I decided to take a couple of weeks off blogging in anticipation of a quiet period for Brexit news over Christmas. It wasn’t the most astute of predictions given David Frost’s resignation on 18 December, but perhaps there’s some value in having had a few days for the dust to settle on that before commenting on it.
Frost’s exit
That said, in some ways the resignation remains puzzling. Frost’s letter to Boris Johnson indicates his dissatisfaction with the government’s general direction of travel, including failing to make use of the “opportunities” Brexit gives and the introduction of Covid restrictions. Yet his political situation was an odd one. He was not an elected, or a career, politician who was ever liable to be asked to defend government policy in general. Of course he was a member of the government, but he was brought in solely to oversee the post-Brexit relationship with the EU, which turned out to mean, centrally, seeking to significantly renegotiate the Northern Ireland Protocol (NIP) which he had previously agreed outside government when he was Johnson’s Chief Brexit Negotiator.
Thus, immediately, his resignation was taken to be a result of his unhappiness with that renegotiation and in particular with what was widely rumoured to be a ‘softening’ of Boris Johnson’s position on removing any role for the ECJ from the NIP and on invoking Article 16. This is highly plausible, and now the general view of what happened, for if it were not so then, surely, at the least, he would have brought the negotiations to a ‘triumphant’ conclusion and then resigned at a logical point, calling it a job well done. Instead, as Johnson’s response letter pointedly implied, he had left with his central task unfinished.
Yet if successful completion was denied him by Johnson’s change of heart, then why not say so in his letter? It would have been far more damaging to Johnson had he said, in terms, that the Prime Minister was undermining gaining full freedom from the EU rather than, as he did, pronouncing that Brexit had now been securely done. If, on the other hand, he didn’t want to damage Johnson then why use the resignation letter to criticize the government at all? Why, indeed, resign at a time when, on so many fronts, the government is in crisis unless the intention was to cause maximum damage? But if that was the intention, then why not turn the knife by loudly saying that Johnson was ‘caving in’ to the EU, and betraying the sovereignty of the UK?
All this assumes that Frost was acting from high principle about the ECJ, but this opens up another set of questions. If it was of such principle then why had it not been mentioned until July of this year? And, given the late arrival of that supposedly crucial demand, was it not always obvious to Frost that the ‘climb down’ was likely to happen? On the other hand, Frost’s self-evident careerism to date would suggest that he would easily accommodate a fudge on the ECJ issue. Or is it that, as a belated convert to Brexit he had, as converts often do, become a fanatic? Might it even be that this fanaticism is compatible with his careerism, and that he hopes that by resigning now he finds favour with Johnson’s eventual successor and returns to office? But, if so, that just re-opens the question of why he didn’t use the resignation to directly attack Johnson’s approach to the NIP negotiations.
Perhaps the answer to all this is that Frost is as useless at drafting resignation letters as he is at everything else. Because, despite a slimy eulogy in Conservative Home, and his own high estimation of his achievements, it’s important to recognize just what a failure Frost has been. He was the one who negotiated the NIP – the supposedly crucial difference to Theresa May’s Withdrawal Agreement – that he and Johnson later disowned. He also agreed the Political Declaration that they both disowned immediately. He negotiated the Trade and Cooperation Agreement which wasn’t, as he claims, something people said couldn’t be delivered but a thin agreement limited by the government’s own self-harming restrictions. The damage of that to UK trade has already begun, and will worsen when, from next week, UK import controls are introduced. Despite his supposedly ‘hard ball’ approach, Frost got precisely nothing from the EU that wasn’t on offer anyway. Add to that the poison that approach has contributed to the UK-EU relationship and, now, his jumping ship before the NIP talks are concluded and it makes for a record of lamentable incompetence, mediocrity and inadequacy. But for Brexit, and Johnson’s patronage, he would never have achieved any prominence at all.
Enter Truss
Given his record, it’s arguable that Frost’s resignation is a good thing for Britain. I’ve been suggesting for months that his ‘Betamax’ approach to the EU is a block to a more pragmatic policy. But whilst getting rid of him is a necessary condition for such a policy, it is not a sufficient one. It also requires Johnson to change tack, and that in turn requires him to stand up to the ERG and its associates in the media. Here again the latest events are difficult to decode. If what provoked Frost’s resignation was such a change in tack then will it be enduring given Johnson’s own pathological inconsistency and his current weakness (and, if it won’t endure, then Frost might as well not have resigned)? He moved swiftly to appoint a replacement, perhaps to forestall a head of steam building behind suggestions that someone like Iain Duncan Smith be installed. That would certainly have done nothing to re-set UK-EU relations for the better. But what of his choice of Liz Truss?
Truss has now become a committed Brexiter and, her one-time support for remain aside, is very much aligned with the deregulatory hard right, having been one of the authors of Britannia Unchained. Her Brexiter credentials – and her now soaring support amongst the Tory Party membership (£) to be its next leader – rest primarily on her record of making post-Brexit trade deals. Of course these are almost all rollovers of pre-existing EU deals, and the new deals that are in prospect are of very limited economic value whilst being highly damaging to UK agriculture. But that preference for symbolism over substance might lead to her readily accepting a fudge in the NIP talks, especially over the role of the ECJ. So despite the immediate appearance that nothing has changed in the UK position, including over the ECJ and Article 16, many well-informed commentators expect her to be less confrontational and more flexible than Frost (if it proves wrong then, again, Frost’s resignation looks pointless).
Thus one reading of Truss’s appointment is that she will be the one to deliver Johnson’s reported desire for a climbdown. Another is that by putting her at the sharp end of negotiating with the EU, Johnson is setting her up to fail. For it is notable just how many Brexiters (or Brexit converts) have found it easier to walk away from delivering the practicalities than to acknowledge their fantasies – David Davis, Steve Baker, Suella Braverman, Dominic Raab and, now, David Frost are all examples. Truss has so far had the easier and more popular of the Brexit tasks – is Johnson now seeking to rain on the parade of her threat to replace him? Or has he handed her a golden opportunity to woo the hard core Brexiters at his expense?
Also highly relevant is the appointment of Chris Heaton-Harris as Europe Minister. Whilst not a household name, perhaps not even in his own home, he has a particular fame or infamy in the Brexit saga. A longtime member and former Chair of the ERG, he was the then government whip who in 2017 wrote to every university Vice-Chancellor in the country demanding to know the names of academics teaching about Brexit and exactly what they were teaching. It was a nasty piece of Brexit McCarthyism, and it largely backfired, but it shows his commitment to the cause, as well as something of his character. He also resigned as a junior minister at DExEU (in charge of ‘no deal’ preparations) over the extension of the Article 50 period in April 2019.
Whilst it remains unclear just how central a role he will play, his new appointment, reportedly, has reassured the ERG wing that there will be no ‘sell-out’ over the NIP which they detest. But, if so, where does that leave any re-set? And, again, if there is no re-set then why did Frost need to resign? Or, if there really is a re-set, how long before Heaton-Harris resigns? And if he doesn’t, then how will the ERG remain reassured by his continued presence?
Why so many questions?
The reason why all this analysis is so full of questions and imponderables is because Johnson’s position is now so weak, and because events around him are moving so fast. Thus it is perfectly possible that when Frost decided to resign (which appears to have been early in December) the Prime Minister was set on averting conflict with the EU, perhaps because of fears it would lead to a trade war and to opposition from the US President. At that time, the ERG were in an especially weak position because they had driven the fiasco over the attempt in late November to save one of their own, Owen Paterson, from punishment. From this, so many of Johnson’s current woes have flowed, including the loss of the North Shropshire by-election.
Yet the huge rebellion against Covid Plan B restrictions that occurred on 14 December and which was largely driven by the ERG (which now overlaps with the ‘Covid Recovery Group’) was a stark reminder of their continuing power. So by the time that Frost’s resignation got leaked to the press a few days afterwards, Johnson’s capacity to change direction on the NIP was already more constrained than it had been when the resignation decision was made. Hence, perhaps, both Heaton-Harris’s appointment and Truss’s apparently (or possibly) unchanged brief. I think that this sequence of events explains what happened with Frost.
All this points to a deeper truth. It’s not just that Frost’s resignation raises so many questions, it is that they all have one thing in common: the internal divisions and battles within the Conservative Party including battles over who will lead it next. Some might say that this is what Brexit has always been about, but I don’t think that is quite right. It is certainly true that the original impetus to hold a referendum was entirely to do with those internal divisions, and the related external electoral threat from UKIP, and it’s also plain that Johnson supported leave to advance his leadership ambitions. But in the years after the referendum, for all that those internal dynamics continued to matter hugely, what happened was that the entirety of national politics became hitched to, and in that sense transcended, the Tory Party battles.
Thus the issue of EU membership, that had hardly mattered at all to the majority of people before 2016, became the central, crucial and over-arching dividing line amongst the whole population. The virus, so to speak, jumped species and proved highly transmissible. Hence all the parliamentary battles of 2017-2019 were not solely, or even primarily, internal Tory conflicts. They were an accurate and necessary representation of the divisions that had engulfed the whole country as a result of the referendum and its result.
That national division hasn’t faded, by any means, but it’s notable that we hardly ever hear Brexiters talk of ‘the will of the people’ any more, as all pretence that this is some national ‘project of liberation’ has now been dropped. That is partly because there is now a fairly clear public consensus that Brexit has gone badly, even amongst a large minority of leave voters. But it is also because Brexit has returned to where it began, as a dog-fight between Tory factions.
It’s true that the ‘remain’ faction of the Tory Party, both in the country and in parliament, has all but disappeared since the 2019 election but instead there is a key division between the ‘deregulatory’ free market Brexiters and the ‘levelling up’ Red Wall Brexiters, and they have very different agendas. Tellingly, both of these agendas can be called ‘true Brexit’, reflecting the fundamental flaw of the entire Brexit project, namely its lack of definition, but also denying either camp the claim to represent ‘the will of the people’ in the way that, together, they did when scarifying remainers.
Johnson is dependent on both factions and, having no principles of his own to guide him, is buffeted around by each, whilst neither of them has any real loyalty to him. Indeed the newly-elected MP for Bexley voted against the government on Covid Plan B within just two weeks of taking his seat. Thus whilst on paper he has a strong majority, in practice his party is so riven that this is meaningless because there is a large enough coalition of willing rebels to defeat him in almost any policy area. So on Brexit policy – and, for that matter, policy more generally and Covid especially – he has simply lost control of events.
That has happened for many reasons, but at least one is just the latest version of the recurring dynamic whereby Conservative Prime Ministers are caught between inflicting massive damage on the UK and appeasing the unappeasable Brexit Ultras who are indifferent to all such damage. Hence, as regards the Frost saga, even if Johnson still wants to back-pedal on the NIP talks, he may not now be able to. It must be admitted that there is a certain piquancy in seeing him now exposed to precisely the political and moral delinquency which he exploited in order to gain power, and to the same, almost gleeful, disloyalty which he, himself, displayed towards his predecessors.
An “extremist rabble”
We’re about to enter the second year of ‘full’ Brexit in the sense of the end of the transition period, and there have been many excellent assessments of the how the first year has played out, including those by Bloomberg News, the Financial Times (£), and Professor Gerhard Schnyder’s Brexit Impact Tracker (my own appears in the December print [subscription only] issue of Byline Times). As we do so, it’s important to understand that the dramas of ‘Frost out’ or ‘Truss in’ - and all similar events, of which we can expect many in the coming months - whilst important in some ways are only tangentially about Brexit.
To put it another way, all of the substantive questions and choices that Brexit Britain faces, including those arising from the NIP negotiations, in its relationship with the EU and the wider world exist independently of those political dramas. They can’t simply be a domestic matter as they were before 2016 precisely because Brexit has now happened and so, almost daily, practical matters arising from it have to be dealt with. These matters should be the stuff of national political debate, not least in advance of the scheduled 2025 review of the Trade and Cooperation Agreement, but the Labour Party is still wary of raising them, whilst the government has this week gone so far as to try to ban the official use of the very word Brexit altogether.
The absence of such debate doesn’t mean that the ongoing questions and choices won’t be addressed, but that the responses will be based solely on the outcomes of factional infighting in the Tory Party rather than on the basis of any strategic intent, still less of any sense of what might serve the national interest. In particular, what happens will be driven by Johnson’s own perception of interests on any one day and, relatedly, the extent to which the ERG fanatics are able to dictate his decisions, as well as, and perhaps increasingly, by how the battle to succeed Johnson develops.
In this sense, Brexit has returned to the ground where it was spawned, namely the dysfunctions of a Tory Party which, as the political commentator Nick Cohen put it this week, has now “dissolved into an extremist rabble that is contorted by magical thinking, heresy hunts, fits of temper and doctrinal spasms”. What happens to the rest of us and indeed to the country is, as it has always been, just collateral damage in that never-ending conflict.
Friday, 31 December 2021
Friday, 10 December 2021
Not my Brexit
The evidence that Brexit is causing mounting damage has been growing since the transition period ended, and has been catalogued in almost every post on this blog since then. It is also to be found on Professor Gerhard Schnyder’s Brexit Impact Tracker, Yorkshire Bylines’ Davis Downsides Dossier, the now closed ‘Keleman Archive’ of 1000 examples, the Brexit database, and a newish substack blog I have only just come across, Nick Tyrone’s This Week in Brexitland. The latest dollop of evidence comes with an excellent new report on the impact of Brexit on services industries by Professor Sarah Hall and Matt Heneghan for the UK in a Changing Europe centre.
That damage isn’t just economic. Those who believed promises of a boost for Britain’s global stature have been rewarded with at best international bemusement and at worst a country deemed untrustworthy and liable to break international law and treaty obligations. Those expecting a revivified national democracy have instead seen an illegal prorogation of parliament and a spectacular and ongoing power grab by the Executive.
Yet, for reasons ranging from the Trappist vows both Tory and Labour politicians seem to have taken, through to media and public pre-occupation with Covid, relatively little is heard of this Brexit damage (though, just this morning, the Express seems to be catching on). Those politicians, journalists, and academic or other experts who do speak of it are ignored or traduced by Brexiters as ‘remoaners’. Brexiters themselves, perhaps unsurprisingly, are reticent to discuss what is happening and when they do the guiding theme is to evade responsibility for it. Astonishingly, the government itself, according to leaked documents, has no measure of whether Brexit has been a success or failure. For some, Brexit was simply ‘the right thing to do’ so the consequences are irrelevant. Others ignore or deny the evidence of Brexit damage. Still others just disown it on the basis that ‘this is not my Brexit’.
Businesses suffer in silence
Amongst those we might expect to be making a noise and to be heard are businesses. It is they that are bearing the brunt of the economic damage, especially those which trade with the EU. A new report this week showed that cross-Channel delays are actually worsening, and there is a lot more pain coming in just three weeks’ time when the UK begins to introduce full import controls. As with all the new trade barriers, it is small firms which will struggle to cope the most and a recent Federation of Small Businesses survey suggests that only a quarter of such firms that import from the EU are ready for what they will face. Beyond trade, almost all business sectors are suffering from labour and supply shortages.
If we hear relatively little public clamour from businesses, and where we do it is more likely to be from representative bodies rather individual companies, it is for good reason. The story of Brexit and business is a complicated one, well told by Iain Anderson, Chairman of Cicero Group, and also discussed in a Mile End Institute podcast featuring Nicole Sykes (then Head of EU negotiations for the CBI), me, and Professor Tim Bale of Queen Mary, University of London. In brief, businesses have been reluctant to speak out for fear of attracting government reprisals in one form or another, and of alienating leave voting customers.
Meanwhile Brexiters have never forgiven the fact that most businesses and their representative bodies opposed, albeit not very vociferously, Brexit before the referendum, and often warned against hard Brexit and no-deal Brexit in the years thereafter. One consequence is that throughout the Brexit process businesses have tended to be excluded from government consultation unless very clearly pro-Brexit, reflecting the cult-like approach to Brexit taken by both the May and Johnson administrations. Even now, anything they say is likely to be dismissed as remainer ‘negativity’ or ‘fearmongering’ as happened over warnings about HGV driver shortages and fuel supplies. On that occasion, an anonymous “senior government source” also ominously threatened the Road Haulage Association that “we will deal with them when this is over”.
To the extent business is able to influence government Brexit policy it is very much behind the scenes, as seems to have happened in relation to this week’s news that the UK is likely to postpone introducing its independent chemicals industry regulatory system. It follows previous postponement of things like the UKCA quality mark after intensive lobbying from the manufacturing sector. Backtracking on such things is welcome, and it could even be a prelude to abandonment, but neither is cost-free. The problem is the disruption and uncertainty, as well as the lobbying effort, engendered by the original rushed timescales and the ideological symbolism of creating meaningless independence. In a similar way, a National Audit Office report this week suggested that in rushing to make trade deals the government is neglectful of consulting businesses and consumer groups and, hence, of their substantive needs.
Pro-Brexit business voices
Overall, it seems fair to say that whilst businesses may be resigned to the reality of Brexit, they continue to be critical of the way it is being done. It is certainly not ‘their Brexit’, and whilst the state is on some accounts supposed to be the executive committee of the bourgeoisie that doesn’t seem to apply to Johnson’s ‘f*** business’ Brexit regime.
But what of those business leaders who were pro-Brexit? One difficulty here is that, compared with politicians, journalists, academics and media commentators, the numbers involved are quite small. Repeated attempts to construct pro-Brexit business umbrella groups, the most sustained being the Alliance of British Entrepreneurs (ABE), have made little headway. It is hard to know who such groups speak for anyway – the ABE, for example, “does not offer formal membership”, and what little is known about it is, to say the least, underwhelming.
At all events, both before and since the referendum, whenever a pro-leave business person appeared in the media you could list on virtually the fingers of one hand which of the white, middle-aged and mainly titled men heroically taking on ‘the establishment’ it would most likely be. Tim Martin (66), Sir James Dyson (74) Lord (Anthony) Bamford (76), Lord (Simon) Wolfson (54), Sir Jim Ratcliffe (69) and Sir Rocco Forte (76) just about covered the main possibilities.
So far as I know neither Sir James nor Sir Anthony – both of whom have had extensive legal disputes with the EU (£) - have ever suggested that Brexit has had any downsides. In fact Dyson this week re-iterated (£) his opposition to the EU’s approach to regulation (though since in the example he uses, his own legal case, he won and the regulation was dropped, it isn’t a strong argument for Brexit unless he believes that British regulations are infallible). To the extent that he worries that the UK may continue to align with many EU regulations, which it probably will, it’s at least possible that he will come to think it was ‘not his Brexit’. As for Sir Jim, he too hasn’t recanted, although his decisions in 2020 to shift production of the Ineos Grenadier from Wales to France and his own tax domicile from the UK to Monaco were perhaps not exactly ringing endorsements for Brexit Britain.
Amongst the other high-profile figures, their most obvious criticism has been over the consequences of ending freedom of movement of people. Tim Martin of Wetherspoons spoke in June of the need to liberalise the immigration system, with special treatment for “countries geographically closer to the UK”. Lord Wolfson, CEO of Next, has also repeatedly called for more open immigration, especially given the labour and supply shortages which have emerged this year.
They were joined last weekend (£) by Sir Rocco, Chair of Rocco Forte Hotels, who also wants a relaxation of immigration controls which are too restrictive for his, and many other, businesses which face the fact that “it is obvious that there is no ready supply of labour available in the UK to fill vacancies”. Forte has the grace to note that “I am sure that some will say I should have been careful what I wished for in supporting Brexit. I would respond that the only issue determined in the referendum result was that the UK should decide its own immigration system. As a Brexit supporter, I wanted proper control over our borders, not their virtual closure”. It’s not his Brexit, it seems.
Yet this does not go so far as to take responsibility for the fact that he used his authority as a business leader to decry those warning of precisely what he is now bemoaning. For example, writing in the Daily Mail in July 2018, he said “concerns voiced by the big business lobby are little more than scaremongering, like the claim that any restriction on European freedom of movement will badly hurt recruitment by British firms. This is untrue. My family's hotel chain hired staff from all over the world, including Europe, long before the EU was even created. We will continue to do so after Brexit, especially because so many young people from Europe want to come here to learn English. Contrary to the hollow warnings from the pro-EU campaigners, migration controls will not mean an end to European migration.”
Wolfson, too, argues that Brexit only meant the UK setting its own immigration policy, rather than being anti-immigration per se. Yet before the referendum, when it would have counted more, his formulation that we must “place our trust in the collective intelligence and endeavour of Britain’s 30 million-strong workforce” did not, at the least, do anything to challenge the centrality being put upon immigration control during the campaign.
In fact, as I noted in my previous post, Brexiters on the free-market right were not, in general, especially bothered about immigration. But they chose to ‘ride the tiger’ of a project which had as one of its central selling points, if not the central point, profoundly anti-immigration sentiment. Within that same central narrative, softness on immigration, and opposition to Brexit, was associated with the self-interest of the “big business lobby” referenced by Forte. Moreover, in the post-referendum drive towards hard Brexit, it is undoubtedly the case that continuing freedom of movement was critical to the argument that soft Brexit would not honour the referendum result. Yet, far from questioning hard Brexit, both Forte and Martin made the case for an even harder ‘no-deal Brexit’, whilst Wolfson suggested that no-deal would cause only “mild disruption”.
The consequence of how Brexit was sold and then executed, whatever they may have wanted or expected, was to make it virtually impossible for the post-Brexit immigration regime to be a liberal one and, certainly, this government isn’t going to deliver it. So, in the absence of any suggestion that they now recognize they made a mistake in championing Brexit, the position of Forte, Wolfson and Martin would appear to be that of ‘this isn’t my Brexit’. It is a position shared by many of those, such as former Brexit Party MEP June Mummery, who regard what has been delivered by Brexit as a betrayal of the fishing industry. Indeed, following the complaint of one enthusiastic leaver about the airport queues he now experiences, “this isn’t the Brexit I voted for” has become shorthand to denote those who, whilst still supporting Brexit, rue some of its consequences.
Johnson and Frost: it’s not our Brexit, either
That some of the most committed Brexiters would regard what got delivered as, at best, unsatisfactory and, at worst, as betrayal was baked into Brexit from the beginning, of course, because what it would mean was never specified. So it’s not a surprise that they are now saying that it isn’t their Brexit or (which is slightly different, as it also suggests that their Brexit was real Brexit) that Brexit hasn’t been done properly.
What is far more surprising, not to say downright grotesque, is the fact that Boris Johnson and David Frost, whose Brexit it actually is, also consider that Brexit hasn’t been done properly, at least as regards the Northern Ireland Protocol. And they, too, suggest it is not their Brexit but, rather, the one forced on them by remainer MPs in 2019 and by the EU taking advantage of their temporary weakness (the golden rule for understanding Brexiters is that they are never responsible and are always the victims).
That has been their repeated complaint for months now, and it looks very much as if their attempts to negotiate a different Brexit to the one they agreed, signed and said was a triumph will now drag into the New Year. That may still bring a triggering of Article 16, although the fact that it has not yet been used, whereas in the summer the implication from Frost was that it would happen very quickly if UK demands weren’t met, suggests a degree of caution on the part of, presumably, Johnson. That may be as a result of the clear messages from the EU that it would make a robust response and/or because of US pressure, including the delayed removal of steel and aluminium tariffs. If that caution holds, and Article 16 isn’t used, we can expect years of being told that, yet again, the Brexiters didn’t get the Brexit they wanted because of EU bullying and US meddling.
History will judge?
This idea that Brexit hasn’t been ‘tried properly’ resembles, as I and many others have frequently remarked, the claims of some apologists for communism. It’s a slippery argument but at least has the merit of acknowledging that things haven’t gone as promised. But, again like some apologists for communism, they have a different trick in their book which is to say that it cannot be evaluated on present appearances or achievements but only in the (very) long-run. Be patient, comrades, our great cause will be proved right by the onward march of history.
It’s a trick that has already been deployed by Jacob Rees-Mogg, who suggested it might be 50 years until the success or otherwise of Brexit is known. Lord (Digby) Jones, the buffoonish former head of the CBI who declared that “there’s not going to be any economic pain” from Brexit, subsequently suggested a timeframe of 100 years for judgment. This week it has surfaced again in an article on the Conservative Home website by Ryan Bourne of the CATO Institute (formerly Head of Policy at the Institute for Economic Affairs and, apparently, though all information about the group’s membership seems to have disappeared, at one time part of Patrick Minford’s Economists for Brexit).
Bourne argues that it is premature to gauge the economic effects of Brexit, and also wrong to conflate Brexit with whatever the Johnson government does or does not do, because the real issue is the possibility that British institutions will prove more economically liberal and more likely to create permissive regulatory regimes than those of the EU. Bourne believes this will be so, but suggests that whether it proves to be the case will only be known in the long-term, which he implies to mean something like 30 years.
Needless to say, this is sophistry of the highest order, arising solely because it has become impossible for any half-way serious person to argue that Brexit has been an economic success so far, or even that such success is imminent. So, conveniently, we are told to defer giving our verdict for a few decades. But Brexit was never proposed to the British people as something which might, perhaps, in many decades be a success but then again might not. Had it been, far fewer people would have voted for it than did – almost certainly too few to have won the referendum. Moreover, if Brexiters had really been serious about the long-term nature of their project, they would not have pushed so recklessly to ‘get it done’, treating all extensions, whether to the Article 50 process or the Transition Period, as treachery rather than careful preparation for an epochal change.
Avoiding accountability
It may be that in 30, 50 or 100 years there will be a consensus view but, in the absence of some decisive ‘Berlin Wall’ moment, it’s equally likely that Brexit will continue to be contested. Indeed we can already see how Brexiters have created the conditions for never having their project judged at all.
For when forecasts are made of Brexit damage, they invariably dismiss them as ‘just predictions, no one can know for sure what will happen’. But as soon as there is actual data about Brexit damage they say ‘ah, but this cannot be proved to be the result of Brexit’ - most notably, so far, because of the pandemic, but 30 years on there will be any number of other reasons to give, and it will get ever-harder to disentangle Brexit from them. Meanwhile, any time that anything good happens to the UK, or on any occasion that the EU experiences difficulties, they will say that this ‘proves’ it was right to leave.
In this way Brexiters protect themselves in a hermetically sealed bubble where both prospective and retrospective scrutiny is ruled out. It will always be either too early to say or too late to know. It is this which is the real significance of the ‘history will judge’ test. For Brexiters, it at worst defers and at best avoids accountability for what they have done. If nothing else it ensures that those who advocated Brexit will be so old, and so distant from having had any power or influence, as to be totally unaccountable for what they promised and what they did.
Take the high-profile pro-Brexit business leaders mentioned above: in 30 years’ time the youngest of them will be 84 and the oldest 106. Amongst the political leaders, Johnson and Farage will both be 87 whilst veteran Eurosceptic Bill Cash will be 111 years old. If we apply the Digby Jones time frame of 100 years, they will all be long dead. And if, by chance, some of the more youthful Brexiters are still around, or some miracle – or horror-film nightmare - of cryogenic storage preserves, say, Jacob Rees-Mogg to face the music, well, they will always have the first and last-ditch evasion of responsibility available. Yes, they may conceivably admit, it was all a ghastly mistake, but only because what was done was ‘not my Brexit’.
I will be taking a break from blogging for the rest of the year. My review of Brexit since the end of the Transition Period will be published in the December print edition of Byline Times. And if you haven’t read it, or are stuck for a Christmas present, you could always buy my book Brexit Unfolded. How none got what they wanted (and why they were never going to) published by Biteback earlier this year and available from all good booksellers.
That damage isn’t just economic. Those who believed promises of a boost for Britain’s global stature have been rewarded with at best international bemusement and at worst a country deemed untrustworthy and liable to break international law and treaty obligations. Those expecting a revivified national democracy have instead seen an illegal prorogation of parliament and a spectacular and ongoing power grab by the Executive.
Yet, for reasons ranging from the Trappist vows both Tory and Labour politicians seem to have taken, through to media and public pre-occupation with Covid, relatively little is heard of this Brexit damage (though, just this morning, the Express seems to be catching on). Those politicians, journalists, and academic or other experts who do speak of it are ignored or traduced by Brexiters as ‘remoaners’. Brexiters themselves, perhaps unsurprisingly, are reticent to discuss what is happening and when they do the guiding theme is to evade responsibility for it. Astonishingly, the government itself, according to leaked documents, has no measure of whether Brexit has been a success or failure. For some, Brexit was simply ‘the right thing to do’ so the consequences are irrelevant. Others ignore or deny the evidence of Brexit damage. Still others just disown it on the basis that ‘this is not my Brexit’.
Businesses suffer in silence
Amongst those we might expect to be making a noise and to be heard are businesses. It is they that are bearing the brunt of the economic damage, especially those which trade with the EU. A new report this week showed that cross-Channel delays are actually worsening, and there is a lot more pain coming in just three weeks’ time when the UK begins to introduce full import controls. As with all the new trade barriers, it is small firms which will struggle to cope the most and a recent Federation of Small Businesses survey suggests that only a quarter of such firms that import from the EU are ready for what they will face. Beyond trade, almost all business sectors are suffering from labour and supply shortages.
If we hear relatively little public clamour from businesses, and where we do it is more likely to be from representative bodies rather individual companies, it is for good reason. The story of Brexit and business is a complicated one, well told by Iain Anderson, Chairman of Cicero Group, and also discussed in a Mile End Institute podcast featuring Nicole Sykes (then Head of EU negotiations for the CBI), me, and Professor Tim Bale of Queen Mary, University of London. In brief, businesses have been reluctant to speak out for fear of attracting government reprisals in one form or another, and of alienating leave voting customers.
Meanwhile Brexiters have never forgiven the fact that most businesses and their representative bodies opposed, albeit not very vociferously, Brexit before the referendum, and often warned against hard Brexit and no-deal Brexit in the years thereafter. One consequence is that throughout the Brexit process businesses have tended to be excluded from government consultation unless very clearly pro-Brexit, reflecting the cult-like approach to Brexit taken by both the May and Johnson administrations. Even now, anything they say is likely to be dismissed as remainer ‘negativity’ or ‘fearmongering’ as happened over warnings about HGV driver shortages and fuel supplies. On that occasion, an anonymous “senior government source” also ominously threatened the Road Haulage Association that “we will deal with them when this is over”.
To the extent business is able to influence government Brexit policy it is very much behind the scenes, as seems to have happened in relation to this week’s news that the UK is likely to postpone introducing its independent chemicals industry regulatory system. It follows previous postponement of things like the UKCA quality mark after intensive lobbying from the manufacturing sector. Backtracking on such things is welcome, and it could even be a prelude to abandonment, but neither is cost-free. The problem is the disruption and uncertainty, as well as the lobbying effort, engendered by the original rushed timescales and the ideological symbolism of creating meaningless independence. In a similar way, a National Audit Office report this week suggested that in rushing to make trade deals the government is neglectful of consulting businesses and consumer groups and, hence, of their substantive needs.
Pro-Brexit business voices
Overall, it seems fair to say that whilst businesses may be resigned to the reality of Brexit, they continue to be critical of the way it is being done. It is certainly not ‘their Brexit’, and whilst the state is on some accounts supposed to be the executive committee of the bourgeoisie that doesn’t seem to apply to Johnson’s ‘f*** business’ Brexit regime.
But what of those business leaders who were pro-Brexit? One difficulty here is that, compared with politicians, journalists, academics and media commentators, the numbers involved are quite small. Repeated attempts to construct pro-Brexit business umbrella groups, the most sustained being the Alliance of British Entrepreneurs (ABE), have made little headway. It is hard to know who such groups speak for anyway – the ABE, for example, “does not offer formal membership”, and what little is known about it is, to say the least, underwhelming.
At all events, both before and since the referendum, whenever a pro-leave business person appeared in the media you could list on virtually the fingers of one hand which of the white, middle-aged and mainly titled men heroically taking on ‘the establishment’ it would most likely be. Tim Martin (66), Sir James Dyson (74) Lord (Anthony) Bamford (76), Lord (Simon) Wolfson (54), Sir Jim Ratcliffe (69) and Sir Rocco Forte (76) just about covered the main possibilities.
So far as I know neither Sir James nor Sir Anthony – both of whom have had extensive legal disputes with the EU (£) - have ever suggested that Brexit has had any downsides. In fact Dyson this week re-iterated (£) his opposition to the EU’s approach to regulation (though since in the example he uses, his own legal case, he won and the regulation was dropped, it isn’t a strong argument for Brexit unless he believes that British regulations are infallible). To the extent that he worries that the UK may continue to align with many EU regulations, which it probably will, it’s at least possible that he will come to think it was ‘not his Brexit’. As for Sir Jim, he too hasn’t recanted, although his decisions in 2020 to shift production of the Ineos Grenadier from Wales to France and his own tax domicile from the UK to Monaco were perhaps not exactly ringing endorsements for Brexit Britain.
Amongst the other high-profile figures, their most obvious criticism has been over the consequences of ending freedom of movement of people. Tim Martin of Wetherspoons spoke in June of the need to liberalise the immigration system, with special treatment for “countries geographically closer to the UK”. Lord Wolfson, CEO of Next, has also repeatedly called for more open immigration, especially given the labour and supply shortages which have emerged this year.
They were joined last weekend (£) by Sir Rocco, Chair of Rocco Forte Hotels, who also wants a relaxation of immigration controls which are too restrictive for his, and many other, businesses which face the fact that “it is obvious that there is no ready supply of labour available in the UK to fill vacancies”. Forte has the grace to note that “I am sure that some will say I should have been careful what I wished for in supporting Brexit. I would respond that the only issue determined in the referendum result was that the UK should decide its own immigration system. As a Brexit supporter, I wanted proper control over our borders, not their virtual closure”. It’s not his Brexit, it seems.
Yet this does not go so far as to take responsibility for the fact that he used his authority as a business leader to decry those warning of precisely what he is now bemoaning. For example, writing in the Daily Mail in July 2018, he said “concerns voiced by the big business lobby are little more than scaremongering, like the claim that any restriction on European freedom of movement will badly hurt recruitment by British firms. This is untrue. My family's hotel chain hired staff from all over the world, including Europe, long before the EU was even created. We will continue to do so after Brexit, especially because so many young people from Europe want to come here to learn English. Contrary to the hollow warnings from the pro-EU campaigners, migration controls will not mean an end to European migration.”
Wolfson, too, argues that Brexit only meant the UK setting its own immigration policy, rather than being anti-immigration per se. Yet before the referendum, when it would have counted more, his formulation that we must “place our trust in the collective intelligence and endeavour of Britain’s 30 million-strong workforce” did not, at the least, do anything to challenge the centrality being put upon immigration control during the campaign.
In fact, as I noted in my previous post, Brexiters on the free-market right were not, in general, especially bothered about immigration. But they chose to ‘ride the tiger’ of a project which had as one of its central selling points, if not the central point, profoundly anti-immigration sentiment. Within that same central narrative, softness on immigration, and opposition to Brexit, was associated with the self-interest of the “big business lobby” referenced by Forte. Moreover, in the post-referendum drive towards hard Brexit, it is undoubtedly the case that continuing freedom of movement was critical to the argument that soft Brexit would not honour the referendum result. Yet, far from questioning hard Brexit, both Forte and Martin made the case for an even harder ‘no-deal Brexit’, whilst Wolfson suggested that no-deal would cause only “mild disruption”.
The consequence of how Brexit was sold and then executed, whatever they may have wanted or expected, was to make it virtually impossible for the post-Brexit immigration regime to be a liberal one and, certainly, this government isn’t going to deliver it. So, in the absence of any suggestion that they now recognize they made a mistake in championing Brexit, the position of Forte, Wolfson and Martin would appear to be that of ‘this isn’t my Brexit’. It is a position shared by many of those, such as former Brexit Party MEP June Mummery, who regard what has been delivered by Brexit as a betrayal of the fishing industry. Indeed, following the complaint of one enthusiastic leaver about the airport queues he now experiences, “this isn’t the Brexit I voted for” has become shorthand to denote those who, whilst still supporting Brexit, rue some of its consequences.
Johnson and Frost: it’s not our Brexit, either
That some of the most committed Brexiters would regard what got delivered as, at best, unsatisfactory and, at worst, as betrayal was baked into Brexit from the beginning, of course, because what it would mean was never specified. So it’s not a surprise that they are now saying that it isn’t their Brexit or (which is slightly different, as it also suggests that their Brexit was real Brexit) that Brexit hasn’t been done properly.
What is far more surprising, not to say downright grotesque, is the fact that Boris Johnson and David Frost, whose Brexit it actually is, also consider that Brexit hasn’t been done properly, at least as regards the Northern Ireland Protocol. And they, too, suggest it is not their Brexit but, rather, the one forced on them by remainer MPs in 2019 and by the EU taking advantage of their temporary weakness (the golden rule for understanding Brexiters is that they are never responsible and are always the victims).
That has been their repeated complaint for months now, and it looks very much as if their attempts to negotiate a different Brexit to the one they agreed, signed and said was a triumph will now drag into the New Year. That may still bring a triggering of Article 16, although the fact that it has not yet been used, whereas in the summer the implication from Frost was that it would happen very quickly if UK demands weren’t met, suggests a degree of caution on the part of, presumably, Johnson. That may be as a result of the clear messages from the EU that it would make a robust response and/or because of US pressure, including the delayed removal of steel and aluminium tariffs. If that caution holds, and Article 16 isn’t used, we can expect years of being told that, yet again, the Brexiters didn’t get the Brexit they wanted because of EU bullying and US meddling.
History will judge?
This idea that Brexit hasn’t been ‘tried properly’ resembles, as I and many others have frequently remarked, the claims of some apologists for communism. It’s a slippery argument but at least has the merit of acknowledging that things haven’t gone as promised. But, again like some apologists for communism, they have a different trick in their book which is to say that it cannot be evaluated on present appearances or achievements but only in the (very) long-run. Be patient, comrades, our great cause will be proved right by the onward march of history.
It’s a trick that has already been deployed by Jacob Rees-Mogg, who suggested it might be 50 years until the success or otherwise of Brexit is known. Lord (Digby) Jones, the buffoonish former head of the CBI who declared that “there’s not going to be any economic pain” from Brexit, subsequently suggested a timeframe of 100 years for judgment. This week it has surfaced again in an article on the Conservative Home website by Ryan Bourne of the CATO Institute (formerly Head of Policy at the Institute for Economic Affairs and, apparently, though all information about the group’s membership seems to have disappeared, at one time part of Patrick Minford’s Economists for Brexit).
Bourne argues that it is premature to gauge the economic effects of Brexit, and also wrong to conflate Brexit with whatever the Johnson government does or does not do, because the real issue is the possibility that British institutions will prove more economically liberal and more likely to create permissive regulatory regimes than those of the EU. Bourne believes this will be so, but suggests that whether it proves to be the case will only be known in the long-term, which he implies to mean something like 30 years.
Needless to say, this is sophistry of the highest order, arising solely because it has become impossible for any half-way serious person to argue that Brexit has been an economic success so far, or even that such success is imminent. So, conveniently, we are told to defer giving our verdict for a few decades. But Brexit was never proposed to the British people as something which might, perhaps, in many decades be a success but then again might not. Had it been, far fewer people would have voted for it than did – almost certainly too few to have won the referendum. Moreover, if Brexiters had really been serious about the long-term nature of their project, they would not have pushed so recklessly to ‘get it done’, treating all extensions, whether to the Article 50 process or the Transition Period, as treachery rather than careful preparation for an epochal change.
Avoiding accountability
It may be that in 30, 50 or 100 years there will be a consensus view but, in the absence of some decisive ‘Berlin Wall’ moment, it’s equally likely that Brexit will continue to be contested. Indeed we can already see how Brexiters have created the conditions for never having their project judged at all.
For when forecasts are made of Brexit damage, they invariably dismiss them as ‘just predictions, no one can know for sure what will happen’. But as soon as there is actual data about Brexit damage they say ‘ah, but this cannot be proved to be the result of Brexit’ - most notably, so far, because of the pandemic, but 30 years on there will be any number of other reasons to give, and it will get ever-harder to disentangle Brexit from them. Meanwhile, any time that anything good happens to the UK, or on any occasion that the EU experiences difficulties, they will say that this ‘proves’ it was right to leave.
In this way Brexiters protect themselves in a hermetically sealed bubble where both prospective and retrospective scrutiny is ruled out. It will always be either too early to say or too late to know. It is this which is the real significance of the ‘history will judge’ test. For Brexiters, it at worst defers and at best avoids accountability for what they have done. If nothing else it ensures that those who advocated Brexit will be so old, and so distant from having had any power or influence, as to be totally unaccountable for what they promised and what they did.
Take the high-profile pro-Brexit business leaders mentioned above: in 30 years’ time the youngest of them will be 84 and the oldest 106. Amongst the political leaders, Johnson and Farage will both be 87 whilst veteran Eurosceptic Bill Cash will be 111 years old. If we apply the Digby Jones time frame of 100 years, they will all be long dead. And if, by chance, some of the more youthful Brexiters are still around, or some miracle – or horror-film nightmare - of cryogenic storage preserves, say, Jacob Rees-Mogg to face the music, well, they will always have the first and last-ditch evasion of responsibility available. Yes, they may conceivably admit, it was all a ghastly mistake, but only because what was done was ‘not my Brexit’.
I will be taking a break from blogging for the rest of the year. My review of Brexit since the end of the Transition Period will be published in the December print edition of Byline Times. And if you haven’t read it, or are stuck for a Christmas present, you could always buy my book Brexit Unfolded. How none got what they wanted (and why they were never going to) published by Biteback earlier this year and available from all good booksellers.
Friday, 3 December 2021
Brexit discredited
This week saw the publication of an update of one of the major studies of the impact of Brexit on UK trade, conducted by John Springford of the Centre for European Reform. It uses a method which compares the actual UK economy with the ‘doppelganger’ UK that didn’t leave the EU single market and customs union. The doppelganger is calculated on the basis of a basket of other countries that closely mirrored UK performance prior to the pandemic and thus provide a good comparison with what has happened to the UK as a result of Brexit. This latest version shows that UK worldwide trade in goods in September 2021 was 11.2% lower than it would have been but for Brexit (and this is still before the UK has introduced full controls on imports of EU goods).
This is consistent with the findings of other studies and, for that matter, with most pre-referendum and post-referendum but pre-Brexit predictions. There is also the beginning of an evidence base about the impact on services trade. Data on what has happened since Brexit are unclear and particularly difficult to disentangle from the pandemic, but a new study by Jun Du and Oleksandr Shepotylo of Aston University suggests that even in the period after the referendum and before Brexit or the pandemic (2016-2019) UK services exports declined by 5.7% a year on average as a causal impact of the vote to leave.
That’s your GDP!
Springford points out that it is not easy to translate the effect on trade into the effect on GDP, but, overall, and consistent with other estimates, he suggests that it looks as if UK annual GDP will be 4%-5% smaller by 2030 than it would have been had Brexit not happened. These are not ‘teething problems’, but long-term damage to national prosperity.
There’s a well-known story about Professor Anand Menon, head of the UK in a Changing Europe thinktank, giving a pre-referendum talk in Newcastle. When he spoke of the likely impact of Brexit on GDP, a heckler called out ‘that’s your bloody GDP, not ours’. It’s a story that has come to stand for the disconnect between ‘experts’ and ‘ordinary people’. But although there are longstanding and good arguments against the use of GDP as an economic measure, it’s wrong to dismiss it as an abstraction that is irrelevant to everyday life. Ian Mulheirn of the Tony Blair Institute calculated that the entirety of the tax rises in the March 2021 budget were attributable to the negative economic effect of Brexit and, hence, tax revenues.
So it may not be ‘our’ GDP, but it is our taxes or our public services. And, despite revisionist claims that Brexit was about ‘freedom at any price’, this is emphatically not how it was presented to the electorate. On the contrary, every warning of its costs was dismissed as Project Fear. Yet as I argued in a recent post, Brexiters seem to have largely given up claiming that Brexit is economically beneficial or denying that it is economically damaging. On the other hand, some, especially on the free market Right, who supported Brexit – notably Spectator Editor Fraser Nelson – are beginning to question its economic rationale.
The strange case of Thatcherite Brexiters
Such questioning opens up the conundrum of why a project which erected barriers with the UK’s largest trade partner should have been so dear to those who regard themselves as free traders. A version of the same contradiction is that so many who are ardent Thatcherites are so opposed to membership of the single market of which she was an enthusiastic architect. In a recent speech to the Centre for Policy Studies – a free market, small state thinktank which Margaret Thatcher co-founded - Boris Johnson went so far as to describe this enthusiasm as having been her “blind spot”.
The apparent contradiction is in many cases explained by the Brexiters’ naïve idea that free trade means tariff-free trade, and hence not to realise (or care) that the single market is about eroding non-tariff barriers (NTBs) as well as removing tariffs, or at least to underestimate the significance of its doing so. Thus in a major speech in February 2020 David Frost – without presenting a shred of evidence – opined that the impact of NTBs and of customs costs was exaggerated by unnamed studies “in some cases by an order of magnitude”, and this clearly informed his approach to the trade negotiations with the EU which were then beginning. Given what has since happened to British trade, it is a line which deserves to go down in history in the same way as, say, that of the record label executive who supposedly rejected the Beatles on the grounds that guitar music was on the way out.
No doubt this is in part ignorance, but I think that it grows from a deeper soil which is the way that many Thatcherite free traders hold a quasi-philosophical belief that markets are a ‘natural’ phenomenon which exist prior to, and function better without, regulation. It is a view of markets, including international trading markets, which is wholly naïve at a conceptual level and unworkable at a practical level. Conceptually, it ignores all those things – from contract law to weights and measures regulations – which are prior conditions for effective markets. Practically, it ignores how creating shared, supra-national regulatory frameworks enables rather than restrains international trade, and in particular services trade. Hence they don’t understand markets in general, or the single market in particular. As regards Brexit, this has had two calamitous effects.
Trade, regulation, and sovereignty
Firstly, it explains why – as is beginning to be more widely discussed than perhaps it was at the time – the Trade and Cooperation Agreement (TCA) was so thin, and effectively little more than mainly tariff-free trade in goods. It’s very important to be careful about this, though. It certainly doesn’t mean that the TCA is worthless, as some Brexiters will undoubtedly argue when it comes up for review and they revive their ‘trading on WTO terms’ fantasy. Without the TCA many industries, notably auto, would massively shrink or even disappear entirely. The real issue is that by opting for a Free Trade Agreement (FTA) rather than single market membership there was inevitably considerably less liberalisation of NTBs and of services trade. As I’ve argued endlessly on this blog, one of the fatal flaws in the entire hard Brexit case was the idea that any FTA, even one more extensive than the TCA, could replicate or even come close to single market membership.
Secondly it explains why far from reducing regulatory red tape Brexit has dumped truckloads of it on British businesses (and also private citizens, for example when travelling or when sending presents to friends and family in the EU). In particular, it has exposed, or may come to expose, firms which trade with the EU to double regulatory and certification requirements – as, for example with the chemicals industry - one for the UK and one for the EU. That’s hardly surprising, as it is exactly the kind of duplication that a single market avoids. Reintroducing it not only hampers British businesses but in some cases will mean EU firms no longer servicing the British market because it isn’t large enough to be worth meeting separate regulations. This is a disadvantage for British consumers.
This also means that Thatcherites are now finding that the scope for post-Brexit regulatory divergence is far less than they had imagined, and government efforts to find examples have not been very fruitful. The big exception is immigration policy with respect to EU countries, but the new restrictions this allows are not economically beneficial for businesses as current labour shortages show and – unlike for many leave voters – immigration control wasn’t a central concern for free market Brexiters. Boris Johnson, like the Lexiters, may now be (dubiously) asserting that it has led to wage increases for workers, but that is hardly a priority for Thatcherites, to say the least. State aid may conceivably come to become (£) an area where divergence is actually beneficial to the UK, but then Thatcherites aren’t very keen on that either.
There are other examples of divergence, ranging from banning live animal exports for slaughter to allowing market traders to use imperial units only, but, whilst these may be important for some, sweeping regulatory reforms are proving elusive (for a detailed listing of where there is and is not regulatory divergence, see the UK in a Changing Europe tracker). For example, there is much talk of creating a more flexible data protection regime than the EU’s GDPR, but doing so would be far more costly for British businesses (£) because for global purposes GDPR is the standard they have to reach. The UK is too small to become a global standard-setter, so exercising its sovereignty in this way just leads back to the problem of duplication. One quiet acknowledgement of that came to fruition this week (£) when it was confirmed that the UK will be able to continue its membership of the European Committee for Standardisation (CEN) and its electrical engineering counterpart (CENELEC). They are not EU bodies, per se, but they do set a huge range of single market standards and these will apply to the UK as well.
In short, because they don’t understand markets and regulation, the rhetoric of Thatcherite Brexiters founders when it meets reality. For with a few exceptions regulatory divergence is uneconomic. Thus, in practice, having regulatory sovereignty is either damaging (when it is used) or pointless (because it isn’t used). Yet Frost, most notably, continues to trot out the line that regulatory divergence is the raison d’etre of Brexit, and a key test of its success. If that is so, he might as well admit that it is destined to be a failure.
Britannia Unchained?
Of course for many Thatcherite Brexiters, such as some of the authors of Britannia Unchained, the real prize was to be deregulation of labour and environmental standards. Indeed it is common to see some – both remainers and leavers - confidently announcing that ‘this was the whole point of Brexit’. That is wrong simply because the only ‘whole point’ of Brexit was that it didn’t have a whole point: it was an assembly of contradictory agendas of which such deregulation was only one, albeit an important one given the power of its adherents. But it turns out that, at least for now, their power is less than they hope and others fear.
For to the chagrin of such Thatcherite Brexiters, here, too, Brexit does not live up to their naïve model of sovereignty. The level playing field provisions of the TCA may not have been as extensive as originally envisaged in the Political Declaration with the Withdrawal Agreement, but nevertheless they exist and constrain the UK through non-regression clauses on labour, social and environmental standards. Indeed free trade agreements in general, including CPTPP membership if it happens, increasingly mandate labour, human rights and environmental standards. It can certainly be argued they do not yet go (nearly) far enough, but the point is that they exist and put constraints on sovereignty in the Brexiter sense of the term.
Moreover, there are domestic constraints. Thatcherite Brexiters like Professor Patrick Minford may be happy to see whole swathes of manufacturing industry and agriculture disappear, but that isn’t something that any government could readily countenance. Nor is there much public appetite for shredding labour and environmental standards. In fact, the government has been quite wary of using Brexit in ways which hard core Thatcherites would wish – not, for example, making use of the freedom to remove the cap on bankers’ bonuses, something bemoaned by Fraser Nelson and others. In part this is because of the peculiar nature of Johnson’s 2019 election victory and his reliance of the ‘red wall’ seats. The pandemic has also had the effect of, if only temporarily, extending the scale of state activity and intervention.
From these constraints arise the now widely made criticism from the Tory Right that “this isn’t a Conservative government”. It’s certainly the case that Johnson is very different to Thatcher, and not just as regards the single market. She was moralistic where he is amoral, if not immoral. She adhered to a version of business rooted in the thrifty shopkeepers of her childhood. He says ‘f*** business’. But an irony of Thatcher’s legacy is that her image of capitalism was entirely different to the rootless, credit-fuelled ‘casino capitalism’ that her policies begat. If Johnson has any kind of business base it is with hedge funds and private equity firms on the wilder end of that footloose, global capitalism who increasingly fund the modern Tory Party.
However, Johnson is similar to Thatcher in relying, as does support for Brexit, on an uneasy and contradictory coalition of socially traditionalist and protectionist nativists with socially indifferent and free market globalists. In fact it’s quite likely that the electoral coalition that brought Thatcher to power and kept her there included many of the actual individuals, as well as the broad sociological groupings, who were to vote for Brexit in 2016. This (along with the specific ‘red wall’ inflection) means that Johnson is highly constrained in the extent to which he can give the free market, deregulatory Right its head.
Notions of the nation and of national sovereignty are at the fault line of this politics, as they were for Thatcher. Whilst basing much of her appeal on a flag-waving campaign to make Britain great again, the logic of her support for economic globalization undermined the nation state, and the idea of ‘British business’, in particular, became hopelessly antiquated. At the same time, and again as a result of policy decisions, the British economy became far more services based (and hence its international trade needs became far more bound up with removing NTBs than removing tariffs). In some respects, Brexit was a reaction against these changes, but conflating them with EU membership was a catastrophic error, and indeed the post-Brexit acceleration of the sell-off of British businesses illustrates this.
An incoherent and undeliverable strategy
The consequence of that error has been to try to square the circle of nativism and globalism by imagining post-Brexit ‘Global Britain’ to be an independent nation state, trading tariff-free with the world*. Unfortunately for Johnson’s government, the world has moved on from such a model (if indeed it ever existed) to one of national inter-dependence, regionalized economics and increasingly globalised regulation. To the extent that Brexit Britain has a strategy at all, it is to adopt an Eighteenth-Century approach to the Twenty-First Century world, something underscored by Frost’s repeated references to Edmund Burke’s political philosophy as its guiding light.
Such a strategy is totally incoherent and undeliverable for both trade and international relations. At the level of trade it is what gives us a government crowing about trade deals of almost no economic value, simply because they were made by the UK, or endlessly talking about Britain’s ‘world-leading’ qualities whilst presiding over a country which is arguably actually ‘undeveloping’. At the level of international relations it is what yields continual antagonism (£) with the EU, and France in particular, as national sovereignty keeps bumping up against that of others, whilst leaving the UK if not isolated and friendless then at least the object of international ridicule and distrust.
This might at least be a formula for creating a certain kind of national solidarity. It would be a nasty, embittered and chauvinistic one, for sure, but it could be viable in a functional sense. However, the reality is that it fails to deliver even that. For as the Brexit vote, and the high levels of continuing opposition to it, show, at least half the country, if not more, are heavily invested in the world of national inter-dependence, regionalized economics and globalised regulation and are unimpressed, if not repelled, by that offered by Johnson and Brexit. That cleavage is most obvious between Scotland and the rest of the UK, but also significantly divides different parts of the English population. So as well as being externally incoherent Johnson’s Brexit cannot function as a nation-sustaining project either, and will very likely be a nation-ending one as well as initiating an unresolvable culture war within England.
Brexit discredited
It may seem we have come a long way from the trade figures with which I began but that is not so. Those figures are not just about the economic damage of Brexit, but are the most readily quantifiable barometer of the flawed political theory of sovereignty which underlies it. It has become a myth that the case for Brexit was a non-economic one – much of the Vote Leave campaign was explicitly economic – and only about regaining sovereignty or ‘taking back control’. The proposition was that by taking back control, good economic outcomes would become possible, as would good non-economic outcomes but at no economic cost.
Thus the economic case and the political case for Brexit were always inextricably intertwined, and as each becomes discredited so does the other.
*It’s true that there is another version of this Brexit strategy which puts particular weight on trading relations with the ‘Anglosphere’ and/or the Commonwealth. It is still trotted out by, for example, Dan Hannan who spoke recently of how EU membership had “artificially” (cf. my point above about markets being ‘natural’) diverted trade from Britain’s “cultural hinterland” (apparently referring to some, at least, of what used to be that entirely natural entity the British Empire). But although there are traces of that thinking in its policy, even this government isn’t quite so detached from reality as to explicitly frame a strategy in these delusional, neo-imperial preference, terms.
This is consistent with the findings of other studies and, for that matter, with most pre-referendum and post-referendum but pre-Brexit predictions. There is also the beginning of an evidence base about the impact on services trade. Data on what has happened since Brexit are unclear and particularly difficult to disentangle from the pandemic, but a new study by Jun Du and Oleksandr Shepotylo of Aston University suggests that even in the period after the referendum and before Brexit or the pandemic (2016-2019) UK services exports declined by 5.7% a year on average as a causal impact of the vote to leave.
That’s your GDP!
Springford points out that it is not easy to translate the effect on trade into the effect on GDP, but, overall, and consistent with other estimates, he suggests that it looks as if UK annual GDP will be 4%-5% smaller by 2030 than it would have been had Brexit not happened. These are not ‘teething problems’, but long-term damage to national prosperity.
There’s a well-known story about Professor Anand Menon, head of the UK in a Changing Europe thinktank, giving a pre-referendum talk in Newcastle. When he spoke of the likely impact of Brexit on GDP, a heckler called out ‘that’s your bloody GDP, not ours’. It’s a story that has come to stand for the disconnect between ‘experts’ and ‘ordinary people’. But although there are longstanding and good arguments against the use of GDP as an economic measure, it’s wrong to dismiss it as an abstraction that is irrelevant to everyday life. Ian Mulheirn of the Tony Blair Institute calculated that the entirety of the tax rises in the March 2021 budget were attributable to the negative economic effect of Brexit and, hence, tax revenues.
So it may not be ‘our’ GDP, but it is our taxes or our public services. And, despite revisionist claims that Brexit was about ‘freedom at any price’, this is emphatically not how it was presented to the electorate. On the contrary, every warning of its costs was dismissed as Project Fear. Yet as I argued in a recent post, Brexiters seem to have largely given up claiming that Brexit is economically beneficial or denying that it is economically damaging. On the other hand, some, especially on the free market Right, who supported Brexit – notably Spectator Editor Fraser Nelson – are beginning to question its economic rationale.
The strange case of Thatcherite Brexiters
Such questioning opens up the conundrum of why a project which erected barriers with the UK’s largest trade partner should have been so dear to those who regard themselves as free traders. A version of the same contradiction is that so many who are ardent Thatcherites are so opposed to membership of the single market of which she was an enthusiastic architect. In a recent speech to the Centre for Policy Studies – a free market, small state thinktank which Margaret Thatcher co-founded - Boris Johnson went so far as to describe this enthusiasm as having been her “blind spot”.
The apparent contradiction is in many cases explained by the Brexiters’ naïve idea that free trade means tariff-free trade, and hence not to realise (or care) that the single market is about eroding non-tariff barriers (NTBs) as well as removing tariffs, or at least to underestimate the significance of its doing so. Thus in a major speech in February 2020 David Frost – without presenting a shred of evidence – opined that the impact of NTBs and of customs costs was exaggerated by unnamed studies “in some cases by an order of magnitude”, and this clearly informed his approach to the trade negotiations with the EU which were then beginning. Given what has since happened to British trade, it is a line which deserves to go down in history in the same way as, say, that of the record label executive who supposedly rejected the Beatles on the grounds that guitar music was on the way out.
No doubt this is in part ignorance, but I think that it grows from a deeper soil which is the way that many Thatcherite free traders hold a quasi-philosophical belief that markets are a ‘natural’ phenomenon which exist prior to, and function better without, regulation. It is a view of markets, including international trading markets, which is wholly naïve at a conceptual level and unworkable at a practical level. Conceptually, it ignores all those things – from contract law to weights and measures regulations – which are prior conditions for effective markets. Practically, it ignores how creating shared, supra-national regulatory frameworks enables rather than restrains international trade, and in particular services trade. Hence they don’t understand markets in general, or the single market in particular. As regards Brexit, this has had two calamitous effects.
Trade, regulation, and sovereignty
Firstly, it explains why – as is beginning to be more widely discussed than perhaps it was at the time – the Trade and Cooperation Agreement (TCA) was so thin, and effectively little more than mainly tariff-free trade in goods. It’s very important to be careful about this, though. It certainly doesn’t mean that the TCA is worthless, as some Brexiters will undoubtedly argue when it comes up for review and they revive their ‘trading on WTO terms’ fantasy. Without the TCA many industries, notably auto, would massively shrink or even disappear entirely. The real issue is that by opting for a Free Trade Agreement (FTA) rather than single market membership there was inevitably considerably less liberalisation of NTBs and of services trade. As I’ve argued endlessly on this blog, one of the fatal flaws in the entire hard Brexit case was the idea that any FTA, even one more extensive than the TCA, could replicate or even come close to single market membership.
Secondly it explains why far from reducing regulatory red tape Brexit has dumped truckloads of it on British businesses (and also private citizens, for example when travelling or when sending presents to friends and family in the EU). In particular, it has exposed, or may come to expose, firms which trade with the EU to double regulatory and certification requirements – as, for example with the chemicals industry - one for the UK and one for the EU. That’s hardly surprising, as it is exactly the kind of duplication that a single market avoids. Reintroducing it not only hampers British businesses but in some cases will mean EU firms no longer servicing the British market because it isn’t large enough to be worth meeting separate regulations. This is a disadvantage for British consumers.
This also means that Thatcherites are now finding that the scope for post-Brexit regulatory divergence is far less than they had imagined, and government efforts to find examples have not been very fruitful. The big exception is immigration policy with respect to EU countries, but the new restrictions this allows are not economically beneficial for businesses as current labour shortages show and – unlike for many leave voters – immigration control wasn’t a central concern for free market Brexiters. Boris Johnson, like the Lexiters, may now be (dubiously) asserting that it has led to wage increases for workers, but that is hardly a priority for Thatcherites, to say the least. State aid may conceivably come to become (£) an area where divergence is actually beneficial to the UK, but then Thatcherites aren’t very keen on that either.
There are other examples of divergence, ranging from banning live animal exports for slaughter to allowing market traders to use imperial units only, but, whilst these may be important for some, sweeping regulatory reforms are proving elusive (for a detailed listing of where there is and is not regulatory divergence, see the UK in a Changing Europe tracker). For example, there is much talk of creating a more flexible data protection regime than the EU’s GDPR, but doing so would be far more costly for British businesses (£) because for global purposes GDPR is the standard they have to reach. The UK is too small to become a global standard-setter, so exercising its sovereignty in this way just leads back to the problem of duplication. One quiet acknowledgement of that came to fruition this week (£) when it was confirmed that the UK will be able to continue its membership of the European Committee for Standardisation (CEN) and its electrical engineering counterpart (CENELEC). They are not EU bodies, per se, but they do set a huge range of single market standards and these will apply to the UK as well.
In short, because they don’t understand markets and regulation, the rhetoric of Thatcherite Brexiters founders when it meets reality. For with a few exceptions regulatory divergence is uneconomic. Thus, in practice, having regulatory sovereignty is either damaging (when it is used) or pointless (because it isn’t used). Yet Frost, most notably, continues to trot out the line that regulatory divergence is the raison d’etre of Brexit, and a key test of its success. If that is so, he might as well admit that it is destined to be a failure.
Britannia Unchained?
Of course for many Thatcherite Brexiters, such as some of the authors of Britannia Unchained, the real prize was to be deregulation of labour and environmental standards. Indeed it is common to see some – both remainers and leavers - confidently announcing that ‘this was the whole point of Brexit’. That is wrong simply because the only ‘whole point’ of Brexit was that it didn’t have a whole point: it was an assembly of contradictory agendas of which such deregulation was only one, albeit an important one given the power of its adherents. But it turns out that, at least for now, their power is less than they hope and others fear.
For to the chagrin of such Thatcherite Brexiters, here, too, Brexit does not live up to their naïve model of sovereignty. The level playing field provisions of the TCA may not have been as extensive as originally envisaged in the Political Declaration with the Withdrawal Agreement, but nevertheless they exist and constrain the UK through non-regression clauses on labour, social and environmental standards. Indeed free trade agreements in general, including CPTPP membership if it happens, increasingly mandate labour, human rights and environmental standards. It can certainly be argued they do not yet go (nearly) far enough, but the point is that they exist and put constraints on sovereignty in the Brexiter sense of the term.
Moreover, there are domestic constraints. Thatcherite Brexiters like Professor Patrick Minford may be happy to see whole swathes of manufacturing industry and agriculture disappear, but that isn’t something that any government could readily countenance. Nor is there much public appetite for shredding labour and environmental standards. In fact, the government has been quite wary of using Brexit in ways which hard core Thatcherites would wish – not, for example, making use of the freedom to remove the cap on bankers’ bonuses, something bemoaned by Fraser Nelson and others. In part this is because of the peculiar nature of Johnson’s 2019 election victory and his reliance of the ‘red wall’ seats. The pandemic has also had the effect of, if only temporarily, extending the scale of state activity and intervention.
From these constraints arise the now widely made criticism from the Tory Right that “this isn’t a Conservative government”. It’s certainly the case that Johnson is very different to Thatcher, and not just as regards the single market. She was moralistic where he is amoral, if not immoral. She adhered to a version of business rooted in the thrifty shopkeepers of her childhood. He says ‘f*** business’. But an irony of Thatcher’s legacy is that her image of capitalism was entirely different to the rootless, credit-fuelled ‘casino capitalism’ that her policies begat. If Johnson has any kind of business base it is with hedge funds and private equity firms on the wilder end of that footloose, global capitalism who increasingly fund the modern Tory Party.
However, Johnson is similar to Thatcher in relying, as does support for Brexit, on an uneasy and contradictory coalition of socially traditionalist and protectionist nativists with socially indifferent and free market globalists. In fact it’s quite likely that the electoral coalition that brought Thatcher to power and kept her there included many of the actual individuals, as well as the broad sociological groupings, who were to vote for Brexit in 2016. This (along with the specific ‘red wall’ inflection) means that Johnson is highly constrained in the extent to which he can give the free market, deregulatory Right its head.
Notions of the nation and of national sovereignty are at the fault line of this politics, as they were for Thatcher. Whilst basing much of her appeal on a flag-waving campaign to make Britain great again, the logic of her support for economic globalization undermined the nation state, and the idea of ‘British business’, in particular, became hopelessly antiquated. At the same time, and again as a result of policy decisions, the British economy became far more services based (and hence its international trade needs became far more bound up with removing NTBs than removing tariffs). In some respects, Brexit was a reaction against these changes, but conflating them with EU membership was a catastrophic error, and indeed the post-Brexit acceleration of the sell-off of British businesses illustrates this.
An incoherent and undeliverable strategy
The consequence of that error has been to try to square the circle of nativism and globalism by imagining post-Brexit ‘Global Britain’ to be an independent nation state, trading tariff-free with the world*. Unfortunately for Johnson’s government, the world has moved on from such a model (if indeed it ever existed) to one of national inter-dependence, regionalized economics and increasingly globalised regulation. To the extent that Brexit Britain has a strategy at all, it is to adopt an Eighteenth-Century approach to the Twenty-First Century world, something underscored by Frost’s repeated references to Edmund Burke’s political philosophy as its guiding light.
Such a strategy is totally incoherent and undeliverable for both trade and international relations. At the level of trade it is what gives us a government crowing about trade deals of almost no economic value, simply because they were made by the UK, or endlessly talking about Britain’s ‘world-leading’ qualities whilst presiding over a country which is arguably actually ‘undeveloping’. At the level of international relations it is what yields continual antagonism (£) with the EU, and France in particular, as national sovereignty keeps bumping up against that of others, whilst leaving the UK if not isolated and friendless then at least the object of international ridicule and distrust.
This might at least be a formula for creating a certain kind of national solidarity. It would be a nasty, embittered and chauvinistic one, for sure, but it could be viable in a functional sense. However, the reality is that it fails to deliver even that. For as the Brexit vote, and the high levels of continuing opposition to it, show, at least half the country, if not more, are heavily invested in the world of national inter-dependence, regionalized economics and globalised regulation and are unimpressed, if not repelled, by that offered by Johnson and Brexit. That cleavage is most obvious between Scotland and the rest of the UK, but also significantly divides different parts of the English population. So as well as being externally incoherent Johnson’s Brexit cannot function as a nation-sustaining project either, and will very likely be a nation-ending one as well as initiating an unresolvable culture war within England.
Brexit discredited
It may seem we have come a long way from the trade figures with which I began but that is not so. Those figures are not just about the economic damage of Brexit, but are the most readily quantifiable barometer of the flawed political theory of sovereignty which underlies it. It has become a myth that the case for Brexit was a non-economic one – much of the Vote Leave campaign was explicitly economic – and only about regaining sovereignty or ‘taking back control’. The proposition was that by taking back control, good economic outcomes would become possible, as would good non-economic outcomes but at no economic cost.
Thus the economic case and the political case for Brexit were always inextricably intertwined, and as each becomes discredited so does the other.
*It’s true that there is another version of this Brexit strategy which puts particular weight on trading relations with the ‘Anglosphere’ and/or the Commonwealth. It is still trotted out by, for example, Dan Hannan who spoke recently of how EU membership had “artificially” (cf. my point above about markets being ‘natural’) diverted trade from Britain’s “cultural hinterland” (apparently referring to some, at least, of what used to be that entirely natural entity the British Empire). But although there are traces of that thinking in its policy, even this government isn’t quite so detached from reality as to explicitly frame a strategy in these delusional, neo-imperial preference, terms.
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