Proustian moments at Le Café Brexit

There is an old saying that if you sit for long enough outside a café in Paris then, eventually, everyone you have ever loved will walk by. I was reminded of this not by the opening of the Paris Olympics but, perhaps more surprisingly, by an article this week in the Financial Times (£). In it, economics commentator Martin Sandbu ponders the possibility that, with the new government’s more positive and relatively more pragmatic approach to EU relations, some new agreement might be reached whereby the UK as a whole, and not just Northern Ireland, participated in the single market for goods.

It made for a kind of Proustian moment. For here, walking past Le Café Brexit, so to speak, was one, or perhaps two or even three, of the Brexit models we once knew so well, although Sandbu does not mention them by name in the article. Most obviously, it reprises the ‘Ukraine model’, first propounded, so far as I know, by Andrew Duff in November 2016. It also resembles the perhaps less familiar ‘Jersey model’, first propounded, again so far as I know, by John Springford and Sam Lowe of the Centre for European Reform in January 2018.

For that matter, it resembles what, in June 2018, seemed to be what Theresa May might seek to negotiate. (I mean by that not what ended up being her backstop proposal as regards the Northern Ireland Protocol in the Withdrawal Agreement, but what was floated as the potential final form of UK-EU relations.)

The sight of once familiar faces

Since the faces of these old ‘loves’ (if, indeed, they warrant that term) may now have been forgotten, it’s worth just briefly recalling their main features. Under the Jersey model, the UK would be in the single market for goods, including agriculture, accepting EU rules not just on products but things like state aid, and social and environmental standards, and be part of the EU VAT regime and, effectively, its customs union.

Under the Ukraine model*, there would be a Deep and Comprehensive Free Trade Agreement (DCFTA) effectively entailing membership of the single market for goods and some services, again accepting product rules as well as things like state aid and social and environmental standards. There would be customs cooperation, rather than a customs union (though Duff suggests the model could be augmented with a customs treaty). However, in a more expanded sense, the Ukraine model encompasses not just a DCFTA but an Association Agreement, encompassing wide-ranging political cooperation, including in areas of foreign, defence, and security policy.

Needless to say, in both cases there is considerably greater complexity than this (for which, see the links above), and no one regards them as precise templates for a UK-EU relationship rather than being indicative of a certain type or category of relationship. Why were they not pursued? One answer can be found in another remembrance of past things, this time the famous ‘Barnier staircase’, the diagram which encapsulated the various categories into which post-Brexit relations might fall, along with the declared UK red lines which ruled all of them out other than a ‘standard’ Free Trade Agreement indicated by the Canadian and South Korean flags on that step of the staircase.

The Jersey model doesn’t feature on the staircase, but the UK red lines which precluded it were partly the same as those for the Ukraine model, which does appear as one of the steps: no ECJ jurisdiction and regulatory autonomy. The Jersey model would also cross the red line of having an independent trade policy, at least as regards agreements about trade in goods. At the same time, it is worth recalling that the Ukraine model, certainly, and the Jersey model, possibly or even probably, does not cross the UK red line of ending freedom of movement of people.

Why are we seeing them again now?

Why, then, might these models have become relevant again, at least from a UK perspective? Firstly because, in a general sense, the Labour government has committed to “tearing down” the barriers to trade created by Brexit. These models would do so, at least for goods trade, by removing many of the non-tariff barriers to trade with the EU, and not just tariff barriers (as, to a large extent, the existing trade agreement does). Since it is goods trade, rather than services trade, which has been most badly affected by Brexit, this would, unlike some of the more modest reforms Labour have suggested, actually make a meaningful economic difference and this, in turn, would assist Labour’s broader growth agenda (it would also considerably, if not entirely, remove the need for the Irish Sea border).

Secondly, and more specifically, Sandbu stresses the significance, which I highlighted in my most recent blog post, of Labour’s planned legislation to shadow EU product safety regulations. It is an important development, rightly described as “a real blow to the Brexiters” by Niall Ó Conghaile in East Anglia Bylines, and one which requires no agreement with the EU. But it also seems likely that the government will agree ‘dynamic alignment’ of Sanitary and Phyto-Sanitary (SPS) regulations with the EU, at least if it is serious about reaching the ‘veterinary agreement’ which has been presented as central to its European policy. Of course, product safety and SPS are by no means exhaustive of the EU regulations, but the point is that, unlike the Tory governments, the present administration has no doctrinaire objection to regulatory alignment. Nor does Starmer have to contend with Brexit Ultras on his backbenches opposing it.

Dating isn’t the same as marriage

Even under the Tories, it was de facto accepted that the possibilities for regulatory divergence were very limited in a practical sense, which Is why they identified so few, and pursued even fewer. Moreover, as the recent example of ‘tethered plastic bottle caps’ has illustrated, to the bemusement of Brexiters like poor old Isabel Oakeshott (£), whatever the UK government may do, UK businesses will often decide to follow new EU regulations.

That’s for the fairly obvious reason that it is cheaper to produce to only one standard, especially if it is that of the larger market, but, in any case, to produce to the standard which is required by one market and is acceptable in the other market (i.e. in this case, tethered plastic bottle caps are now legally required for sale in the EU and acceptable, although not legally required, in Great Britain). Moreover, there is an additional incentive for UK manufacturers, specifically, to produce goods to a standard which will be acceptable in both Great Britain and Northern Ireland, where EU rules apply anyway (an early example being that of baby food manufacture).

This is just one illustration of something that Brexiters have never been able to understand. They (generally) manage to grasp that exported goods have to meet the standards of their destination market, but don’t understand why firms producing goods which are not for export should have to comply with the EU rules, depicting this as unnecessary red tape. And, with Brexit, they proceeded on that basis, only to find that doing so actually increased red tape. Hence, for the most part, the UK continues to comply with EU rules but without having any say in making them (or, at least, only a very limited say, in some cases, via the British Standards Institute’s membership of European standard-setting bodies). So much for ‘sovereignty’.

But the Brexiters also failed to understand something which is admittedly more complicated, and which is highly germane to the re-appearance of the Ukraine and Jersey models. The fact that goods produced in the UK meet EU standards doesn’t in itself make those goods legally saleable in the single market. Alignment doesn’t mean access, any more than dating means marriage. It is exactly the same issue, though in reverse, which some remainers fail to understand when they wrongly assume that goods sold in the UK marked ‘Not for sale in the EU’ (NFEU) must mean that those goods do not meet EU standards.

So, for this reason, even if the Labour government shadows EU regulations for product safety and in every other area, whilst that is helpful for businesses (by ensuring there is no need to produce to two standards**), that does not in itself replicate or gain the benefits of single market membership. But if regulatory alignment is no longer a red line for the UK, then there is no good reason not to make it de jure and not just de facto (in other words, to agree dynamic alignment not just in relation to SPS, but across the board for goods)? Similarly, if dynamic alignment for SPS is to be agreed, then that crosses the previous red line on ECJ jurisdiction, which would ultimately be needed in the event of, for example, disputes. So why not do the same for all goods?

In short, since, under Labour, the UK red lines which the Barnier staircase showed to preclude the Ukraine model have now, apparently, gone, then why could the Ukraine model not be revived? Indeed, given Labour’s very clear desire for a deep security pact, there seems little the government would object to, on doctrinaire grounds, in the wider model of not just a DCFTA but an Association Agreement.

One potential issue, with the Jersey, though not the Ukraine, model, is that it implies a customs treaty, which would limit the possibilities for an independent UK trade policy. And, despite the very limited economic rationale for such independence, Labour seem as committed to this as the Tories were. However, even the Jersey model would not preclude UK trade agreements with other countries on services, and whilst it is true that, historically, FTAs have been goods-focused, it is at least arguable that a smarter UK policy would be to develop a focus on services deals. Indeed, last year’s ‘Trading Up’ report from the Nuffield Foundation funded Economy 2030 project advocated precisely that, along with replicating the arrangements for goods in Northern Ireland across the whole UK economy.

It takes two to tango

So much for the UK side, but about the EU? Sandbu suggests that admitting the UK to the single market for goods would require the EU “to abandon the theology of four inseparable single market freedoms”. It’s a slightly irritating formulation, since it’s hardly a ‘theology’, but presumably one thing he has in mind is the issue of freedom of movement of people, which remains a UK red line under Labour. However, the Ukraine model does not entail such freedom of movement (and, hence, that did not feature on the staircase as precluding the model).

Nevertheless, in terms of the likelihood of the EU agreeing to it, an obvious objection is that the current Brexit trade arrangements actually work fairly well for the EU, and also that the dividing line between goods and services is an increasingly blurred one. Moreover, as a report this week emphasized, the EU are likely to want to see the existing Brexit deal fully implemented before considering a new one. It’s also questionable whether either the Jersey model (which really only arises from the historically curious status of the Channel Islands, and anyway relates to a tiny territory) or the Ukraine model (which relates to a much smaller economy than that of the UK, and is really predicated on being a path of entry to full EU membership, rather than an exit destination), would prove attractive or practicable from an EU perspective.

There is also the perennial problem of Britain’s Brexiters, despite them being out of government. Even Labour’s fairly modest policy on tracking EU product safety standards got a full frontpage headline in the Express declaring it to be ‘The Great Brexit Betrayal’, and the rage at something like a Ukraine-style Association Agreement can be all too easily imagined. So one question is whether Labour have the courage to defy the wave of criticism that would come from the press, and which might well impact on the electorate. My sense is that the answer is that they don’t, but I’ll come back to that.

The bigger issue is what this means for the EU. It is exactly the same problem as that which would be created by the UK rejoining the EU, or the single market as a whole: what happens if the Tories pledge to reverse whatever Labour agree, if and when they return to power? That is a huge concern for the EU, and one which we know the Brexiters would play on because at least one of them, David Frost, has already openly stated (£) that both the “Conservatives and the Reform Party must ... raise doubts on the EU side about how politically sustainable any deal might be in the medium term”. This wasn’t a reference to a single market for goods deal, or to an Association Agreement, specifically, but clearly would apply to them, and it did make explicit reference to the policy of regulatory ‘mirroring’.

It's tempting to think that what Frost and his fellow Brexit Ultras say is now irrelevant but, unfortunately, they retain a wrecking power. For the EU, having gone through the pain and aggravation of Brexit and reached what appears to be a durable form for the future relationship, and with many other issues far higher up its agenda, there’s not much incentive for a major change in that relationship anyway. But there still less if there is a real risk that, a few years later, the UK might pull out of it.

This in turn makes it less likely that Labour will seek such an agreement, even if they were minded to take on the domestic opposition to it. Why take that hit to embark on a policy which they can’t be sure of delivering? And this is a point that those who are impatient for progress, up to and including joining the EU, should take note of. Suppose Labour pursued being in the single market for goods, and were rebuffed by the EU. Then, regardless of the underlying reasons for it, it would become an established fact of British political life that ‘the EU will never give us more’.

It is this, I imagine, which informs Labour’s rather stealthy approach to alignment and to closer relations generally. Some, at least, within the government may well hope that gradually, if circumstances change, that will morph into a substantive change in the institutional form of the relationship, perhaps in a second term of office, perhaps with the Tory Party smashed again, and an eventual marginalization of the Brexiters. Such an approach could include, apart from a security pact, seeking the kind of detailed trade easements recently discussed by trade expert Sam Lowe.

The realities of single life

However, even if I am right to hypothesize that there is the coherent long game in play (and, obviously, I may not be), whilst the government ponders asking the EU to set up home together, it still has to face up to the issues of being single. The most immediate of these is the completion of full import controls on goods from the EU. This is one of the major hanging threads from Brexit, deriving from the twin scandals of Brexiters’ failure to understand that such controls were the necessary consequence of hard Brexit, and the Tory government’s abject incompetence in setting them up.

It bears repeating that the equivalent controls on the EU side were introduced, in full, the day after the transition period ended. That is now over three and half years ago, and not only has Britain repeatedly delayed doing the same but also, as I’ve detailed in the past, the Tory government created an almost incomprehensible array of partial and/or deferred implementations, with a patchwork of completion dates over the coming years. This is borne out by a National Audit Office report of May 2024, which was scathing about the costs, delays, and lack of clarity about the future timetable. Within that timetable, at least as things stand, October will see the introduction of the next phase of safety and security declarations, as well as some of the physical checks left hanging from the previous phase.

Labour’s intention is to make much of this unnecessary by reaching an SPS deal with the EU, but since negotiations will not even begin until early next year, not least because the new commission will not be in place until then, what happens in October? Another delay, with the attendant biosecurity risks? Meanwhile, the costs of preparing the new facilities will continue to mount, and port operators are already calling for compensation if it turns out these are not necessary following a new SPS agreement.

This is actually just the latest iteration of this issue, as changes that the previous government made to the checks required have already led to significant wasted expenditure on port facilities, as recently reported by Sophie Inge of Politico. There is hardly a better illustration of the absurd folly of Brexit than this saga of dishonesty, incompetence, cost, and the fact that rectifying it will entail further cost. It may also be another example of the way the Tories ‘salted the earth’ in anticipation of losing the election.

At least the import controls issue is one where, however difficult and expensive it may be, there is a potential solution. It is less clear that this is so for another Brexit-related issue the new government will soon have to face, the introduction, probably in November, of the EU’s new Entry/Exit System (EES) and, probably next May, of the European Travel Information and Authorisation System (ETIAS). Taken together, these systems will introduce new processes for travellers entering the EU, and are likely to cause substantial extra delays at British airports, the Eurostar terminal, and ports, especially Dover.

Unlike import controls, these are not a hanging thread from Brexit, but they are a consequence of it. That’s not, as some Brexit commentators persist in claiming, because they are some sort of EU ‘punishment’. It is simply that they apply to all third country nationals entering the EU. The fact that they are likely to impact especially upon British nationals is because of the volume of travel between the UK and the EU. That, rather like the extent of UK-EU trade and supply chains, is yet another reflection of the basic facts of geography and economics that the Brexiters refused to understand. Now, it’s yet another price we are all going to have to pay for that ignorance.

As things stand, unless there is a further delay for technical reasons, which is possible, there isn’t much the government can do other than, as is reported to be happening, lobbying the EU to water down the impact of these new measures. But it’s not clear whether, or why, the EU will agree, and it is another example of the Brexiter myth of sovereignty that the only way Britain can ease the travel queues for its own citizens is by going ‘cap in hand’ to Brussels. What is in the government’s power, and has now been announced, is legislation to extend the rights of French border officials to operate on UK territory in Dover. That’s perfectly sensible, though, again, it scarcely betokens a great win for Brexit sovereignty.

Brexit: unloved and unlovable

It is still only the very early days of the new government, and it would be unrealistic to expect more than the beginnings of the re-set in the tone of relations with the EU, which we have started to see. In that sense, whilst it may be reasonable for commentators to take notice of foregone models of Brexit, these are still only passers-by at Le Café Brexit.

As we sip water from our bottle, with its tethered plastic top, we may have glimpses of paths not taken, and which might one day be available again, but for now we are stuck with the unloved and, even to its most ardent advocates, distinctly unlovable dishonesty, cost, and confusion of the Brexit we – in the collective sense of the polity – have chosen. As Proust put it, “it is often hard to bear the tears that we ourselves have caused”, and Brexit has certainly induced some especially stinging ones.

But Proust also suggested that “we are healed of a suffering only by experiencing it to the full”. Although Brexit is already unpopular, that has still to happen. However, with the full impact of import controls and the new barriers to travel still to come, not to mention the accumulating drag on economic growth, it is perfectly possible that the harsh and bitter divorce created by May, Johnson and Frost may give way to a new kind of relationship and eventually, who knows, even a re-marriage. Or, since both parties will have changed, and lost times can never really be retrieved, perhaps that possibility would better be called, simply, a marriage.

Update 02/08/24, 08.26: since writing this post, I’ve seen that, just yesterday, it was reported that many of the import control processes and checks due to come into effect in October are going to be postponed, yet again, this time until the end of June 2025. Another Proustian moment! As before, this prevents, or defers, disruption, but at the risk of biosecurity breaches. It also maintains the farce of asymmetrical border controls. 

Notes

*Of course, this ‘Ukraine model’ was developed prior to the war with Russia, which has had many effects upon Ukraine’s relationship with the EU. My use of the term here simply refers to the basic type of the relationship, which is also illustrated by those the EU has with Georgia and Moldova. Note also that Andrew Duff has continued to develop and advocate this model since 2016, for example in a European Policy Centre discussion paper of March 2024.

**Some readers may be thinking the plastic bottle tops example makes this point irrelevant, since businesses don’t need the UK government to shadow EU regulations if they, as businesses, do so anyway. However, the bottle top example is of a particular sort, in that the EU standard, whilst not required in the GB market, is entirely legal here. But, absent of UK shadowing of EU regulations, there could be cases in which goods conforming to EU standards were illegal to sell in terms of UK standards. The legislation prevents this happening, at least within its domain of safety standards, and albeit with some caveats.

I am not planning to post again until Friday 30 August, unless there is a major Brexit development. During that period, I will be pondering the future of this blog, which by then will be about to enter its ninth year, and circumstances have become very different. I might just continue as before, but other possibilities include scaling back from a weekly to a fortnightly, or even monthly, post; or scaling back to posting only whenever there is a major, or interesting, development however frequently or infrequently that may be. I’d be interested in the view of readers on this, and in particular whether a regular post (so you know when it will be coming) is preferable to an ‘as and when’ post, and, if a regular post is preferable, whether every week, every fortnight, or every month would be better. If you have a view, please leave a comment below this post, or a message on X-Twitter.

Beyond folly

The last ten days were supposed to be my break from Brexit hence, as trailed two weeks ago, there was no post on this blog last Friday. But escaping did not prove easy, gloomily conscious as I was of taking my first trip to the EU since Britain ceased to be a member and my last before the transition period ends. Even if that had not been in my mind, in motorway service stations and elsewhere was the unavoidable message of the government’s increasingly panicky campaign: “time is running out”. Brexit is not mentioned of course, for we are not supposed to recall that what were to have been the ‘sunny uplands’ turn out to be a quagmire of paperwork, cost, and inconvenience.

A further reminder, as I drove through Kent, was the sight of huge construction works for one of the lorry parks that will be needed post-transition. Then, taking the Dover to Dunkirk ferry laden with lorries from Portugal to Lithuania to Bulgaria, just a few of the 2.1 million that Dover’s port handles each year, it was hard not to wonder who thinks that what this huge, complex artery of international trade really needs is to have a whole lot of new disruptions. And, over in Dunkirk, the new sanitary and phytosanitary lanes were a visible indication of just what leaving the EU and the single market means in, literally, concrete terms (it is notable that the new facilities and systems needed for Brexit in EU ports have been in place for months whereas, for all the talk of taking back control, the UK is still developing them).

Petulant children and the role of the man-baby

None of this, as everyone should know by now, will be avoided by an EU-UK trade deal, although it will be worsened without a deal. On that issue, the outcome remains opaque. The talks have resumed after the UK’s sort-of-but-not-really walk out, a resumption enabled by Michel Barnier ‘conceding’ to British demands to use the ‘right’ words (intensification, compromise needed on both sides, British sovereignty respected).

In the Ladybird book of international negotiations that seems to be Boris Johnson and David Frost’s go-to text this perhaps counts as a victory and I doubt they have any inkling that to outsiders it resembles an adult placating a petulant child. As Tony Connelly of RTE reports – within a detailed explanation of how the talks faltered and resumed - an EU diplomat described the conversations that preceded the resumption as the UK being “in the therapeutic phase”.

Connelly and others also report that one reason the outcome remains unknowable is Johnson’s almost pathological aversion to making the necessary choices, with their inevitable costs. One widely discussed suggestion is that he will await the outcome of the US Presidential election before deciding which way to jump. In brief, if Trump were to win then Johnson would be more likely to opt for no deal with the EU, in the expectation that a trade deal with the US is more likely than it would be under Biden (for a wider discussion of what the US election means for the UK see Patrick Wintour’s excellent in-depth analysis, and for what it means for the prospects of a trade deal see my recent article in Byline Times).

It is a plausible enough theory of Johnson’s decision-making process if only because it is so inane. Economically, of course, no US trade deal could come close to compensating for the damage of there being no deal with the EU (government estimates being +0.16% GDP over 15 years for the former and -7.6% GDP over 15 years for the latter). And if Johnson hasn’t yet learned that Trump is a blowhard who, for all his talk, is not going to do Brexit Britain any special favours, then he simply hasn’t been paying attention. Not that that would be a radical departure from character.

Yet there is a political, or perhaps just a superstitious, rationale for this theory. Trump’s demise, if it comes, will be as symbolically important for Brexit as Brexit was for his election in 2016. It will mark the rout of the figurehead of nationalist populism and, as Rafael Behr observed some time ago, would scupper Johnson’s “bumbling English Trump tribute act” and the “tantrum diplomacy” that goes with it (of which the UK’s recent outburst over continuing the talks is a good example). Indeed the parasitical relationship of the Brexiters to Trump was made plain this week by Nigel Farage’s cringingly sycophantic endorsement of his idol, in which he underscored that a defeat for the Washington man-baby would be a defeat for nationalists globally.

So on this account a Biden win most likely heralds a trade deal with the EU (unless, something underpriced in UK discussions which are almost invariably parochial, such a win hardens EU demands upon the UK or at least reduces willingness to accede to those made by the UK). If so, for all that it will by definition make Britain poorer than the present trading relationship, it will be spun as a great victory by Johnson.

Turning Japanese

A tiny foretaste of just how dishonest that spin will be came this week in the government’s triumphant announcement that, as a result of the trade deal it has just signed with Japan, soy sauce will be cheaper from 1 January as it will attract a zero tariff. It turned out to be a lie of a strange and complex sort in that soy sauce currently has no tariff charged anyway because of the EU-Japan trade deal which the UK is leaving, so the deal with Japan doesn’t make it cheaper it just stops it getting more expensive by virtue of trading on WTO terms. Anyway, much of it doesn’t come from Japan but from the EU, with which the government says trading on WTO terms is fine. And, anyway, you’d have to use an awful lot of soy sauce to benefit by more than a few pence. These and other nonsensical or misleading features of the announcement have been documented by Full Fact.

As for the Japan trade deal more generally, it should be filed under ‘not bad news’ rather than ‘good news’ in that, despite some features which do go beyond what the UK had via the EU-Japan deal, it mainly continues those provisions. So if it hadn’t happened it would be a further example of Brexit damage. That it is being trumpeted as evidence of the virtues of Brexit is indicative of the shameless disinformation and ludicrous boosterism of this government, which will go into overdrive if there were to be a deal with the EU. If and when that happens it will be worth recalling how Johnson’s Withdrawal Agreement was also greeted as a huge triumph by those who, only months later, denounced it as a disaster.

Meanwhile in the real world …

Moving from Brexiter PR back into the real world what we find are new reports of impending labour shortages once transition ends in fields ranging from agriculture to dentistry (£), of regulatory uncertainty in industries from aerospace (£) to chemicals (£), and of ongoing difficulties in the recruitment of trained customs staff (£). Many of these stories are, as they have been for years, under the public radar, appearing in the business pages of newspapers or in the specialist media of particular industries. There is more cut through when the Brexit effects on holidaymakers are reported, as with last weekend’s outrage at the “petty EU” for “threatening” British tourists with longer passport queues from next year.

It’s a story that encapsulates so much of the Brexiter mindset. That this was likely to be an effect of Brexit is not a new idea, but they dismissed it as more Project Fear. Then, when it threatens to become a reality, they treat it as a form of punishment as if whilst leaving the EU Britain ought to retain the rights it had as a member. As the years have gone on, this mindset seems to have become so ingrained that there is no way of reasoning with it: all the adverse effects of Brexit are either denied (they won’t happen, it’s just scaremongering), ignored (they aren’t happening), displaced (they are happening but it’s not because of Brexit) or disowned (they shouldn’t happen, it’s only because the EU are punishing us).

Between this barrage of misinformation and the general lack of profile in the news of Brexit effects, it’s perhaps unsurprising that a YouGov poll this week found a very low level of public awareness of how things will change once the transition ends. It should also be noted that even where respondents believe they are clear about what will happen it doesn’t mean that they are. On one specific issue which will affect individuals travelling to the EU – the need to pay for electronic authorization to travel – just 9% knew that from 2022 this will be a requirement, whilst another 14% knew it would be required, but wrongly thought it would begin in 2021 (it doesn’t because the system isn’t ready yet).

The interesting and important question will be how people react as the post-transition effects become obvious and, crucially, who they blame. Another YouGov poll this week suggests that 57% of people would blame the government if the transition ends with no deal. But what of those adverse effects that will arise even if there is a deal? Clearly the Brexiter press will push the EU punishment narrative, but this may have much less traction than in the past, if only because public perceptions of governmental competence have been damaged by the handling of the Covid-19 crisis. That of course is now the backdrop to everything and whilst it does not diminish the significance of Brexit it does inflect it in new ways.

The blindingly obvious is undiscussable

As I return from France, it, like Germany, is going back into lockdown (and I am beginning a two-week quarantine). The clocks have changed, the weather is awful, much of the UK is subject to stringent restrictions and everyone can see that even greater ones are in prospect. Over 45,000 of our fellow citizens have died because of the virus – in March, it was hoped that 20,000 would be the maximum – and infections continue to rise.  We are heading for a long, hard winter and with some two-thirds of businesses at risk of insolvency along with millions of jobs  we face a potentially cataclysmic situation that will damage the livelihoods of all but the most comfortably cushioned.

Few of us have experienced anything like this and much that is familiar is being ripped up by force majeure. But, still, Britain pushes on with the one, supposedly inviolable, immutable policy of Brexit. A policy of such folly that the government no longer dares mention it by name and which even its most enthusiastic proponents have ceased to try to justify in any serious way. The Brexit Emperor lacks not just clothes but skin and flesh.

Yet even now – hugely difficult as it would be – it wouldn’t be totally impossible given the extraordinary circumstances for the UK to at least try to find some route to extending the transition, which ends in only two months’ time, rather than to just parrot that “time is running out”. It seems feasible that if the UK was open to such an idea the EU would be at least willing to explore how to make it work, if only because of the worsening Covid-19 situation in many of its member states.

There are plenty of people who can see just how ludicrous this is, but it isn’t in any serious sense within the realms of what is even politically discussable - and way beyond what Johnson’s woefully incompetent and incontinently dishonest leadership is able to deliver. And whilst the mechanics would be hugely complicated the proposition is not: in the face of so overwhelming a public health crisis, and with so much undecided even about the implementation of the Withdrawal Agreement (especially as regards Northern Ireland), there is just not enough time to agree and to move to a new relationship which by any standards is important for both parties. So - let’s just take some more time.

In any other context, political or personal, it would be so blindingly obvious as to not need saying. That it is near to unsayable and certainly won’t happen is down solely to the warthog stubbornness of a small group of fanatical Brexiters still fighting the battle to leave that they have already won, and totally indifferent to its costs.

So we blunder on, prisoners of a series of past decisions that we do not have the wit or the will to revisit, and of a small but powerful group of ideologues we are either too cowardly or too weak to face down.

It is worse than folly. It is insanity.

In for the long haul

A month ago Boris Johnson set a deadline of 15 October for a trade deal with the EU to be done. That date has passed, no deal has as yet been done, but Johnson has not walked away from the negotiations. Perhaps he never intended to and it was just more empty bluster, as in July and September. Perhaps, as some pundits have been reporting, he will do so today when he is due to respond to the European Council meeting. Or perhaps he would like to, but is constrained by the resurgent Covid-19 crisis. Sometimes in politics manufacturing a new crisis can distract attention from an existing one, but it can also simply magnify the sense of a government losing control.

It is clear that the EU will not walk out of the talks and that whilst they continue, fisheries, state aid and the governance of any agreement remain the familiar, widely-reported, stumbling blocks. Of these, the third, governance, has grown in salience because the Internal Market Bill (IMB) has so badly damaged the EU’s trust in the UK (£). But the truth is that this lack of trust has been growing over years, as I catalogued in a post last May, accelerating with Johnson’s cavalier repudiation of much of the Political Declaration.

Lack of trust is now central

The IMB was just the last straw, and - even if the relevant clauses get abandoned, as they still may - its attempt at hardball tactics has badly misfired. For, especially given the new Covid-19 situation, Johnson might want to play the same trick as he did in January and sign up to some kind of deal which he could then try to backtrack on later. If so, the IMB has made that a great deal harder. He has played his tricks so many times that there is no longer any goodwill. Trust and goodwill can sound like airy-fairy concepts in the cold-eyed world of trade negotiations and international relations but they are indispensable, especially in such a complex and unprecedented negotiation as this one.

The fault is not Johnson’s alone. Apart from the back story going back to 2016, trust in the UK is also much damaged by the spectacle of Iain Duncan Smith, and other Brexiters (£), now repeatedly calling for the Withdrawal Agreement to be repudiated. At the same time, there are increasing concerns about the government’s commitment to the rule of law, not just because of the IMB but also the recent attacks from the Home Office on the legal profession, attacks repeated by Johnson in his party conference speech. The backdrop of the illegal prorogation of parliament and the grab of executive power in relation to both Brexit and the COVID-19 pandemic, especially through the extensive use of Statutory Instruments, contributes to these concerns. As David Allen Green, the Financial Times’ Law and Policy commentator, discusses, there is now a question as to whether Britain is moving towards “government by decree”.

Also rumbling away in the background is the long-standing hostility of many parts of the Tory Party – strongly overlapping with those that are the most pro-Brexit – to the Human Rights Act and, even, to the European Convention on Human Rights (ECHR). Indeed it is worth recalling that before the Referendum, Theresa May, whilst campaigning to remain in the EU, proposed that Britain leave the ECHR. Perhaps of more relevance at the present time is Dominic Cummings’ assertion that after Brexit “we’ll be coming for the ECHR”.

No doubt this would find considerable support amongst many leave voters. Throughout the Referendum campaign in conversations and on social media when leavers were asked to give examples of EU laws they disliked these were almost invariably judgments of the European Court of Human Rights (usually garbled versions of these, but that is another matter). Although this is only based on my own experience, I’m pretty sure it was the case more generally. It perhaps doesn’t need to be said here, but the ECHR and its Court are not EU institutions, and Brexit does not affect Britain’s participation in them.

At all events, the Tory 2019 election manifesto promised a review of the Human Rights Act, which translates the ECHR into UK law. This has itself been an issue within the future terms negotiations as it impacts on the EU’s willingness to share security and law enforcement data. Recent reports suggest that the UK has now agreed “not to materially alter” the spirit of the Human Rights Act in order to achieve agreement on such data sharing. Nevertheless, the very fact that Britain’s wholehearted commitment to the ECHR is in question is significant.

A problematic neighbour

So viewed from an EU perspective Britain now looks like a very problematic neighbour. In summary, its government has spoken quite openly of a willingness to flout international law. Influential politicians advocate reneging completely on an international treaty. Its commitment to the domestic rule of law is fraying and that to the ECHR is under debate.

It may well be that much of the noise in these areas comes from some rather cranky and even extreme individuals and thinktanks. But anyone observing British politics over the last few years will have seen how, again and again, ideas which have started there have become mainstream within a short period of time. For example, when in January 2019 Jacob-Rees-Mogg was urging Theresa May to prorogue parliament it was a very niche view. Eight months later, under Johnson and with Rees-Mogg’s connivance, it was attempted and the court ruling of its illegality remains much resented by Brexiters.

Indeed, more generally, one might see the entirety of Brexit as a story of a fringe idea colonising mainstream politics, and thereafter a progressively harder and more extreme version of Brexit become mainstream. So one way of thinking about the situation now is that, having seen Britain signally fail to confine the Brexit Ultras to the margins, and having seen every accommodation made to them by the British polity met with a still harder demand, the EU is now seeking to build a ‘firewall’, in the form of strict governance procedures, between itself and the country the Ultras have captured.

For who knows just how rogue the UK is going to go in the next few years? For that matter, what kind of state will it be if, as seems increasingly likely, Scotland departs and, as is by no means impossible, Northern Ireland also? Even if those things don’t happen – but especially if they do, leaving a mainly English rump – what is the EU to make of a country which, despite having achieved Brexit, still configures its relationship with the EU in wholly antagonistic terms? That may change with the passage of time and political generations, but it’s equally likely to become entrenched and even more bellicose.

The import of all this for the current negotiations is that even if from a British perspective the issue is (perhaps) to get some sort of deal over the line by the start of January so as to at least minimise disruption, from an EU perspective things look different. Not only would the disruption be less for the EU and it is better prepared for it but, more to the point, whatever gets agreed now will have long-term consequences.

Having been repeatedly stung by British perfidy – especially over the Withdrawal Agreement/ Political Declaration - there is a strong incentive to nail down the governance terms of any agreement, and if that is not possible to accept that there will be no deal this year. As Clement Beaune, the French European Affairs Minister said this week, “it’s a matter of how the UK is a partner of trust in the years to come”.

Britain unprepared

If such strategic considerations inform the EU’s approach to these final phases of the negotiations, in the UK it is short-term factors which mainly predominate. I’ve been writing since at least October 2018 about the lack of preparedness of businesses (and other organizations) for Brexit, and in several recent posts about how government information for businesses has come too late and been lacking in key operational detail. Throughout that time there has been a drumbeat of implicit criticism from the government of businesses for being unprepared (and – paradoxically – a veritable orchestra attacking business bodies for their warnings of how much will change).

In recent days, these criticisms have mounted. First, the Business Secretary, Alok Sharma, issued a panicky sounding “urgent message” to businesses to get ready for the end of transition. The next day Cabinet Office minister Lord Agnew accused them of “burying their heads in the sand”, attracting widespread condemnation (£). I’m conscious that I keep repeating that I am repeating myself but as I wrote a few weeks ago these criticisms of business are outrageous given the years of dishonest promises of continued ‘frictionless trade’, the lateness of government planning for the effects of Brexit, and the dismissal of the warnings about both.

Even now, although it is true that some of what is to come will occur with or without a deal, businesses that will face tariffs if there isn’t a deal are left in limbo since, in at least some cases, this is not something they can prepare for as it will simply sound their death knell regardless of any actions they take in advance. Nor are tariffs the only issue. It has long been explained to Brexiters that a ‘Canada-style’ Free Trade Agreement – actually, any Free Trade Agreement – will do relatively little for services trade and, certainly, will offer far less integration than single market membership. But for years they either ignored it, or pretended that a ‘Super-Canada’ deal would be done that would magically avoid this problem. 

The reason why trade agreements do little for services is because, even more than for goods trade, liberalisation requires removing non-tariff barriers. This in turn entails some loss of national regulatory control or, in Brexiter terms, sovereignty. An example of the kind of issue at stake is the mutual recognition of professional qualifications in, for example, law and accountancy, and in fact, despite its recent rhetoric of asking for no more than what Canada has, the UK has been seeking such recognition in the negotiations with the EU.

This seems to have been unsuccessful (though that cannot yet be said definitively) and if so that is unsurprising as it is a version of ‘cakeism’ – that is, wanting to have a benefit of single market membership without being a member. The consequence, as a House of Lords sub-committee reported this week (£), will be very considerable potential damage to the UK’s £225 billion professional services industry. As with sectors like pharmaceuticals, auto, aerospace, chemicals and also some that get less attention (e.g. music, computer gaming, fintech) the UK is ripping up some of its biggest economic success stories – areas where, to use the government’s favourite phrase, Britain is ‘world-beating’ – in the name of the Brexit theology of sovereignty.

Holding all the cards?

Also unsuccessful has been the “UK plea” for special allowances on electric car and battery exports (this would have meant an exemption for this sector from rules of origin which, in general, we already know will be applied). This, remember, is a sector identified by Boris Johnson in 2019 as being one in which the UK plans to emerge as a future world leader. And in the balance are arrangements for air travel at the end of the Transition Period if there is no deal. As things stand, it is not known what will be in place but, in the event of no deal, the Transport Secretary says “we expect the EU to bring forward contingency measures” so that flights can continue. Hardly reassuring for those wanting to plan travel for a time which is now less than eighty days away.

It’s worth noting the tone in both these stories. Whereas the Brexiters promised that Britain would ‘hold all the cards’ once it voted to leave the EU it is now a matter of ‘pleading’ with the EU for special treatment and being entirely dependent upon the EU to keep something as basic as air travel to the continent. That’s not the result of EU ‘bullying’ but the fact, as the air travel case illustrates literally, that if a country disconnects itself from an interconnected world then inevitably it becomes the supplicant when seeking to reconnect itself. Sovereignty doesn’t put planes in the air.

But there is small comfort in the spectacle of all the Brexiter claims being discredited. Between the ravages that Covid-19 is inflicting on businesses and those self-inflicted by Brexit it is becoming increasingly difficult to see what kind of economy Britain is going to be left with this time next year. And that self-inflicted wound isn’t just a result of Brexit, but of the way Brexit has been done and even just of the bone-headed refusal, in the midst of a pandemic, to extend the Transition Period, which would at least have cushioned or delayed much of the damage.

Time is running out but negotiations will never end

Having refused to do so when it was both possible and obviously going to be needed has now exposed the UK to a dire set of risks, for the end of year deadline is one that Johnson cannot now conveniently drop. It is ironic that David Frost is reportedly complaining that (£) the EU is “using the old playbook” of “running down the clock” when it was the UK that ensured that the clock stopped on 31 January. That of course was predicated on the theory that ‘the EU always blinks at the last minute’, a theory now being tested to destruction, with the most recent EU Council statement having a decidedly ‘take it or leave it’ tone.

This exposes the obvious difficulty with the government’s approach which is that it entails the UK being willing to ‘walk away’ without a deal. But apart from all the damage that would do, disproportionately to the UK, the story about contingency measures for air travel in the event of no deal shows the hollowness of the idea. For immediately after having done so Johnson would have to return to the table to agree these and other measures. So if later today, or any other time, he were to announce the end of future terms talks then almost the next day they would resume in a new form.

In several recent posts I’ve argued that it is pointless trying to predict whether or not there will be a deal, and I must confess to becoming increasingly irritated by the numerous pundits trying to do so. But, in addition to that, the wider implication of what I’ve written today is that if there is no deal – and, in a less dramatic way, even if there is a deal – that won’t be a ‘settled’ relationship, and so won’t be the end of ‘Brexit negotiations’. It will be the beginning of more negotiations.

So, depressing as it is to say it, the current ‘deal or no deal’ episode isn’t even the prelude to a resolution. For, given the irreducible fact that the EU is a major economic bloc sitting geographically right next door, there will be never-ending negotiations of one sort or another. Indeed it must be conceded that one, at least, of the Brexiters’ slogans has been proved true. Unsurprisingly so, since it was the truism that ‘we’re leaving the EU but we’re not leaving Europe’.

 

For the first time this year I will be taking a break from blogging next week. It may turn out to be a big week for Brexit news, which would be unfortunate. I hope to post again on Friday 30 October or shortly thereafter. Many thanks to all who read and help to publicise the Blog, which has this week hit the milestone of 4.5 million visits since its launch just over four years ago. I know that there are many other places people can go for Brexit news and analysis, so it is much appreciated and never taken for granted that you come to this site. Maybe this is also a moment to say that I’m sorry I don’t acknowledge every (mainly) kind comment made on Twitter – on ‘blog days’, especially, my notifications tend to go wild. But I do appreciate every one of them. CG

Johnson's 'no deal 2.0' virtue signalling

The first week of Johnson’s new administration has seen both speculation about, and the beginning of some answers to, how he intends to undertake Brexit. The outrageousness of that situation shouldn’t pass without comment. We have just had an election campaign in which Johnson made ‘getting Brexit done’ the central theme. Yet, as pointed in a previous post, he avoided saying almost anything about how it would be done – and neither the opposition parties nor the media were able to pin him down.

So he will now claim a mandate from voters for doing it any way he wants. It is a travesty of democracy, which replicates the way that during the Referendum Brexiters refused to tell voters what they were voting for, only to define it later and claim it as the ‘will of the people’. Thus whilst a reasonable interpretation of the election was that people were voting for ‘Johnson’s deal’, as expressed in the Withdrawal Agreement (WA) with the EU and operationalised domestically by the Withdrawal Agreement Bill (WAB), Johnson is already changing the latter.

Amongst these changes, the most striking is to make it illegal for the government to seek an extension to the transition period, with the associated removal of a parliamentary vote on extension. It might be argued that this is consistent with Johnson’s campaign pledge not to seek such an extension, but that pledge did not entail (legally) removing the option just (politically) not exercising it.

Of course, doing so is, in a way, a meaningless gesture. Just as with the ‘enshrining in law’ of the 29 March leaving date, it is something that can always be removed by further legislation if necessary. In that sense, it is simply what in other contexts would be called ‘virtue signalling’.

A signal to the Tory Party

Yet gestures and signals matter, and so in another way it is not meaningless. It carries a message, perhaps to voters though I think at this point more to his party, that Johnson will not renege on his campaign pledge. This in turn underscores that, as I pointed out in my post-election post, the ERG remain a powerful force.

Indeed, given the near unanimously pro-Brexit character of the new intake, the ERG are larger and more powerful than ever before. As this new signal indicates, any idea that Johnson’s majority frees him to pursue a softer Brexit – even assuming he wanted to – is surely mistaken. Forty-five rebels can take it away, and there are certainly that number who would have no compunction in doing so, as their track records show.

This incipient possibility is underscored by the very fact of the ERG’s continued existence. For what is the purpose of this ‘party within a party’ now that the Conservatives as a whole are fully committed to Brexit and are led by the erstwhile figurehead of the Leave campaign?

The answer to this question is, as again pre-figured in my earlier post, that the endless civil war within the Tory Party is far from over, and is almost certainly going to revive in the coming months. Indeed, less than a week after their landslide win, it is reported that there are splits within the cabinet (£) over, precisely, revisions to the WAB (although, in this case, potential changes to the powers of British courts vis a vis the ECJ, rather than over the transition period extension).

These splits probably won’t amount to much now, but they lie waiting in the wings. And they were manifested in a different way this week. Early reports suggested that the revised WAB would scrap the previous commitments to workers’ rights. Later, this was disowned. Then it emerged that they had indeed been removed from the WAB. In this can be seen how there is still a political juggling act going on, and very likely a degree of administrative chaos. Far from being master of all he surveys, Johnson is, like any other Prime Minister, subject to diverse pressures (e.g. from the ERG but also from his new ex-Labour seats). But, anyway, just as enshrining no extension to the transition period in law does not mean that the law can’t be changed, neither does the enshrining – or not – of workers’ rights.

So the conclusion is the same: what matters about these legal signals is not that they set in stone what will happen, but that they reflect the political messages Johnson wants to send which, in turn, reflect the political exigencies he faces.

A signal to the EU

Party issues aside, there is another audience for the transition period gesture and it is the EU. Johnson, and the Brexiters generally, have always believed that Theresa May failed to be sufficiently hardball in negotiations and think that they can do better. One aspect of that is, simply, having a majority. Interviewed on Radio 4 this week, the former Brexit Secretary David Davis – a man who has been wrong in just about everything he has ever said about Brexit – opined that this in itself strengthened the UK’s hand because it meant that remainer politicians would no longer be able to disrupt the government’s plans.

This is based on the Brexiter myth that what happened in the WA negotiations was that the UK was undermined domestically – and by remainers rather than by the Brexiters who opposed May’s deal - rather than it arising from the UK’s own negotiating red lines, as enthusiastically approved by the Brexiters. But even if that were not a myth it could actually be argued that having a majority makes negotiations more difficult – the familiar tactic of international negotiations of saying ‘we cannot agree to this because we will never get it through parliament’ is eroded.

That aside, the signal the transition period law is meant to send the EU is that the UK is ready to leave without a future terms deal if necessary, and to pressurise the EU into agreeing such a deal quickly, a point made this week by, again, David Davis. It is about as ill-judged an approach as could be imagined, having learnt none of the lessons – or the wrong lessons – from what happened with the Article 50 (A50) negotiations.

For, then, as soon as A50 was triggered, it was the UK which was always most under time pressure. And that pressure was all the greater because of not having an agreed, detailed, plan for what was being sought from the future terms during phase 2 of the A50 negotiations. The latter is likely to be the same this time, because of the tensions between ERG purism and business and economic pragmatism.

Time pressure exists in the future terms negotiations anyway, since the transition period cannot be easily or endlessly extended. Johnson’s WAB gesture just increases that, making it more difficult, politically, to extend. So it just recreates the time dynamic which was so damaging to the UK in those previous negotiations. For, make no mistake, the timescales proposed are ludicrous. It is not even just a matter of the eleven months between the UK leaving and the end of the transition period, since some, at least, of this will be needed for ratification. And the timescale for extending the transition period is even tighter – just until the end of June.

For the EU, the effect of Johnson’s signal was only ever going to be to lead them to say – as they immediately did (£)  - that, given this self-imposed additional time constraint, only a very minimal deal will be available. As before, the threat of no deal is a rather empty one (and may even breach the good faith requirements of the WA)  since it would be so much more damaging for the UK than the EU for simple reasons of economic scale and the asymmetry of the trading relationship.

It could have been different, but it’s going to be the same

So all that Johnson has achieved so far is to limit his options, purely for reasons of domestic politics despite the fact that his majority might have freed him from such constraints. As with Theresa May, but with even less excuse, he is repeating the errors which have dogged Brexit from the beginning.

For whilst I’ve never thought Brexit is viable, still less desirable, those who do have consistently made a mess of it. It’s not completely unimaginable that a self-confident, pragmatic Brexit government could approach the complexities of undertaking it in a realistic way. That would entail dropping the confrontational, aggressive and paranoid posturing towards the EU and instead approaching the negotiations as the technical, bureaucratic exercise they to some large extent are.

It would also mean eschewing all the grandstanding about deadlines and recognizing that it would be a long and gradual process, requiring extensive consultation with parliament, businesses, civil society and others as to how to deliver it. By contrast, the revised WAB removes the role of parliament in setting negotiating objectives and even its right to receive updates on progress.

It would – again, for those who seriously believe in it – be conducted with the confidence of knowing that it was about building a desirable and durable new national and geo-political strategy which involved patience, the formation of new relationships externally, and the development of consensus domestically. Nothing like that has happened. Instead, the process has been, and continues to be, rushed, and conducted in a way which has destroyed trust and good will with the EU and credibility beyond the EU.

Meanwhile, at home, remainers – or even just those who are concerned or perplexed – have been stigmatised and insulted, and consultation confined to those who are ‘true believers’. Yet if Brexiters want their ‘great national project’ to succeed they need to bring with them a decent proportion of the nearly half who voted to remain, the more than half who would now do so, and the two parts of the United Kingdom which did so.

Theresa May set the stage for most of this – not least in her desperate wish to be accepted as a true convert – and Johnson is continuing it. At root, it is driven by the constant suspicion of the Brexit Ultras, both inside and outside the Tory Party, that they will be betrayed, and fear of what they will do as a result. Like a metastasising tumour, that suspicion and that fear have now spread throughout the body politic.

If there was a chance to press the re-set, it would have to have been begun by Johnson immediately. It would take great leadership, and it might well fail – but it is already clear that he isn’t even going to try. And, thus, any possibility of doing Brexit in a half-way sensible manner has now disappeared.

Hence, now, Johnson even with his big majority is still making the same mistakes for the same reasons and is now digging himself, and the UK, into a deeper and deeper hole. He is either going to have to do the mother of all U-turns and extend the transition period, or do an extremely limited deal – perhaps to be followed by several years of supplementary deals – or end the transition period with no deal.

No deal 2.0

It’s important to clarify that the ‘no deal’ now being entertained at the end of the transition period is not the same as that which would have obtained had there been no WA. The new version – call it no deal 2.0 – would be different because the WA terms would be in place. That is, primarily, the agreement on the financial settlement, on Citizens’ Rights and on the Northern Ireland arrangements. So it would be somewhat less damaging than the original no deal (‘no deal 1.0’) and that matters, in particular for EU-27 nationals in the UK and for UK nationals in the EU-27. Moreover contingency planning for ‘no deal 2.0’ will presumably be more advanced than before.

Equally, it’s important to recognize that there are three, partially overlapping, features to what has to be done during the transition period.

Trade

The first, which gets by far the most attention, is future trade terms. I’ve written a lot about that on this blog, but just briefly to recap. Future trade terms matter, economically, because about half of UK trade is with the EU. It is true by definition that even the most ambitious Free Trade Agreement (FTA) will have little provision for services, because that is the nature of FTAs and one of the ways they differ profoundly from single market membership.

Thus any FTA will be worse for a service-based economy, such as the UK’s, than single market membership. But even considered as primarily goods-based agreement, FTAs can have varying depths and extents. The quicker a deal is done, and the less that the UK agrees to in terms of Level Playing Field (LPF) conditions (e.g. state aid rules, competition rules and environmental standards), the shallower and more limited it will be.

Johnson has already indicated an unwillingness to accept extensive LPF (some think that could change, but if so it will open up a row with the ERG), and the added time pressure he has created simply increases the chance that any deal done will be so limited – for example with respect to coverage of intellectual property rights and data management - as to significantly damage even goods trade. The more limited it becomes, the closer it is to the no trade deal position of falling back on ‘WTO terms’ which would be the least advantageous of all the outcomes.

Non-trade

The second feature of the transition period negotiations, which gets far less media attention than it should, relates to future terms for all the non-trade issues as set out in the Political Declaration. These include security, law enforcement, aviation and other transportations, fishing, science, energy and much else. Here, again, the less time there is the more difficult and more limited a deal becomes.

However, on these issues, there is not even the fall back of something like WTO terms, as there is for trade. Instead, what would happen under ‘no deal 2.0’ would be some limited, temporary workarounds in at least some of these areas. Some have already been developed by the EU in preparation for ‘no deal 1.0’, for example a basic framework for aviation.

This shouldn’t be mistaken for the ‘micro-deals’ that ‘managed no-deal’ Brexiters used to speak of. They are not deals at all, they would be unilateral measures taken by the EU and in the interests of the EU which might have the side-effect of protecting the UK from the worst disruption. Even so, the implications of no deal for, perhaps especially, security would be very serious.

Northern Ireland

The third feature of ‘no deal 2.0’ relates to Northern Ireland. Failing to reach a trade deal would have particular consequences for Northern Ireland since, by virtue of the WA, it will be in a different position to the rest of the UK and, in this scenario, there would be a sudden and sharp divergence. Moreover, with or without a trade deal, the Northern Ireland protocol of the WA needs to be operationalised.

This entails considerable complexities, as set out by Professor David Phinnemore of Queen’s University, Belfast, some of which would vary according to the nature of any trade deal that might be done, others of which need to be resolved anyway. Under ‘no deal 2.0’ the time available to do so would be extremely tight, perhaps impossibly so.

So this is a qualitatively different aspect compared with the first two features of ‘no deal 2.0’. For whereas the first two arise from what does or does not develop from the political declaration on future terms, this third one, whilst interacting with those future terms, arises from the way that an unextended transition period would impact on the capacity to deliver the agreed terms of the WA which, of course, will be a legally binding international treaty.

Whether Boris Johnson, given his comments during the election campaign, begins to understand what this treaty entails must be open to question. But his government will have to get to grips with it, and fast, especially given his clear intention not to extend the transition period.

Johnson’s gamble

Just from the first week of his new premiership, it’s possible to see that Johnson has embarked on a series of gambles in the domestic management of his party and in the negotiations with the EU. But he is taking a far bigger gamble without, apparently, realising it.

That gamble relates to the UK economy, and the investment and location decisions of businesses from some of the very largest right down to some self-employed individuals. An indicator that this is indeed the story of the week can be seen in how the pound, having risen on news of Johnson’s election victory, returned to its previous level when the transition period policy was announced.

For Johnson is saying, unequivocally, that from January 2021 businesses will be outside of the single market and customs union and that, unequivocally, if necessary that will be without any new trade deal being in place. He is also, therefore, telling them that they will face increased barriers to trade of a greater or lesser extent, whatever happens. For example, even if there were a zero tariffs, zero quotas goods trade deal, there will still be the extra costs of new customs procedures and, of course, new barriers to the hiring and deployment of staff.

In the time horizons of both business and personal planning that is a short period. Johnson perhaps believes, like so many Brexiters, that despite all the evidence to date the ‘Project Fear’ warnings were just that, so he can virtue signal about no deal with impunity. He’s doing so for political reasons but, in doing so, creating a potentially horrible economic trap. For the more his party, the electorate and the EU believe him the more likely it is that businesses will do so too, and act accordingly.



Huge and heartfelt thanks to Matt Roxburgh @mattroxburgh for responding to my Twitter appeal for help and patiently fixing the technical problems that prevented some readers from accessing last week’s posts, a task made more difficult by my techno-uselessness. Hopefully, no problems with this post – but if so down to me not Matt - although previous posts may still have problems until I have completed work on them.

This will be the last post on the blog this year. I will resume at the beginning of January. Many thanks to all who have read, publicised or said kind things about it this year. Very pleased to have the 3 millionth visit recently. Hugely appreciated, and never taken for granted.

Deal or no deal? There’s still no end in sight

And so the pitiful charade continues. To the surprise of no one at all the cross-party talks have died a death. In truth they were stillborn, but it is a recurring feature of Brexit that every development is shrouded in dishonesty, deception, fantasy or, usually, all three.

That applies to almost all the discussions of deal or no-deal. What looks certain to be May’s swansong is typical. She is now going to make a final attempt to get Parliamentary approval for her deal, this time though the back-to-front mechanism of a vote on the Withdrawal Agreement Bill (WAB) rather than another ‘meaningful vote’. In other words, the idea is to approve the domestic legislation to implement the Withdrawal Agreement (WA) before deciding whether to ratify that agreement with the EU. It might best be described as putting the cart before the dead horse.

Indicative votes

Before we even get there, it seems that there is to be a new round of government-initiated indicative votes (IVs). The previous round, initiated by the House of Commons itself, did not yield a consensus and the next version will probably have the same outcome. To an extent, that is to be hoped for, because several of the options – if a leaked document is correct – are, literally, gibberish.

In particular, one option proposes a customs “arrangement” with all the benefits of the customs union but with the freedom to make independent trade deals. About the only sense that can be made of that is if it implies services-only trade deals. If so, the benefits – already tiny, if existent at all – of an independent trade policy are further diminished: free trade agreements have limited purchase in services.

I suspect that this is what is implied because two other options refer to a “comprehensive customs union in goods and services” (so, presumably, this is the difference from the customs arrangement, which only mentions goods). But, alas, the customs union only relates to goods, not services. So voting for those options will be indicative of nothing except MPs not knowing what a customs union means. None of the customs options are anything to do with the WA anyway – they all relate to how the Political Declaration might be changed.

Other options for the IVs are different, relating to process, and here the crucial one may turn out to be on not having a confirmatory referendum. If MPs vote for that option (i.e. because the wording means that voting ‘aye’ to the motion will mean saying ‘no’ to a referendum), it will be a major blow to the remain cause although not a fatal one. A fifth option – voting on the package agreed with Labour – is of course already obsolete since we now know that no such agreement has been reached.

Deal?

With the IVs done, we will then get to the WAB vote in early June. There’s every chance that some MPs will try – and even a small chance that they will succeed – to insert an amendment based upon the erstwhile Brady Amendment or, which is more or less the same thing, the ‘Malthouse Compromise’. This would have the effect of writing into UK law something (i.e. no backstop, or a circumscribed backstop) which directly contradicted what the UK was committed to by international treaty if the Withdrawal Agreement were to be ratified. In those circumstances it’s conceivable that the EU would not even ratify the agreement anyway or, if it did, that there would be an immediate dispute about its meaning.

Supposing, though, that the WAB and the subsequent meaningful vote see May’s deal passed unamended. To hear May, and much of the media, talk you would assume that this would mean that Brexit was done and dusted. It’s reported today (£) that some potential Tory leadership candidates do indeed think that, with the legislation passed, the contest would be all about non-Brexit issues. That is the sheerest fantasy.

The reality is that if May’s deal is done it will only be the beginning of a protracted, complex and highly contentious negotiation with the EU, under the new time pressure imposed by the transition period. It will be conducted against the backdrop of vocal cries of betrayal from Brexiters within and outside of the Tory Party. And very likely it will be under the leadership of a Brexiter PM who regards the deal as odious and will seek to undermine or wriggle out of it.

Indeed, if May’s deal passes, the Tory leadership election is going to be a very strange affair. It seems unlikely that it will be another coronation, so the party membership will have a vote, which seems certain to mean a Brexiter will be chosen. Boris Johnson is generally regarded as the front runner (though I am not convinced this will prove true) but all of them will in those circumstances be unable to run on a ticket of seeking to re-negotiate the backstop. It will have been agreed by Parliament and (presumably) ratified by both the UK government and the EU.

No deal?

Clearly, though, it is far more likely that May’s deal doesn’t pass, or come anywhere close. Then, the situation is going to be enormously complex. First and foremost will be the issue of time. With no deal agreed, the Brexit deadline will be the end of October. The leadership election will take weeks, followed by or running into the summer recess. The winning candidate will almost certainly have been elected on the platform of re-negotiating the WA to remove or truncate the backstop and in the event of that re-negotiation failing leaving with no-deal.

That re-negotiation will fail, without a shadow of a doubt, but it will take up a few more weeks and the October deadline will be closing fast. Does the new PM seek a General Election – possibly requiring an application to the EU for another Article 50 extension to accommodate it - on a no-deal platform that s/he might well lose, and which would anyway provoke a huge split? Just sit and let the time run out with no-deal happening automatically? That would risk MPs finding a way, as they have before although it might not be easy to do so again, of taking over control of proceedings with a view to forcing the government to take another course – conceivably meaning the revocation of the Article 50 notice if that was all there was time for? Or might it mean the insanity of Rees-Mogg’s proposal of the prorogation of parliament in order to prevent this?

All these entail huge difficulties but suppose that, in some way or another, the new Prime Minister manages to get to no-deal. What then? The economic chaos has been widely-trailed. Less obvious, but crucial, is the point made cogently by Alex Dean in Prospect this week: it would not be an end-state, with ‘clean Brexit’ done. It would be the beginning of a new set of very urgent negotiations against a background of serious economic and social dislocation, probably including a further collapse of the pound, and major political crisis.

This is actually the sub-text of all the ‘managed no-deal’ formulations including Farage’s claim that the UK should leave and then immediately open talks on a free trade deal with the EU. But of course many other things apart from trade would need to be agreed. Some of them, such as a bare-bones deal on aviation, would likely be agreed in the interest of, and on terms dictated by, the EU without preconditions. Others, including trade, would entail as a pre-requisite agreement on all the things in the WA (Farage, naturally, still pushes the discredited pre-referendum claim that the EU will come running for a trade deal). That includes, as Liam Fox admitted in an interview this week [time limited download], an agreement about the Irish border.

Makes no sense?

So in any scenario in which Brexit goes ahead we are still, even now, only at the very beginning. May’s deal heralds one new set of negotiations; no-deal heralds a (different) new set of negotiations. But perhaps calling it ‘May’s deal’ is part of the problem, encouraging the myopic focus upon UK domestic politics in general, and May’s personal political fate in particular.

In reality, it is a deal struck between the UK government and the EU. Its form – and certainly the backstop – arises from the red lines which May and her likely successor share. The issue is that Brexiters don’t accept the consequences, imagining them to just reflect May's lack of 'true belief'. So once May has gone nothing really changes (although whether she goes with or without the deal passing will certainly make a difference to what happens next).

Nor will anything change unless or until an honest and realistic discussion of Brexit and what it means begins, of which there is less sign than ever not least because of the re-entry of Farage and the Brexit Party into the fray.

And if none of this makes sense, don’t worry. In fact, congratulations. You’ve understood what is going on.