The eighth summer of Brexit: pragmatism without honesty

The recurring word in most commentary on this summer’s Brexit events is ‘pragmatism’. It refers to the range of ways, some quieter than others, in which the government is trying to soften or avoid some aspects of the damage of Brexit. It’s a fair description, so far as it goes, and there is something to welcome in the damage limitation measures it is applied to, so far as they go. It may be further evidence that, as I suggested last March, Britain’s ‘Brexit fever’ is finally breaking. However, it is very far from showing anything like honesty about Brexit, and it consists of ad hoc measures rather than a coherent post-Brexit strategy.

Nevertheless, there is an emerging pattern. For, although this summer’s Brexit news stories are quite disparate in nature and detail, they are all variations on the same theme in being attempts to deal with the consequences of the delusion that Brexit meant ‘taking back control’ without admitting that it was a delusion. It is this which means that such pragmatism as there is still lacks honesty about what Brexit actually means.

How independence brought dependence

This is evident in the only event that prompted me to post during this summer break, namely the decision to indefinitely postpone the introduction of the UKCA mark. I won’t write about it in detail again now, but it was always one of the most hubristic examples of the supposed ‘independence’ that Brexit would bring, and although it has long been on the cards that it would be dropped, much cost has been incurred in indulging that hubris. And whilst dropping it is, indeed, ‘pragmatic’ the government, and Brexiters generally, are reluctant to spell out that it means that Britain is now dependent upon CE marking, dependent upon EU approved bodies to test and certify conformity to the standards necessary for this marking, and effectively accepting the same product standards as the EU.

The UKCA announcement was swiftly followed by reports of yet another delay in the introduction of import controls although, incredibly, it was not until the end of August that the government formally confirmed this.  This also creates a dependency in that, in effect, the UK is now dependent upon the EU to ensure that the goods it exports are safe and meet all requisite standards. But the EU has no responsibility and no system to do this for third countries. As I discussed at some length last time import controls were postponed, this creates increased risks because the UK is no longer part of the eco-system of single market institutions that reduce those risks. Hence the British Veterinary Association has warned that this latest postponement “is putting the UK’s biosecurity at serious risk of imported diseases”.

Those and other risks are real, but they are trumped by the fact that Britain simply can’t afford to implement Brexit import controls. This latest postponement was perhaps the first time the government overtly admitted that doing so would cause inflation, especially of food prices, although it wasn’t the first time that it had been admitted it would cause costs. Jacob Rees-Mogg had already conceded that at the time of the previous postponement. Such admissions also at least implicitly acknowledge the costs in the other direction of trade, in other words the EU controls on UK imports which have been in place since the end of the transition period.

There is perhaps some honesty in this, but even that is concealed by the government’s pretence that its border strategy involves “using Brexit freedoms” and the usual tedious, and again hubristic, rhetoric that when import controls are introduced they will be part of a high-tech “world-class border”. Mere competence, of course, is as disdained as it is elusive. It’s a boast which seems all the more vain given that this summer also saw the very quiet announcement of “a new phased approach” (meaning, again, delayed) to introducing the Customs Declaration Service (CDS), the system meant to replace the Customs Handling of Import and Export Freight (CHIEF) service. CDS is supposed to provide a much more streamlined service so as to mitigate some of the Brexit frictions but, as I noted in a post in January 2021, it has been subject to persistent delays, going back to at least February 2019.

Freedom to do … not much

The decisions about UKCA and import controls are similar in responding to the impracticality and costs of ‘taking back control’ by acting as if Brexit hadn’t happened. It turns out that the best way to use the wonderful freedoms of Brexit is not to make use of them at all. That is unsayable for the government, and on the same day as the UKCA decision was announced, with the timing perhaps designed to sweeten the pill for Brexiters, the UK’s new post-Brexit alcohol duties regime came into force, complete with the populist tag of the ‘Brexit Pubs Guarantee’.

Here, at least, is something that can be said to have been made possible by Brexit, although whether the specific issue of cheaper beer in pubs required Brexit is disputed by breweries, as are its benefits to the pub trade. More generally, most parts of the alcoholic beverages industry are unhappy about the new regime, and, far from cutting red tape, it introduces a far more complex structure of duties and looks set to create strange anomalies in, for example, the pricing of different strengths of wine.

But even if it is to be counted as a result of Brexit, there are only a very small number of these “micro-divergences” in tax policy, and it is unlikely that there will be many more to come, according to KPMG UK’s Head of Tax Policy. Indeed, in most respects Brexit ‘freedoms’ are unused, not just in relation to tax policy divergence but regulatory divergence, as the latest edition of the UK in a Changing Europe’s regulatory divergence tracker, released in July, shows.

This isn’t, as the Brexit Ultras moan, through lack of political will, but again because doing so is too impractical and costly. However, that doesn’t mean that continuing the pre-Brexit status quo of regulatory alignment in most areas is cost-free. Once outside the single market, it isn’t enough simply to be aligned, it has to be formally demonstrated by individual firms selling into the EU, just as it does by those of any third country. That entails both direct costs, and indirect costs in terms of delays – precisely the kinds of costs that single market membership gets rid of. In short, leaving the single market makes regulatory alignment expensive, but regulatory divergence is even more expensive. So we pay for the price of a freedom we cannot afford to exercise, and Brexiters call this sovereignty.

Freedom to … follow

But it’s actually worse than that. Not only can we not afford to diverge, we cannot afford not to follow. Even without the UK making any active choices to diverge from EU regulations, ‘passive’ divergence occurs whenever the EU itself changes regulations. Each time this happens it puts pressure on the UK to shadow the EU, partly because of the costs to British businesses and organizations of not doing so, and partly because in many cases a failure to do so increases divergence between Great Britain and Northern Ireland, thus ‘thickening’ the Irish Sea border. As time goes by the significance of this “ratchet effect” becomes ever-clearer (£).

The imminent introduction of the EU Carbon Border Adjustment Mechanism (CBAM) is a significant case in point, and we will hear much more about it when transitional implementation arrangements begin this October. As with most things Brexit, the technical details are ferociously complex, but in essence it means a tax on embedded carbon in EU imports of goods in many sectors, with an associated system of trading in carbon certificates, as well as systems of reporting and monitoring. British firms exporting to the EU will be immediately and directly affected (if they are to continue to export), imposing considerable new costs, although reports suggest that most of them are unaware of what is about to happen (£) with CBAM (and with several other major upcoming EU regulatory changes).

At the same time, the UK is planning to have its own CBAM system, although it is unlikely to be ready until at least 2026, and it is possible that in outline it will be very similar to the EU’s. However, unless there is an agreement linking the two systems then British firms will have to show compliance with both. This sounds rather like the ill-fated plan to have ‘our own’ UKCA mark, but UK CBAM is perhaps more akin to the still postponed UK REACH system for the chemicals industry in that both could only link to the EU’s equivalents by agreement with the EU. It is a subtle difference, but an important one. Whereas things like delaying UKCA and import controls, or passive regulatory alignment, can be done by the UK without any agreement from the EU, things like creating linkage or mutual recognition with EU systems overtly make the UK a supplicant to the EU.

Brexit Britain’s supplication

This is evident in a much more politically visible policy area, which has permeated this summer’s news, namely the frenzy over ‘stopping the boats’. Entirely unsurprisingly, the government has discovered that, here too, ‘taking back control’ does not actually have any substantive meaning, and that its policy requires agreements with others – not just the EU, but some of its members, such as France and Italy (£), and other countries, such as Turkey.

Of course, irregular migration is very much an issue across the EU, and were the UK still a member it would have a significant role in shaping EU policy, as well as benefitting from its shared arrangements, such as the Dublin 3 Regulations. That can include the right to return asylum seekers for claims processing in the first safe participating country they reached, and it is reported that Rishi Sunak (£) would like to replicate that right in a UK-EU agreement. Indeed, a returns agreement is something that was sought during the Trade and Cooperation Agreement (TCA) negotiations, but the EU turned it down. Reportedly, it has done so again.

It is not difficult to see why. The UK, because of its geographical position, is very unlikely to be the first safe country arrived at (unless arrival was by air) and, if it is, unlikely to then be used as a point of departure to an EU country. So a ‘returns policy’, in itself, would be almost entirely one-way, which is hardly in the interests of the EU or its members. Inevitably, Brexiters are incapable of understanding this, with bone-headed former MEP David Bannerman tweeting rancorously about “our so called friends in the EU showing their true colours again”, and an Express article trotting out the usual paranoid and self-pitying line about “Brexit punishment”.

By contrast, the Labour Party’s plan, which hit the headlines this week, is rather more honest and realistic in recognizing that any deal with the EU needs to offer something for both sides (though it can’t be assumed the EU will agree to it). It seems to include offering agreement to take some asylum seekers from the EU, via managed routes, in exchange for EU agreement to accept returns of those arriving in the UK by irregular routes. But the government reaction to this more, well, pragmatic proposal was to denounce it as surrendering control to Brussels and making Britain a “dumping ground” for “illegal migrants” (sic), whilst the Brexit Blob went into predictable hysteria.

This serves to illustrate the continuing dishonesty – as well as the stupidity – that surrounds Brexit, which precludes a realistic post-Brexit strategy. Rather than accept the reality of being a supplicant to the EU, the Brexiters either expect to be gifted what they want, and denounce the EU as malevolent for not doing so, or, if some deal is made or even proposed, they denounce it as ‘surrender’ and betrayal of Brexit. They certainly haven’t grasped that being outside the EU means less, not more, control, something which will be shown again in this policy area if, as a report this week suggests, the UK is about to sign a deal to access the EU Border Agency, Frontex. Such ‘opt-ins’, for all that they may be desirable to both the UK and the EU, are invariably different in character from full membership, and invariably shaped by the fact that it is the UK ‘joining in with’ an EU programme or initiative rather than vice versa.

Something similar applies to the last of this summer’s main Brexit stories, with the UK finally, and belatedly, agreeing terms to re-join the Horizon Europe programme. Again this is widely seen by sensible commentators as a sign of an emerging pragmatism. Yet, as with the other examples, there is little honesty from the government about what that pragmatism means. In particular, not only has the UK’s absence from the scheme in itself done significant damage to British science, but the new associate membership, which operates without freedom of movement of people which does so much to promote easy and flexible cooperation, is inferior to what we had before.

So this is a recurring theme. When particular instances of the damage of Brexit become undeniable, the government sometimes seeks to patch them with some kind of solution, be it a delay, quiet alignment, or cooperation, but there is no honesty about the fact that the ‘solution’ is rarely as good as what has been lost, or, even if it is, that the very need for ‘solutions’ demonstrates that Brexit is the cause of so many problems, and that all the effort used to create such solutions is itself a cost of Brexit.

At the same time, even these sub-optimal solutions come in the teeth of Brexiter opposition with, in the case of Horizon, the Telegraph’s Matthew Lynn (£) sneering at all the scientists and industrialists relieved that there has been at least a fix of sorts, on the grounds that they apparently don’t recognize that “Europe is finished” and is a “failing bloc”. But whatever Brexiters may want to think, the UK wanted and badly needed Horizon, and for all that they continue to rail against the implementation of the Windsor Framework they refuse to see that it was only that agreement that unlocked the possibility of being in the Horizon scheme. In this sense, the EU’s refusal to agree Horizon terms until the Northern Ireland Protocol row was settled was an effective negotiating lever.

Yet a quite astonishingly ignorant Telegraph editorial (£) insisted that the delay over Horizon showed the EU to be irrational and self-harming and that, far from being a supplicant, the UK’s participation was needed to prevent the EU becoming a “scientific backwater”. Indeed, the article suggests, it was a clear case of ‘them needing us more than we need them’ whilst the Express reported it as the EU “backing down”. But even here there is no consistent logic, with still other Brexiters, such as David Frost, warning that the UK will be ‘held hostage’ by Horizon membership.

And this, too, is a recurring theme. Endless claims that the EU is failing, that it ‘needs us more than we need them’, but that, paradoxically, it is able to punish and hold hostage the UK are amongst many examples of how the Brexiters have learned literally nothing from the last seven years. Indeed, now they are making ever more strident calls for a ‘Brexit 2.0’ of leaving the ECHR. That may come to nothing, but the vociferousness of the demand, and its reach well into the higher ranks of the cabinet, is an important sign that the madness of Brexitism is alive and kicking, despite the failure of Brexit. This enduring madness sustains the tension, which has existed in various forms throughout the entire Brexit process, between the practical realities of what Brexit means and the implacable demands and fantasies of Brexiters within and outside government.

Brexiters’ continued denial

One sign of this is the way that, even now, the Brexit Ultras continue to claim that Brexit has had no adverse effects on trade and the economy generally, or even that its effects have been positive. This summer seems to have seen an upsurge in such attempts, in ways which are as brazenly dishonest as they are desperate. These attempts have shown all the now familiar tricks, including cherry-picking particular data points (especially relating to the pandemic), citing trade figures without adjustment for inflation, or making comparisons between the UK and the EU (or individual members) rather than between the UK when an EU member and when not.

The latter of these, something to which anti-Brexit commentators are also sometimes prone, is especially misleading because, of course, whether or not a member of the EU, the UK economy is often, if not always, better or worse performing than the EU average, or the Eurozone, or individual EU members (Germany being a currently popular comparator). To see how asinine such comparisons are, consider whether, when the UK was a member of the EU, Brexiters would have argued that the relative performance of the UK and the EU had any implications for the case for belonging to or leaving the EU. Undoubtedly, they would (and probably did) say that if the UK was performing better than the EU it ‘proved’ we did not need to be a member, and were held back by being ‘shackled’ to the EU; but if the EU was performing better than the UK it ‘proved’ we should not be a member as the EU was ‘rigged’ to our disadvantage.

But even comparing the UK during and after membership is not really sufficient. What is necessary is to estimate the ‘counterfactual’ of how the UK would have performed had it remained a member of the EU compared with how it has in fact performed since leaving, the OBR’s being the best-known and most authoritative example. Such estimates are difficult to make, and bound to be imperfect, but although the Brexiters are happy to dismiss all such estimates (£) they fail to provide a convincing one of their own. Instead, they frequently simply assert that Brexit has had a beneficial effect, effectively positing an implicit and indefensible counterfactual, especially by pointing to increases in the nominal value of trade (ignoring inflation, as well as things like unusual energy trade fluctuations, changes in statistical methodology etc.).

The endless and varied kinds of chicanery used to make these assertions has the effect, no doubt intended, of making it exhausting to debunk each individual example. But, even without doing so, it is easy to demonstrate their hollowness. For, crucially, no Brexiter is able to explain how Brexit could conceivably be responsible for increasing trade or economic growth, or how even sustaining their levels could be because of, rather than despite, Brexit. It has increased trade barriers with the EU, and, even if the much-vaunted new trade deals are going to have much value (they won’t), it is far too early for them to have had any impact, as those with Australia and New Zealand only came into force at the end of May, whilst CPTPP membership has yet to begin. Nor can any supposed Brexit boost have come from deregulation since, as noted above, and as Brexiters themselves constantly and vociferously complain, there has been almost no regulatory divergence.

So there is no reason in principle why Brexit could have a positive, or even neutral, effect on trade or the economy generally. Moreover, the claim that it does so flies in the face of what businesses themselves say. Even in the fanatical pages of the Express, an article headlining business backing for Brexit and hostility to any idea of re-joining was replete with examples of businesses saying the exact opposite, primarily because of the ‘red tape’ barriers to trade that Brexit has created. By contrast, there are no examples of businesses for whom trade with the EU has become easier as a result of Brexit. The latter is important, because Brexit was supposed to have a positive effect, not just ‘to not to be (too) negative’. This point is also relevant to the wholly bogus way that Brexiters treat any post-Brexit good news - such as this week’s announcement of BMW’s investment in the Mini plant – as if it were somehow attributable to Brexit. Again, the question is: what investments, if any, have been made that would not have happened without Brexit, and how do they compare with those investments which would have been made, but for Brexit?

So what happens now?

The consequence of the continuing power of this invincible stupidity is a kind of political drift. Where the economic or political costs are high enough, and those affected lobby strongly enough, we see the government seeking accommodations of various sorts to mitigate or minimise some of them, but in cases where the immediate costs are not too high, such as its dismissal this summer of the EU’s offer of formal ‘strategic dialogue’ (£), we see the government pandering to the Brexit Ultras.

This is why the government’s supposed ‘pragmatism’ over this summer only consists of ad hoc, sub-optimal fixes, which may slightly reduce the damage of Brexit in a few policy areas but are constrained by the ongoing ‘conspiracy of silence’ which prevents honesty about the reality even of those fixes, let alone about the abject failure of Brexit across every single policy area. That silence is shared by the Tory and Labour Parties, and it comes from the fear both have of the unquenchable and unreasoning fury of the Brexit Ultras, a fury so hair-triggered that it is provoked even by the waving of EU flags at the Last Night of the Proms. I don’t think we will see an end to the power of the Ultras at least until a few of the high-profile ones publicly admit that Brexit, in principle and not just in delivery, was a catastrophic error.

Even so, it is possible that a Labour government might be able to fashion ‘pragmatism’ into a more coherent strategy, to the extent that it might pursue closer ties with the EU across all policy areas (it will in any case inherit, perhaps by Tory design, some of the present government’s delayed or deferred implementations, such as import controls). At least such a government would not have the dead-weight of Brexit Ultra MPs that makes this impossible for the Tories, and although it would still face the massed ranks of the pro-Brexit media – a taste of which we saw with this week’s furore over its asylum plans - it might, when in power, be more able to resist or ignore their attacks. However, there is little sign that Labour will be any more honest about the costs and limitations of such an approach, since to do so would open up the obvious question of why that approach was not bolder.

Yesterday saw the publication of the revised edition of my book Brexit Unfolded. How No One Got What They Wanted (and why they were never going to). When the first edition was published, in 2021, the sub-title was perhaps provocative. Now, it is almost a truism, whilst also being a taboo for the main parties. The new edition tells the story of what happened from the end of the transition period up to last June, and concludes that the situation is that “now they can’t agree what to do about it”, creating, at least for now, a political – and national – impasse.

So what happens now? Seven years ago, I returned from holiday and wrote the first post on this blog. It finished with the words “it is this strange new landscape that I will comment on in the months and years to come”, but I did not really anticipate that I would do so for so many years as I have, and certainly didn’t anticipate that the blog would receive the attention it has (for which, as always, I am grateful). The landscape now is just as strange, if not even stranger, although in some ways depressingly unchanged. Entering the eighth year of blogging, I will continue to try to record and analyse it.