Living with Brexit

In my previous post I wrote about the effects of Brexit as being a slow puncture gradually degrading the economy and well-being more generally. I mentioned that one aspect of that is the structural, demography-related, problem of labour shortages across all sectors, but hadn’t at that point read an excellent Bloomberg report published a couple of days earlier which provides a more detailed analysis of this. Notably, it contained the assessment of the senior UK economist at Bloomberg Economics that “Covid was a short sharp shock, but Brexit is a slow burn”. It’s fair to say that this gradual decline has always been the expectation of the vast majority of economic forecasts for Brexit, even before the pandemic, although what I mean by ‘slow puncture’ goes beyond economics to include all the social and cultural harms.

It would be perfectly possible to fill a blog post each week with further reports of this gradual falling apart of our country. The latest examples include how Brexit has deprived Britain of being the air freight gateway to Europe; the way that the post-pandemic bounce back of German trade is far less strong with the UK than with the EU and the US; the continued “dampening” effect of Brexit shown by the latest ONS trade figures (the Eurostat figures, which use a different methodology, paint a far worse picture); the mounting evidence of massive Japanese disinvestment in UK financial services; the gradual reintroduction of mobile roaming charges for British people visiting the EU; the 29% fall since the end of transition in goods flowing between Ireland and the rest of the EU via Great Britain, with the consequent ‘abandonment’ of, in particular, the port at Holyhead; supply shortages across the board that are partly or mainly attributable to Brexit, with KFC being a high profile example of a company affected and timber being an example of a key commodity affected.

It’s definitely worth recording these and other examples and, as I’ve often mentioned before, the ‘Kelemen archive’, comprising now an astonishing listing of 817 reputable reports of Brexit damage, is a key resource. However, it’s also important to understand that there are several different, though sometimes related, responses from Brexiters and the Brexit government to this unfolding disaster.

Denial and bluster

The most predictable of these, and perhaps now the least important, comes from the hardcore Brexit ideologues. In their world, the mounting damage is largely ignored, whilst bogus or misleading statistics are quoted to ‘prove’ the success of Brexit. A recent example, from the misnamed Brexit Facts website, uses the latest ONS trade statistics showing exports to the EU have risen 20% since the referendum to ask the rhetorical question “who needs EU’s single market?”. Whilst impressing the feeble-minded, this is of course an absurdity since Britain didn’t leave the single market at the time of the referendum, but only at the end of the transition period.

These kinds of claims are often linked to highly distorted representations of the warnings that were supposedly made about Brexit, sometimes by referring to Brexiters’ own hyperbolic descriptions of those warnings as being of economic 'Armageddon'. In particular, on trade, and economics more generally, they tend to confuse the warnings made of falls in anticipated growth with absolute falls, and the warnings of reductions in trade with warnings of an end to trade. Similarly, as Jonathan Lis points out in a recent acute analysis, they typically argue that because ‘the sky hasn’t fallen in’ then Brexit has been justified. But, Lis rightly says, “Brexit was marketed as a national rejuvenation, not something to be survived”.

Presumably in search of some signs of this rejuvenation, the ‘Brexit Facts’ website (like many similar ones) also devotes much attention to boosterish stories such as how Team GB won more Olympic medals than any individual EU country. Apart from Brexit being irrelevant to this, the report is amusing to read for the contortions it has to go through to point out (correctly) that the EU isn’t a single state, denying its members national identities, given that precisely this has been a persistent myth amongst Brexiters. The flip side of this kind of bluster about Brexit benefits is the obligatory weekly, if not daily, story in, especially, the Express about how the EU is on the point of collapse.

Performativity

Closely related to the denial and bluster, but perhaps slightly more respectable, or at least subtle, in the way that they mislead, are the ‘performative’ responses to Brexit. These are things which appear to be substantive gains from Brexit but which on examination are at best trivial or at worst untrue. The false claim about vaccine licensing is the most glaring example of the latter, though less commonly heard as the EU rollout gathers pace.

More persistent are the claims made about the rollover of trade deals with countries that the UK participated in as an EU member. Here, whilst it’s true that they couldn’t be made by the UK on its own when it was a member, they only more-or-less replicate what was there before Brexit. Closely related are the claims for prospective trade deals which are, or will be, new but which bestow very little economic benefit. They are performative in being ‘for show’ rather than being of great substance.

A recent variant of the same thing was the announcement that the UK is to become a ‘dialogue partner’ of ASEAN, the South-East Asian trade group. There’s nothing wrong about this, but the EU had been such a partner for years and, anyway, it doesn’t bestow any great prizes. Yet Dominic Raab announced it as a triumph (£), whilst arch-Brexiter Owen Paterson opined that it was a “very significant” development although nothing concrete is, or could be, claimed for it.

Similarly lacking in substance is the news that the UK’s new independent geographical indication (GI) scheme has awarded its first protection, to salt marsh lamb from Wales’s Gower peninsula. Yet, unlike EU GIs, it only applies to Great Britain (not Northern Ireland, despite being called UKGI), so at best it offers very limited protection and it’s not clear that there were many, if any, cases of farmers in other parts of Great Britain trying to pass their product off as Gower lamb.

Meanwhile, to achieve EU-wide protection for GB products, such as Gower salt marsh lamb, not previously registered as EU GIs (those which had been registered prior to the end of the transition period have been rolled over), a separate application and registration process will be necessary. So again, UKGI is performative without having much substance. It’s not a false story, and it’s not totally meaningless, it's just that like ‘independent trade policy’ it doesn’t mean very much beyond the symbolism of being ‘independent’.

Bombast

Whilst much of the government’s approach to Brexit now consists of such performative posturing, the summer political hiatus is masking its bombastic response to the realities of the Brexit it created as regards the Northern Ireland Protocol (NIP). September will see the resumption of what may quickly turn into a crisis, with the various grace periods set to expire at the end of that month. In the meantime, a substantial reshaping of Ireland-Northern Ireland trade continues apace. That matters, in two contradictory ways. On the one hand, unionists, and possibly Frost, will misuse this evidence of ‘diversion of trade’ as running counter to the NIP and warranting it suspension and re-negotiation. On the other hand, it shows the value of the NIP to the Northern Ireland economy, making suspension and re-negotiation foolish and unnecessary on that ground alone, let alone for wider political and diplomatic reasons.

The extent to which the NIP row escalates into crisis will depend in large part on whether David Frost and the government persist in insisting that the Protocol be, effectively, completely revised, and on whether they follow through on the repeated threat to ‘invoke Article 16’. If not, then perhaps this bombast will be re-assigned to the category of performative – making a show of independence but with no substance. As I’ve suggested before, that may in turn depend on wider considerations of domestic politics but, to some extent, whether over the NIP or something else, such as the previous ‘vaccines war’ or the emergent row over Gibraltar, there will always be some domestic value in picking fights with the EU.

Apart from the expiration of the various Northern Ireland grace periods, the other upcoming test of the government’s Brexit resolve is over the introduction of import controls on goods arriving from the EU. The next (and really the first substantive) stage in doing so will also come at the end of September. After that, export health certificates will be required for meat, cheese, eggs, fruit and vegetables and a wide variety of other food and drink products. But, as both the Fresh Produce Consortium and the Food and Drink Federation have made clear, neither industry nor government is ready for this. The result will be further disruptions to supplies in shops, on top of those already being caused by the lack of HGV drivers and other labour shortages and supply chain problems.

Thus, again, the question will be whether the government pushes on, in the name of ‘true independence’, or whether it decides to again postpone import controls (the October phase was originally meant to have been implemented in March, and the EU’s controls were in place for the end of the transition period). I sometimes see people on social media suggesting that a continuing failure to implement import controls would violate WTO rules, because it would discriminate between EU and non-EU importers, but my understanding – for what little that is worth on this issue – is that this is largely theoretical: any action against the UK would be very slow and the penalties nugatory. Rather, again the decision will depend on a domestic political calculation of how much inconvenience the public will put up with for the sake of Brexiters’ eighteenth-century notion of sovereignty.

Quiet realism

The recurring tension between Brexit purism and pragmatic realism is being played out, more or less under the radar of public attention, as different sectors of society and the economy are quietly accommodating to the new restrictions and inconveniences of Brexit. So, for example, what were supposed to be the temporary Operation Brock powers to manage post-Brexit lorry queues to the channel ports are to be made permanent.

Equally, as has been happening for months, firms are adjusting to the Brexit trade barriers by learning to deal with them or, especially in the case of many small firms, giving up on trading with the EU. Each example may get little or no news coverage, and the overall effect may not even be very visible in aggregate trade figures, since small traders are, by definition, small. But it is quietly reshaping the structure of the British trading economy to the detriment of small businesses – an ironic outcome given the persistent claim that Brexit would benefit such firms whereas it was supposedly only ‘big business’ that gained from EU membership.

Other forms of quiet realism are to do with how regulation operates. In my previous post I discussed some of the issues of regulatory duplication. Because of the problems this poses, some sectoral regulation is gradually being redesigned because of Brexit. An important example is regulation of medicines and medical devices, the subject of an extensive report in the Financial Times this week (£).

The Medicines and Healthcare Products Regulatory Agency (MHRA) is supposed to “seize the opportunities” following from departing from the EU regulatory system and was identified in Iain Duncan Smith’s TIGRR Report as having the basis to expand and become a world-leading regulator. This was against the background in which, having hosted the European Medicines Agency (EMA), the UK had indeed been central to the global regulatory nexus with important consequences for its position as hub of the bio-medical and pharmaceutical industries. The EMA was lost with Brexit, but so too was the flow of funds to the MHRA from the EU for medical authorisation. That, along with other budgetary cuts, now means that the MHRA looks set to be scaled back.

One potential consequence, according to the FT report, is that companies will seek authorisations from EU or US regulatory agencies, with MHRA becoming a rubber stamp in the UK market for decisions made elsewhere. If this is so, it undermines the idea of the UK becoming a world-leading regulator – and that probably has knock-on implications for the wider scientific and industrial eco-system – but, and this is my point here, it will also be a recognition of the reality that the UK cannot be a ‘regulatory superpower’ in the medical or any other sector, and for that matter cannot even afford to try.

As such it directly contradicts the naïve ideas of, especially, David Frost about the UK having regulatory sovereignty in the modern world, and the equally naïve idea that the UK could become an international regulator. Something similar is unfolding even in the area of financial services (£), where the UK is undoubtedly a major player. Yet the core dynamic is the same as for other sectors: creating two separate regulatory regimes, EU and UK, is too expensive but the UK on its own isn’t large enough to become a global regulator.

So, again under the radar, and beneath the bombast of ‘independence’, the UK is gradually morphing from being a rule-shaper to being a rule-taker. Of course there will be scope for some tinkering around the edges, and when that happens it will be the subject of performative triumphalism, and in turn feed the denial and bluster of the hardcore Brexiters. But in broad terms the realities of regulatory realpolitik will hold sway.

Noisy fantasy

It isn’t glib to draw comparisons with the unfolding catastrophe of the Trump-initiated withdrawal from Afghanistan, because there are parallels in the way that once the US decided to leave it was inevitable that the UK did the same (just as the UK would never have deployed there had the US not done so). Brief talk of the UK leading a new international coalition was nonsense and came to nothing. For, despite the bravado of the recent deployment of the UK’s Carrier Strike Group in the South China Sea, any idea of ‘Global Britain’ as a military superpower is a long-dead fantasy.

That has been obvious since at least the Suez crisis, although the embers of the fantasy have long smouldered, and were fanned by post-Brexit nationalist hubris exemplified by Johnson’s ‘East of Suez’ speech when Foreign Secretary. Now, caught between US isolationism and self-imposed and antagonistic isolation from the EU, UK post-Brexit foreign and defence policy looks not so much incoherent as non-existent.

Even the residual diplomatic and soft power strengths we had have been depleted by Brexit and Johnson, whilst nativist Brexity sensibilities shape the spiteful policies on accepting refugees and on overseas aid, thus limiting those few things which Britain can still offer Afghans. Meanwhile calls for the Taliban to honour the commitments they have made ring hollow coming from a government that treats the deal it signed with the EU over Northern Ireland as disposable.

Beyond all that, the Afghanistan crisis once again exposes the sheer mediocrity of a government which, from Johnson downwards, is staffed by those whose real or feigned enthusiasm for Brexit was the sole criterion for ministerial office.

Silence

It is as fantastical to imagine Global Britain as an economic or regulatory superpower as it is to pretend it is a great military power. Brexit increasingly looks like the classroom in which these lessons are being taught, albeit that the hardcore Brexiters are slow pupils, sitting slack-jawed at the back, alternating sticking their fingers in their ears with shouting insults at the teacher and their fellow students. Meanwhile the majority of them sit silently, no longer mentioning the Brexit for which they made such extravagant promises until so recently. To be fair, there are a few - such as Shanker Singham still blathering on about creating ‘smart’ borders, a Pacific trade tilt and unspecified regulatory reforms - who are permanently stuck in the pre-2020 bubble. But for the most part it is as if they would like us to forget all those promises, to forget, indeed, that Brexit ever happened. When, for example, did anyone last hear anything from Michael Gove?

In that amnesia, they are considerably aided by the relative lack of media attention to what is happening. It’s not that the so-called ‘mainstream media’ does not cover Brexit, but that for various reasons it does so in fairly muted ways. For example, this week’s story of Nando’s closing restaurants for lack of chicken supplies was reported on the BBC website as only affecting Great Britain, not Northern Ireland (or Ireland), making it obvious that Brexit must be the key factor and yet it was not mentioned. It’s true that the main lunchtime BBC1 news bulletin covering the story on Wednesday did use the B-word, once, but it was muffled in a list of various factors. Given his own public statements, it is hard to resist the conclusion that Tim Davie’s leadership has, even if only indirectly, influenced this approach, along with the ferocious criticism of the BBC from Brexiters and the government.

But, as for all news outlets, it is more complicated than that. For one thing, precisely because the Brexit effects constitute a ‘slow puncture’ they don’t make for headline news. There may also be a sense amongst journalists, for whom topicality is inevitably important, that Brexit is ‘yesterday’s story’. Both of these factors also mean that it is hard for Brexit to compete for news space with big, current stories, and of course that has been especially true over the last eighteen months when the pandemic has inevitably been centre stage. And the pandemic, in particular, in its interactions with everything from trade volumes to labour shortages has served to complicate many stories which might otherwise be straightforwardly about Brexit.

Beyond the media, it seems likely that companies, like Nando’s, damaged by Brexit are sometimes reluctant to name it for fear of offending many customers and in some cases, perhaps, the government. There’s a circularity here, because where they do explicitly name Brexit as the cause, as trade bodies unequivocally did this week in relation to the “chaos” in the poultry industry that is the main cause of Nando’s (and KFC’s) woes, it becomes much easier and more likely for the media to do so, even as far down the journalistic food chain as the Express.

All of this means that, except for the minority of people who are passionately engaged, a lot of the public are quite apathetic about, and probably largely unaware of, the many significant and ongoing Brexit developments. Again there is a circularity in this, as it is partly a consequence of the relative lack of media coverage, whilst that lack of coverage is partly a reflection of lack of public interest. It also results from the wariness of the Labour Party in tackling the consequences of Brexit, since the one thing that the official opposition does have the power to do is influence the news agenda.

As I have recently noted, and I’m not the only one (£), there are signs that Labour is beginning to speak more loudly about Brexit. In any case, Brexit will come back to public attention when import controls start to be introduced and when the NIP row resumes. No matter what some Brexiters may now hope, Brexit isn’t going to be forgotten nor, by many, will it be forgiven. As events even in this quiet summer show, we will be living with Brexit for a long time yet.