in that vote was there a mandate for Brexiters to permanently sour UK-EU relations post-Brexit, nor should those relations continue to be seen through the prism of the now dead question of whether the UK should remain a member of the EU.

So the current period is potentially crucial for changing the tone of those relations and shifting them from the virulently hostile ones the Brexiters are seeking to embed. It’s clear, as with the vaccine row, that they will weaponize whatever comes to hand in that attempt. The chances of such a change of tone are, in any case, negligible given that we have a government which is Brexiter to the core. But they are not non-existent because no government has complete control of the narrative. Other politicians, journalists, grass roots organizations, and civil society generally also have a role. And then, as the old cliché has it, there are ‘events, dear boy, events’.

*Some people dislike the term ‘new’ in this context, because what is happening is, rather, the re-imposition of barriers which had been removed by the customs union or single market. However, I think it is a reasonable usage for two reasons. First because, obviously, it is intended to mean ‘new as compared with when the UK was an EU member’. Second, because in a certain sense we are not simply facing a return to pre-customs union, pre-single market days as these rules are now being applied in the context of a very different economy to when the UK joined the EEC in 1973, in particular as regards the realities of international supply chains.

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