Friday, 21 April 2023

Britain's Brexit degradation

In the last few posts on the blog, especially the most recent one, I’ve suggested that it is at least arguable that the government and, in a wider sense, the British polity are becoming slightly more realistic about Brexit. That is most evident in the Windsor Framework, the refreshed Integrated Review, and possibly in the reported, though not quite announced, news that the Retained EU Law (REUL) Bill is to be delayed though not, apparently, abandoned. But that lack of clarity about REUL shows how precarious this emergent ‘realism’ is, and is damaging in its own right since it means that multiple sectors – for example healthcare – simply don’t know whether they are soon going to face major regulatory upheaval.

Political stasis is degrading Britain

This reflects a wider stasis about Brexit, such that it is both central and marginal. There is scarcely anything in the UK which is not adversely impacted by it, as attested by the superb Yorkshire Bylines’ dossier of Brexit damage which this week recorded its thousandth entry. That impact extends to the most pressing of economic problems, namely persistently high inflation. Yet Brexit has ceased to be a major political issue, at least for the two main Westminster parties and perhaps even the smaller ones, with the LibDems fairly muted and the SNP having other preoccupations.

Sunak faced down the Brexit Ultras amongst his MPs to deliver the Windsor Framework but they, and more importantly their counterparts outside parliament, remain a powerful force. That is shown by the anti-ECHR provisions of the Illegal Immigration Bill. Even if he was willing, he isn’t able to crush that force and so has little choice but to let the damage drift on, with, at most, some tinkering around the edges. He certainly isn’t going to suddenly admit the truth of what a disaster Brexit has been.

The Labour Party’s ‘make Brexit work’ position is almost the same. Whilst there are few Brexit Ultras amongst its MPs, it is also fearful of being monstered by the pro-Brexit media as well as of leave voters in its traditional electoral base, especially in the ‘Red Wall’. It’s true that there is some recent polling evidence that Labour could gain some electoral advantage if it came out clearly in saying that Brexit was a mistake, without sacrificing its current projection to re-take all of the ‘Red Wall’ seats,  but there are obvious limitations to that finding.

For one thing, any such advantage might not survive the likely shrivelling of Labour’s current huge polling lead when the next election gets closer. More importantly, Labour policy plainly couldn’t just be to ‘call Brexit a mistake’ without specifying a solution, presumably seeking to join either the single market or the EU. Doing so would immediately open up all the division and toxicity, ensure that the next election was dominated by Brexit, and, at least potentially, transform the Tory Party’s fortunes by enabling it to re-group around that single issue. So it’s not hard to understand why that survey result isn’t being heeded by Starmer and, at all events, there no sign whatsoever of him doing so.

It's also worth considering the implications of other survey evidence. It's certainly striking that public opinion on the question of whether Brexit was a mistake or not has for months been fairly stable in showing 53%-55% thinking it was a mistake and 32%-35% thinking it was the right thing. However, over about the same period as that opinion has settled, the public view of the significance of Brexit as a political issue has declined, so that only 17% currently regard it as one of the top three issues facing the country. Moreover, despite a sustained poll lead for (re-)joining the EU, opinion remains significantly divided (46% join, 35% stay out, 19% don’t know in the most recent poll) and there is little reason for confidence that the outcome of another referendum would yield a majority, let alone a clear and convincing majority, to do so.

These various results help to explain the current stasis: although the entire basis of the UK’s national strategy is seen by most people as a mistake, most of them wouldn’t vote to reverse it, and very few of them regard it as a pressing issue. That may change after the next election, given the palpable sense of a country which is in all kinds of ways ‘on hold’ until then. But, for now, it means that Brexit is like a kind of political and economic mould or fungus, slowly degrading the country, making it gradually poorer, meaner, shabbier, sillier and nastier, but with no real consensus on what to do about it.

Yet even as the main parties and much of the public settle to a resigned, impotent despair about Brexit, it has a small but powerful, well-funded, well-organized and indefatigable group of defenders, constantly twisting the truth of the damage it is doing to the country. Indeed, they are one of the biggest reasons why the main parties are so cautious about addressing or even admitting that damage. So in parallel with Brexit degradation in the sense of gradual damage and decline, there is a continued Brexit degradation in the sense of a humiliating, demeaning and corrupting dishonesty.  

CPTPP: a degraded debate

Nowhere is that dishonesty more obvious than in relation to CPTPP accession, which at the time of my last post was just being announced. Subsequent discussion of it has fairly predictably focussed on its puny estimated economic value of 0.08% growth of GDP over 15 years, by contrast with the estimated 4% loss of GDP growth over the same period as a result of the impact of Brexit on UK-EU trade. Predictable as it was, this critique met with confused and contradictory responses from Brexiters.

Trade Secretary Kami Badenoch rejected the legitimacy of such comparisons even being made. We should “stop talking about Brexit” and simply see the deal in its own terms as an economic boost. That might be fine, and in line with my suggestion that we should ‘de-Brexitify’ policy decisions. But that suggestion was the fourth in a series of steps of which the second was to drop false claims of Brexit benefits, including trade deals. Since, from Sunak downwards, CPTPP is being hailed as a proof of the benefits of Brexit freedom from EU trade policy then, inevitably, it will and must be judged against the corresponding costs. Brexiters can’t have it both ways.

Briefings for Britain

At least Badenoch’s response showed some glimmer of recognition that, judged in cost-benefit terms, CPTPP is a dud. In the deep heartlands of Brexit true faith even that is missing. For example, writing on Briefings for Britain (formerly ‘Briefings for Brexit’), one of the small group of dogmatically pro-Brexit economists, Catherine McBride, sought, first, to attack the 4% figure which, apparently, “no one on Twitter has been able to explain”. She decided that it is a garbled version of a 2018 OBR estimate of a 4.4% loss if – and she bolded her text for emphasis – “the UK left the EU on WTO terms”. So, apart from chiding the critics for having got the figure wrong, McBride accused them of ignoring the “inconvenient truth” that there had been a trade deal.

Alas, this critique was misplaced on both counts. The 4% figure is a correct report of the OBR estimate, first produced in 2020 and still expected, and it is explicitly an estimate of leaving with a trade deal. McBride went on to castigate the nay-sayers because “these were expectations of long-term changes in the UK’s GDP relative to a baseline, not an immediate 4% GDP decrease on leaving the EU”. She is quite right in that, and also right to say that some people on Twitter misunderstand that (though citing unspecified Twitter accounts is an obvious ‘strawman’), but then made exactly the same error she accused them of by arguing that:

“Brexit dissenters will be disappointed to know that the UK’s GDP increased from £2.24 trillion in 2019 to £2.49 trillion in 2022 an increase of 11% in current prices although unchanged when you account for inflation. But either way: this is not a ‘4% hit’.”

In this, unlike many Brexiters, McBride at least recognized that in real terms there was no growth, yet she, herself, suddenly ignored her own observation that the 4% figure means 4% less GDP than would otherwise be the case, not a 4% decrease in GDP.

She then turned her attention to the 0.08% figure, criticising the modelling, with an inevitable side-swipe at civil servants, as being likely to under-estimate the benefits of CPTPP. But in fact the figure was based on a new, changed, model that, if anything, would tend to over-estimate those benefits. At all events, whilst it is obviously true that any modelling can be criticised, there’s no reason given to think that the gain of CPTPP is going to be anywhere near the loss of Brexit. Indeed, the fundamental flaw in the attempts to defend CPTPP (and post-Brexit trade policy generally) on cost-benefit grounds is that entails simultaneously denying that substantially increasing trade barriers with the UK’s closest and largest partner entails much, or any, cost, whilst asserting that somewhat decreasing trade barriers with small and remote partners is a significant benefit.

Why bother?

It might be said that it is hardly worth wasting so many words on the self-evidently partisan offerings of ‘Briefings for Britain’, but that misses the way that such documents get circulated as if they were reliable evidence. For example, Reform Party leader Richard Tice did just that with the McBride briefing, describing it as “brilliant”. Moreover, writing in the Spectator, which has a much wider reach, Robert Tombs, who is one of the Editors of ‘Briefings for Britain’ and one of the most active peddlers of the kind of pseudo-analysis it specialises in, produced a very similar discussion of CPTPP. In fact, if anything, it was even more slipshod, for reasons Gerhard Schnyder explains in detail on his latest Brexit Impact Tracker blog, and itself fell prey to the slippage between criticising and yet reproducing false claims of a 4% drop in GDP. This one also got circulated approvingly by, for example, David Frost, who described it as “excellent”.

Admittedly a disinterested observer wouldn’t be hugely impressed by endorsements from Tice and Frost. This is peer review only in the sense that the authors and reviewers share a common dogma. But whilst it’s true that no serious analyst takes them seriously, within the Brexit bubble such writings do contribute to the degradation of political discourse by purveying misinformation and, at best, half-truths, and that is amplified by high-profile recommendations.

Endless opportunism

One of the many reasons why that degradation of political discourse has occurred is that, throughout the Brexit saga, Brexit ideologues have been adept in their opportunism, especially in economic arguments. Pre-referendum claims that Brexit would be hugely economically beneficial effortlessly segue into defences that ‘it hasn’t been as bad as some predicted’, or into outright denials that it was ever proposed as an economically beneficial project but was ‘all about sovereignty’.

That opportunism can be seen In relation to CPTPP, where there has also been a shift from attempts to justify it on economic grounds to asserting that its real value isn’t economic at all, but ‘geo-political’ (£). It isn’t an entirely fatuous argument, and is made by serious analysts such as Marianne Schneider-Petsinger of Chatham House, who stresses in particular its significance for cementing UK-Japanese relations, themselves much damaged by Brexit. But in the hands of Brexiters like John Longworth it becomes entirely opportunistic and internally contradictory.

For one thing, Brexiters also repeatedly laud CPTPP as against EU membership on the basis that it is simply about trade rather than politics, so it hardly makes sense to make political heft the claim for its value. For another, it fails as an attempt to side-step the embarrassing fact of the disparity in economic value of the two memberships in that exactly the same applies to any geo-political value it may have. If, as Longworth says, having a ‘seat at the table’ and ‘being in the room’ is what makes CPTPP worthwhile, then how does that stack up against not being at the table or in the room of the EU? What, concretely, does the former enable the UK to do? And what does the latter preclude it from doing?

Daily life degraded

As I said in my last post, CPTPP isn’t necessarily a bad thing, and Schneider-Petsinger is right to see it as having some strategic value - given that Brexit has happened. But this is only damage limitation and, as such, different not only to what Brexiters claim about CPTPP but also to what they promised for Brexit. In fact, as time goes by, it becomes ever clearer that Brexit has done nothing but create new problems for which damage limitation is the best that either the present government or a Labour successor have to offer.

The recent Easter holiday queues at Dover are a good example. The predictable Brexiter insistence that these were nothing to do with Brexit was quickly discredited, largely because of some robust reporting from the BBC and other media outlets, facilitated, perhaps, because Simon Calder, the media’s go-to travel guru, is a respected independent expert who feels no need to pull punches on the causes. But, given Brexit, what are the solutions? One is just to accept that, at least at busy periods, we are stuck with massive queues over and above those that occurred before Brexit. Building extra facilities, something previously rejected by the government, might help, a reminder that both Brexit and the incompetence of its execution are the problem. But the realities of the need to ‘wet-stamp’ passports at facilities where e-gates are not feasible mean that, as has already happened on Eurostar, the ultimate solution is to reduce capacity, meaning less choice and higher prices for customers.

Also recently in the news have been the difficulties faced by travellers from the EU in visiting Britain. These include the fact that these tourists aren’t able, as before Brexit, to simply use their national ID cards, meaning that they either have to go to the expense of getting a passport or choose a different holiday destination. Unsurprisingly, this means numbers have fallen. School and other group trips from the EU face particular disruption, where paperwork problems for just a few members of the travelling party can scupper the journey, problems made all the more likely by the ‘Kafkaesque’ post-Brexit visa system (£). As a result, French schools increasingly favour Ireland as a destination. And there are similar difficulties faced by EU groups coming for commercial or cultural purposes, from touring punk bands to opera singers.

All of these things come with costs, both economic and non-economic. The economic costs are obvious, for example in the loss of tourist income. But, especially in the long-run, the non-economic costs of declining interest in and knowledge about the UK, and its declining reputation as a friendly and welcoming place, are perhaps even more significant (and, indeed, may have knock-on economic costs, too). To some degree they are problems that can be smoothed. There is already talk of simplifying processes for French school trips, for example. But that will take time and will have to be replicated on a country-by-country basis even to get back to something like the pre-Brexit situation. EU travellers could be admitted using their ID cards again, though there is no sign of that. The UK could create an efficient and user-friendly visa scheme, but that seems an even more remote prospect given a Home Office that failed even to provide visas for a visit from a Ukrainian state orchestra (and, thereby, did yet more reputational damage to the UK).

Trade degrading, with worse to come

What is more likely is that each of these things, in itself not disastrous, adds another layer of damage, as things that used to be very easy become very hard. At an aggregate level, that can be seen in the latest calamitous ONS figures for UK goods exports, now established as by far the weakest in the G7 for over two years (£). In fact, the picture for trade in general is bleak*. The ONS’s latest quarterly figures show that exports of both goods and services to both EU and non-EU destinations have fallen. There is not a shred of credibility in blaming this on the pandemic or the Ukraine War, which affects all countries, with the Institute of Directors stating (£), “it is clear that Brexit has had the largest influence”.

What we are now starting to see in these aggregate figures is the effect of all those ‘small stories’, dismissed as anecdotal by Brexiters, of mainly small companies which have struggled with, and in many cases given up on, exporting to the EU. But no less important is the more hidden story of larger companies coping with the new barriers but, as a result, increasing their cost base and becoming less competitive. What has happened, as I anticipated in January 2021 when the transition period ended, is not a process of dealing with ‘teething troubles’ but one of making long-term structural adjustments to the UK’s permanent detriment.

That process is not over. Although already badly affected by post-Brexit customs formalities and other costs, imports from the EU have not yet been subject to full controls in the way that exports to the EU were since the day after the transition period ended. Now, after several delays, that is set to change in what is expected to be a staged process beginning in October 2023 but with the main measures coming into force over the following year. Although billed by the government as a ‘slimmed down’ and ‘risk-based’ border, this will entail new processes and costs, estimated as £420 million a year. It should be added that a risk-based border, whilst cheaper in upfront terms, may turn out to be much more expensive if there turn out to be defects in ‘low risk’ products.

The consequence of import controls will be a mixture of more expensive products or reduced consumer choice, and possibly some import substitution (i.e. domestic production of what were hitherto imported goods), though that, too, has cost implications since it implies production only becoming viable because imports have become more expensive. That these are new costs, entailed solely by Brexit, was admitted by the government when their introduction was postponed.

It is therefore, to say the least, perverse that the government is claiming the (arguably) lower cost of the ‘slimmed down’ controls compared with those it was originally going to create to be a “saving” from “reduced red tape” (£). If post-Brexit visa processes are ‘Kafkaesque’, then that inversion of truth is surely ‘Orwellian’, but here again we can see how what is, at best, damage limitation is now being claimed as a ‘Brexit benefit’. Thus, along with the degradation of terms of trade we see another degradation in political honesty.

A country degraded

It’s always been easier to predict, explain, and measure the economic degradation of Brexit than its geo-political damage, but Joe Biden’s trip to Ireland provided a further illustration of the latter. Agreeing the Windsor Framework headed off the threat that he might not come to the UK for the anniversary of the Good Friday Agreement, but the continuing deadlock over the Assembly was a reminder of the damage Brexit has done. Hence Biden made only a perfunctory stop in Northern Ireland, including a short, awkward and bizarrely low-key coffee meeting with Sunak. That was followed by an extensive, high-profile and markedly warm tour of Ireland during which, whilst addressing Ireland’s parliament in almost extravagantly friendly terms, he urged that the UK “should be working closer with Ireland”.

Brexiters, and the right-wing media in Britain generally, were moved to bitter comment, much of it focussing on Biden personally and some of it saturated with anti-Irish prejudice. But what the visit illustrated had little to do with Biden and much to do with what Brexit has done to the UK’s international relations and standing. The UK-US ‘special relationship’ has long been a polite fiction, apart from intelligence, especially signals intelligence, and, to an extent, defence cooperation. Brexit ended, for good, the UK’s strategic role as a US-EU bridge. And any idea that Trump would offer a new form of UK-US partnership, whether in trade or anything else, was always na├»ve, as it will still be if he comes back for a second term in office.

As for Ireland, Biden is by no means the first US President to place deep importance on his Irish heritage, and certainly not the first to recognize the political importance in the US of the Irish diaspora or the importance of that diaspora to American history and identity. Hence the US was closely involved in the peace process and has a large stake in it, so that it is now pivotal to US-UK post-Brexit relations. Moreover, Ireland is a significant international player in its own right, a significance enhanced by its membership of the EU, as has been shown not least by the Brexit process itself. It is an object lesson in how the sovereignty-sharing enhances rather than, as Brexiters have it, diminishes national power, and one all the more unpalatable for those Brexiters who think “the Irish really should know their place”.

A country degrading itself

So Biden’s Ireland visit and the British reaction to it rammed home the double degradation of Brexit. On the one hand, it showed how the importance of the UK has been degraded. On the other hand, the combination of neediness and nastiness in the reaction was shaming.

In October 2017 I wrote a post entitled ‘Brexit is bringing humiliation to Britain, and there is much more of it to come”, and in September 2018 that “Britain is humiliating itself”. In both cases, the core of the analysis was that this humiliation came from the government’s refusal to accept or acknowledge the realities of what Brexit means. It’s this which links the two senses of degradation: the more persistent the dishonesty and fantasy of Brexit politics, the more the country becomes diminished, poorer, and daily life more difficult.

It is now 2023 and, yes, there are the tiniest glimmers of realism about Brexit, but they are limited, painfully slow in coming, and fought every inch of the way by the Brexit Ultras. Thus Britain’s Brexit degradation continues, and there is no end in sight.

 

 

*A rosier picture is presented in the government’s latest UK Trade in Numbers briefing, released yesterday. It is partly based on the same ONS data I mentioned, so why the discrepancy? One reason is that the briefing highlights annual changes, rather than the monthly and quarterly changes which are what is new in the ONS data. Another seems to be because the briefing states that “figures include non-monetary gold and other precious metals”. However, for its main reporting the ONS excludes non-monetary gold and other precious metals, explaining that such trade “can be large and highly volatile, distorting underlying trends in goods exports and imports”.

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