Accommodating Brexit

Are there any expressions other than ‘the elephant in the room’ to connote the ignoring of big, obvious things? If so, it would be useful to know them as that poor old elephant is now the most clichéd of clichés to describe the government’s attitude to Brexit. In their speeches to this week’s Labour Party conference, Rachel Reeves mentioned it only briefly and in passing, and Keir Starmer not at all. It’s absurd, especially as the guiding theme of both speeches, as of the government’s entire incoming communications message, is that of the dire inheritance bequeathed by its Tory predecessors. Brexit can hardly be excluded from that reckoning.

It's tedious to go on and on making that observation, and it’s certainly not made with any surprise on my part that Nellie is still ignored in the corner, but it remains a necessary one, for two reasons. One is because, mentioned or not, Brexit continues week-in and week-out to exert its damaging effects. Ignoring them doesn’t make them go away. The other is that, in the continued absence of discernible post-Brexit strategy, this means that the government’s approach is one of ‘accommodating’ Brexit. That is perhaps slightly different to ignoring Brexit, as it is a kind of acknowledgement of Jumbo’s existence alongside a dogged determination to live with it.  

The ongoing damage of Brexit

As for the first of these, the latest news on the economic damage of Brexit comes with a new study by Professor Jun Du and others of Aston University. Apart from providing new evidence of the already well-attested “profound and ongoing” dampening effect of post-Brexit trade barriers on UK-EU goods trade, it identifies two, more specific, things. One is the particular effect of reducing the varieties of goods traded, sharply and continuously in the case of UK exports to the EU; declining, sharply recovering, then slowly declining again in the case of UK imports from the EU.

My reading, although it isn’t stated quite in these terms in the report, is that what has happened is that small product lines (and especially those of smaller firms) have simply been dropped as not being worth the extra costs. That has happened continuously as regard UK exports because the EU introduced full import controls immediately. In the other direction, it was discontinuous presumably because the initial impact of customs and VAT charges had an immediate effect, which was then adjusted to, but more recently the gradual introduction of UK import controls has produced a new decline.

Whatever the process, the result is that specialist products are now less likely to be traded. That has an economic impact on the firms affected, of course, but it also reduces consumer choice, with effects which are not just economic but adversely affect quality of life. Delicatessens are a good example, as trade in small batches of artisanal food products is exactly the kind of thing which has suffered. It’s easy for Brexiters to sneer that, like post-Brexit travel barriers to fancy foreign holidays, such things are the complaint of the effete metropolitan elite. But, whatever purveyors of this new politics of envy may imply, it is hardly the case that everyone other than middle-class Londoners holidays, if at all, in Bridlington, and subsists solely on bread and dripping apart from an orange at Christmas. (An orange, you say? You had it lucky!)

The other noteworthy finding of the Aston study is that Brexit has “heavily disrupted and weakened” UK-EU supply chains. This isn’t surprising, and confirms earlier research by, for example, the Resolution Foundation, but, apart from providing valuable new empirical evidence, it is worth highlighting because it strikes at the heart of one of the Brexiters’ many stupidities. Because they thought of the single market as being a kind of trade agreement, potentially replicable by a new trade agreement, they entirely failed to understand its role in integrating supply chains. Obtaining, as the UK did, a (largely) ‘tariff-free’ trade agreement with the EU did little to address this, and now we are living with the consequences.

It’s worth stressing again that, as with the consequences for trade, these are ongoing. As I pointed out when the transition period ended: “what is underway is a fundamental shift in the ‘tectonic plates’ of the UK trading economy and its supply chains, happening in real time and under our noses, but with little comment on the aggregate picture. And it is going to get worse when all the new rules are stringently applied on the EU side and applied at all on the UK side. It is reaching, or will reach, into every niche of economic life …”

What has changed now, of course, is that it is becoming possible to see the aggregate picture, with the Aston study being the latest instalment.

Mutual recognition - again

Press reports of the government’s reaction (£) to the Aston study just repeated the standard mantras about “improving” trade terms with the EU by “tearing down unnecessary barriers”, which doesn’t begin to address the problems. The study’s policy proposals for doing so include regulatory alignment, which seems likely to be consistent with government policy, but rightly recognize that to significantly reduce trade frictions such alignment would need to be accompanied by ‘mutual recognition’ of regulations as between the UK and the EU.

To a degree, that too is consistent with government policy, at least as regards its stated intention to seek mutual recognition of professional qualifications. However, there are significant obstacles even to that, and far more to the extensive use of Mutual Recognition Agreements (MRAs). The EU does enter into some MRAs with third countries, but it was a persistent folly of some of the more ‘sophisticated’ Brexiters to believe that the single market could be extensively replicated by a patchwork of such MRAs, a folly embraced by Theresa May in her March 2018 Mansion House speech when she called for “a comprehensive system of mutual recognition”. However, there was simply no possibility of the EU agreeing to this, as it would effectively end the single market, for reasons set out elegantly and in detail by Professor Stephen Weatherill of Oxford University at the time of May’s speech. That analysis still holds.

It’s true that the Aston proposals are nothing like as unrealistic as Theresa May’s were, in that they refer to a small number of “key sectors”, but, although MRAs in such sectors can’t entirely be ruled out, there is unlikely to be much appetite within the EU to entertain them. Not only would doing so begin to make the EU’s relationship with the UK look rather like that which it regards as complex and cumbersome with Switzerland, it would do so without the UK accepting, as the Swiss do, freedom of movement of people. We’ve been all round these loops before, both before the UK left the EU and afterwards, most recently in November 2022. As the reference to May’s 2018 speech also illustrates, in many ways the UK is still stuck on what in the past I’ve called the Mobius Strip of trying to square the circle of Brexit, by endlessly revisiting solutions to the impossible conundrum of how to be ‘out’ and yet be ‘in’.

The one area where that circle might be squared is that of what seems to be Labour’s ‘flagship’ post-Brexit policy of seeking a Sanitary and Phytosanitary (SPS) regulation deal with the EU. I’ve written about this numerous times but, even there, if the government intends to seek, as at one time the Tories did, an SPS deal based on ‘regulatory equivalence’ then it will not be agreed by the EU. And this is because such a deal would (in effect, even if not in formal terms) be a form of MRA, with both the UK and the EU mutually recognizing each other’s regulations as ‘equivalent’.

If the EU agrees any SPS deal, it will be based on ‘dynamic alignment’ with ECJ jurisdiction and, in that de-limited sense is often described as a ‘Swiss-style’ agreement. It could also be described as, within the SPS domain, the UK being ‘in’ whilst in all other respects being ‘out’. But this would be an exceptional deal, conceivable because it has in the past been offered by the EU (and rejected by Johnson’s government as violating UK sovereignty), and not a template for other sectoral carve-outs.

Regulatory alignment of product standards

An SPS deal may be one of the main ways that the government will seek to accommodate Brexit, but some of the issues wrapped up in those of regulatory alignment and mutual recognition surface in other policy developments.

A key example is the Product Regulation and Metrology Bill (PRMB). I’ve mentioned this Bill a couple of times since it was unveiled in the King’s Speech, referring to it in terms of providing the legal basis for the UK to continue to follow EU safety regulations and, as such, being an important indication of the government’s commitment to regulatory alignment. What I failed to spot, but was alerted to by Nigel Haigh of the Institute of Environmental Policy UK, is that whereas in the King’s Speech the Bill was indeed entitled the Product Safety and Metrology Bill, in its published form the word ‘safety’ was replaced with ‘regulation’, and that betokens a much wider ambit. Just how much wider remains to be seen, but one important clause in the Bill refers to potentially tracking EU regulations relating to the environmental impact of products.

No matter how wide its ambit turns out to be, this doesn’t amount to ‘dynamic alignment’ with EU product regulations, in that, whilst creating an easy mechanism for the UK to follow such regulations as they change in the future, it does not create any commitment automatically to do so. In this sense, despite Brexiters’ horrified reactions to the Bill, it does not actually violate sovereignty, even in their highly restricted meaning of the term. However, it does at least imply a commitment to ongoing regulatory alignment as the norm rather than the exception.

To the extent that this implication is realized in practice it will have the effect, amongst other things, of somewhat mitigating the costs of Brexit, since it means that businesses only need to produce to a single standard whether selling in the UK or the EU. To a degree, that may not make much difference. We’ve already seen, most famously with ‘tethered plastic bottle tops’, that firms sometimes choose to follow EU product standards even without any corresponding change in UK law, so as to avoid the costs of dual production lines. However, the PRMB should mean that businesses, when selling to the EU, are relieved of much of the burden of having to establish for themselves what EU regulations they need to conform to, since this would be done by the government. It also prevents firms, whether in the UK or overseas, from ‘dumping’ what might be considered sub-standard products on the UK market. It should also serve to ‘thin’ the Irish Sea Border, to the extent that it reduces the possibility of passive divergence between product standards in Great Britain and Northern Ireland.

Nevertheless, it can’t be emphasized often enough that simply having the same regulatory standards as the EU, to the extent that the PRMB will deliver that within some regulatory domains, whilst reducing some of the costs and inconveniences of having left the single market, in no way provides the benefits of single market membership. Alignment is not access (£): the PRMB still means that we are ‘out’ and not ‘in’. To put it another way, there is no ‘mutual recognition’ in any of this, which is the flipside of it being something that the UK can do unilaterally, without the need for any agreement with the EU. The fact that the UK may choose to align with EU regulations does not make those regulations ‘recognized’ by the EU. What it does show is that the UK recognizes (in a different sense of the word) the pragmatic benefits of having regulations which are aligned with those of the EU.

So whilst the PRMB does not in fact violate the Brexiters’ idea of sovereignty – the UK is making its own laws – it does show just how facile that idea is. For what it really demonstrates is that the practical realities of the UK’s economic proximity to the EU mean that regulatory alignment is still its best option, despite Brexit, whilst massively reducing its benefits, because of Brexit. The UK may, in the Brexiters’ terms, have regained sovereignty, and paid the price for doing so, but it can’t afford to use it. The PRMB is simply a (limited) acknowledgment of this reality, and an attempt to accommodate to it by ‘making the best of a bad job’*.

‘Not for EU’ labels

Some of these issues appear in a different way in one of the most abstruse of Brexit topics, that of ‘Not for EU” (NFEU) labelling. As I discussed in a detailed post last October, NFEU labels are, in part, a particular illustration of the difference between alignment and access. They don’t necessarily mean, as many mistakenly believe, that the product they are attached to does not conform to EU standards, but rather that, whether or not they do so, they are not certified for sale in the EU single market.

Without re-hashing that long and complicated post, the labels arise as part of the Windsor Framework as a requirement for certain goods produced in Great Britain (GB) but sold in Northern Ireland (NI), preventing them being legally sold in (the Republic of) Ireland (or, of course, anywhere in the EU, but it is primarily aimed at the possibility of them entering Ireland). The decision to extend their use to GB was an entirely unilateral one taken by the UK government, largely as a sop to NI unionists as it assuaged their concerns about NI being treated differently to the rest of the UK. In a way, this could be regarded as yet another way of acting as if Brexit hadn’t really happened, in the particular sense of trying to act as if the Irish Sea Border Brexit has given rise to didn’t really exist. 

NFEU labels were due to become a legal requirement in GB at the beginning of October for meat and dairy products (fish, fruit and vegetables were set to follow next July), although many firms began to introduce them in advance of the deadline. However, at almost the last minute, the new government announced this month that the requirement has been indefinitely postponed, with a review to be undertaken. To avoid any misunderstanding: this does not mean the end of NFEU labels in NI, where they have been required since last October and will continue to be used, because doing so is part of the Windsor Framework agreed with the EU. Rather, it is the UK’s unilateral decision to extend to their use in GB which has been reversed.

But not for GB

At one level, it’s yet another example of the mess and chaos which Brexit has brought in its train, and especially of the consequences not just of the UK leaving the EU single market but of the way that Brexit has fractured the UK single market. It is also, of course, an eruption of the consequences of the insoluble ‘Northern Ireland Trilemma’. But it is particularly fascinating because the business economics of NFEU labels point in contradictory directions.

For some firms, in some respects, it is quite desirable for NFEU to apply in GB, given that it applies in the NI. If they are selling in both territories then it reduces costs, as it avoids having to have different labels, and increases flexibility, as it allows stock to be distributed to wherever in the UK it is needed. This would be the case for those supermarket chains which extend across the UK, for example, and, indeed, there was some business lobbying of government to introduce the GB policy. It also explains why some chains began to implement the policy before it was legally required.

Against that, however, is the fact that mistaken as it is, the impression that the goods marked NFEU are sub-standard may deter some consumers from purchasing them. I suppose they might be offset by fanatically pro-Brexit consumers, who read the label as denoting some special Brexity product, denied to envious continentals, but it is surely hard to imagine them to be very numerous. Meanwhile, for firms which only sell in GB, including chains which have no presence in NI, there is no upside to NFEU, only downside. Hence there has also been business lobbying to abandon the GB policy.

It's probably sensible to have postponed, and very likely to have halted, NFEU labels for GB, but doing so will inevitably provoke unionist grievance in NI. And, as with the postponement of UKCA marking, it is another case where those firms which incurred costs to comply in advance of the now abandoned deadlines have wasted money. That may not amount to much in the overall scheme of Brexit costs, but it’s yet another example of how those costs just keep mounting, and how even modest attempts to reduce them are not, themselves, cost-free.

The bigger picture

One of the difficulties of analysing Brexit is that it is hard (and, for any one individual, I would say it is impossible), to grasp it in its totality. That is mainly because of its scale and the technical complexity of each of its elements, but also because of the ways in which those elements interact and interlink with each other.

For example, in relation to this post, the need for NFEU labeling would disappear if there were to be an SPS agreement, and I assume that this is what the government hopes will ultimately be its fate. By extension, this is one reason why the EU is likely to be amenable to an SPS agreement. For the original offer of one was made in the context of the then ongoing row about the Northern Ireland Protocol and it arose because the EU has a strategic and principled interest in ameliorating the problem Brexit created for Ireland, as was demonstrated from the very first days after the referendum result. It is unclear that this interest exists in relation to any other regulatory area.

There is also a potential interrelationship with the PRMB, because although we don’t yet know its full ambit, we do know the areas it will exclude, as they are listed in a schedule at the end of the Bill. For the most part, they are things like food, plants, and products or by-products of animal origin: in short, the kinds of products that SPS regulations relate to, and, moreover, listed with reference to their definitions in EU law. No reason is given for their exclusion so this is pure, very possibly stupid, speculation on my part, but I wonder if it is because the government anticipates an SPS deal with the EU which would entail standards for these products being dynamically aligned with the EUs and, as such, treated separately from all other product standards?

Whether or not that is the case, the wider point is that with which I began, and which I’ve written about in the last couple of posts: the government’s lack of a post-Brexit strategy. For the implication of the interlinked nature of Brexit issues is that they are not really amenable to piece-by-piece attempts to accommodate to being out of the EU. Whilst that strategic absence persists, there will still be plenty of Brexit news to discuss but it won’t add up to a coherent picture and, in the absence of that, many of the old debates will continue.

This is the first post of the ninth year I have been writing this blog. There’s still little sign Britain has accommodated itself to Brexit, or even has any idea of how to do so.

 

*A more extensive acknowledgement of this reality could lead, even within Labour’s red lines, to a new post-Brexit settlement along the lines of the Ukraine model. If it is objected (let’s go round the loop again) that this would make the UK a rule-taker, then it would show a failure to recognize that, as things stand, the UK is already a de facto rule-taker, but with few of the benefits.

An Autumn Statement of Britain's foregone future

The staggering success of Brexit in transforming Britain’s economic prospects has been such that in his Autumn Statement speech the Chancellor mentioned it, well, just once, and that to refer to the fatuous “Brexit Pubs Guarantee”. This is the policy, first trailed in Rishi Sunak’s 2021 budget, and which came into force last August, whereby duty on a pint of beer bought in a pub is guaranteed to be less than when bought in a shop. As Brexit benefits go, this might be thought rather meagre but, in fact, it’s not even a Brexit benefit, as it could have been done whilst being a member in the EU.

The reticence was scarcely surprising, though. In making a statement putting heavy emphasis on the need to boost business investment, Jeremy Hunt could hardly mention that, just the day before, the Deputy Governor of the Bank of England had told the Commons Treasury Select Committee that the decision to leave the EU had “chilled business investment” ever since the referendum. Nor, in putting heavy emphasis on the need for economic growth, was he likely to refer to the Office for Budget Responsibility’s (OBR) forecast from April 2023 that Brexit will cause UK GDP to be 4% a year lower than it would otherwise have been by 2035, even though that forecast was explicitly left unchanged in its analysis accompanying this Autumn Statement.

Hunt certainly wasn’t likely to challenge the OBR’s estimate, as Trade Secretary Kami Badenoch did the other week, since one of the big lessons learnt from Truss’s mini-budget catastrophe, which brought him to the Treasury, is that the OBR’s forecasts are crucial to gain market legitimacy. So trying to pick holes in one of those forecasts would open a can of worms that every Chancellor who follows the hapless Kwasi Kwarteng will want to remain tightly closed.

The long hand of Trussonomics

That is a reminder that, although it seems a long time ago, it is only a year since Truss’s ‘true Brexit budget’ (£) meltdown and the first Sunak-Hunt Autumn Statement that followed. At that time, I wrote that the effect of those events was to begin to break the silence about the economic damage of Brexit. That was true, so far as it went, although it hasn’t persisted to the same degree, perhaps in part because Brexit has been subsumed into the long list of things about which, as I wrote more recently, we ‘mustn’t grumble’.

It’s not just that, though. Opinion polls show that in October 2022, following the Truss debacle, 57% thought that Brexit has made the UK economy weaker than it would have been, and 11% that Brexit has made the economy stronger than it would have been, a lead for 46 percentage points for ‘weaker’, which was the highest recorded since the question was first asked in February 2022. However, in the most recent iteration of this poll, in October 2023, 49% thought ‘weaker’ and 21% thought stronger. At 28 percentage points that is still a considerable lead, but it has not only declined since its high point in October 2022 it is also the smallest lead recorded in any of the polls since the question was first asked. (The numbers responding ‘similar’ or ‘don’t know’ have remained stable throughout, at around 20% and 12% respectively).

So it looks as if the Truss mini-budget did indeed have an impact on public debate and public views about the economics of Brexit, but that this has since diminished. One reason is probably just the passage of time since the mini-budget crisis, and declining media interest in Brexit. But another may be because of the extent to which, in Conservative circles, the belief that Truss was essentially right has endured or even grown. It may not be surprising that this belief was expressed just this week by Patrick Minford (£), the ever-deluded chief economic cheerleader for Brexit and prime intellectual architect of the Truss budget. Nor is it precisely a shock that Truss herself, whose qualities do not self-evidently include that of deep introspection, should not just regard herself as blameless but in recent months have appointed herself as the standard-bearer for a ‘true Conservative’ economic policy of tax cuts and small government. But it is more surprising, given the damage she did not just to the economy but to their chances of re-election, that “so many Tories still love the failed leader”, to quote part of the headline of an insightful recent article by the Guardian’s Zoe Williams which seeks to explain Truss’s “astounding return”.

Part of Williams’ explanation relates to Brexit. She suggests that Truss and her supporters have mobilized its recurrent victimhood motif to present her as not having failed but as having been destroyed by the forces of the Blob, the Establishment – that amorphous conglomerate which, to explain Truss’s demise, has to extend even to bond market traders. This is all part of the increasingly dangerous contemporary British version of the ‘stab-in-the-back myth’ that played such an odious part in German politics after the First World War. It was on display again last week in the aftermath of Suella Braverman’s resignation.

At all events, it won’t have been lost upon Rishi Sunak that Truss’s ‘Great British Growth Rally’ upstaged him at the Tory Party’s conference, and that tax cuts are one way that he might throw some red meat to his many critics. Indeed, he even had the gall to suggest (£) that the lesson of Truss’s budget chaos lay not for the Tories but for Labour’s “dangerous” green investment plans. In any case, one of the few things known about Sunak is that he wants to be seen as an ‘instinctive tax-cutter’ and his political hero is Nigel Lawson, Thatcher’s Chancellor in the 1980s

In this way, there is now a peculiar alignment within which tax cuts are seen as symbolic both of defiance of Establishment orthodoxy and of fealty to Thatcherite orthodoxy. So it’s not surprising that Sunak and Hunt conjured some up, even if they relied on a smoke and mirrors trickery that was concisely exposed by Paul Johnson of the Institute for Fiscal Studies, and were based less on any serious economic analysis and more on a desire to lay political traps for Labour at the coming election.

Certainly the right-wing press was quick to latch on to this alignment, with both the Mail and the Telegraph carrying the identical front-page headline “Biggest tax cuts since the 1980s”. The Telegraph front page also prominently featured five pundits who it promised would provide “the best comment and analysis”. Of these, one was Allister Heath, who last year lauded Kwarteng (£) for “delivering the best budget I have ever heard a British Chancellor deliver, by a massive margin”, whilst another was none other than Kwarteng himself. Truly, the best comment and analysis anyone could imagine.

The scale of the economic damage of Brexit

Nevertheless, unlike the architects of the mini-budget, neither Sunak nor Hunt could even begin to try to pretend that the Autumn Statement was about ‘delivering Brexit’, any more than they could admit how constrained it was by the ongoing damage of Brexit, the leaden divers’ boots dragging down Britain’s economy.

Further evidence of this was provided by last week’s report from the National Institute for Economic and Social Research (NIESR), entitled Revisiting the Effects of Brexit. The first line of its conclusion is that “overall, it is certain that Brexit has had a significant effect on the British economy” [my emphasis added], and the ‘headline’ summary of that effect is that, coming up to three years after the end of the transition period, UK real GDP is between 2% and 3% lower than it would have been compared with if Brexit had not occurred, and that it is forecast to be between 5% and 6% lower than it would have been by 2035 (thus, even worse than the OBR forecast of 4%). This equates to £850 per capita and £2,300 per capita respectively. The main reasons for this are the impacts on investment, productivity, and UK-EU trade.

There are several things to say about these findings. First, they are based on modelling different scenarios and, in doing so, the impact attributed to Brexit is stripped out from the impact of other shocks, primarily those of Covid and of the Ukraine War. This also means they are based on a form of ‘counterfactual modelling’ (i.e. comparing what has actually happened so far and what is forecast to happen with what might, in other scenarios, have happened or have been forecast to happen). As such, they are, of necessity, estimates but – unlike the constant attempts by pro-Brexit economists to assess the impact of Brexit by comparing actual UK performance with actual EU, Eurozone, or individual member state performance – they do address the central relevant question: is the UK economically better off or worse off outside the EU than it would have been within the EU? By definition, this question can only be answered in counterfactual terms, and of course it is the same question as that asked in the opinion polls I referred to earlier.

The NIESR model is, however, a different to another kind of counterfactual model, the widely-quoted ‘doppelgänger’ produced by John Springford of the Centre for European Reform (CER) and, in fact, it suggests that Brexit has not been as damaging as the CER model estimates. Thus the last iteration of the CER doppelgänger showed UK GDP to be 5.5% lower than it would have been by June 2022, whereas NIESR shows it to be 2.5% lower by 2023.* It should go without saying that either figure may be right, or that the true figure may be even higher than the highest estimate, or lower than the lowest estimate, but for the time being, at least, these are the best estimates available. It should also go without saying that, on any of these estimates, it represents a huge economic hit. To get a sense of its magnitude, consider that in 2019-2020 (i.e. before the pandemic created big distortions in public finances), the UK spent 1.9% of GDP on defence, 4.2% on education and 5.8% on pensioner benefits.

It's important to understand two things about the NIESR, CER and OBR estimates. One is that people sometimes wrongly think – and, when that happens, Brexiters suddenly become sticklers for analytical rigour – that these are estimates of absolute falls in GDP. They are not, they are estimates of lost growth in GDP that would otherwise have occurred. In that sense they are about a kind of invisible immiseration, the loss of what might have been. The second is that people sometimes think – and Brexiters collude in this when they talk about the Brexit impact as being one of ‘temporary adjustment’ – that what is being estimated is a one-off event. It is not. Rather, each year, every year, actual GDP is lower than it would otherwise be, with the gap between what is and what might have been gradually increasing. In that sense they are about a kind of compound invisible immiseration.

It's also important to repeat that all these studies do seek to strip out Brexit from other effects, and in doing so they recognize that the UK economy – including the specific issues of trade performance and productivity – faces many challenges other than Brexit, including some that pre-dated Brexit. This matters when reading, for example, another recent report, this time from the Boston Consulting Group (BCG) about UK trade performance and policy. For this report, whilst making many good points about the non-Brexit challenges, still finds it necessary to repeatedly make the strawman claim that “most commentary” ascribes the challenges facing UK trade to the single factor of Brexit. In fact, it is hard to think of a single serious commentator on trade or economics who does this, and, manifestly, the NIESR, OBR and CER do not.

The issue about the economic studies is simply that, as the BCG report itself states in relation to trade, although without attempting to quantify it, “Brexit has undoubtedly had a significant impact”. Quantification is useful in estimating the extent of that impact but, fundamentally, the point is that whatever other factors are in play, in a world where economic growth is hard to find, Britain, uniquely, has chosen to make it significantly harder by the addition of Brexit to these other factors. For another way to contextualize the magnitude of estimates of lost GDP growth, such as the NIESR figure of 2.5% for 2023, is to compare them with the latest OBR forecasts of what GDP growth will be: 0.6% (2023), 0.7% (2024), 1.4% (2025).

The bitter legacy of Brexit for SMEs

The BCG report also rightly highlights that the impact of Brexit has varied between sectors, identifying pharmaceutical and automotive industries as amongst those where Brexit “is likely to have been a major factor in reducing trade”. Perhaps the most important distinction to be drawn is between large and very large businesses, on the one hand, and small and medium-sized enterprises (SMEs) on the other. The reasons are fairly obvious. Larger firms had the resources to plan for and implement the changes that Brexit brought, and were often more likely to already be familiar with procedures for trading outside the single market.

There has been ample survey evidence of how hard SMEs have been hit by Brexit, and the negative impact on specific sectors and businesses has been assiduously chronicled by Peter Foster of the Financial Times, most recently in his report on the cosmetics and beauty sector (£), itself partly based on a study conducted by Oxford Economics for the British Beauty Council. Amongst other things, Foster’s report spells out that the impact of Brexit is an ongoing one, not simply a ‘shock’ to which firms ‘adjust’ – although, in some cases, it has been just that, with the adjustment being to cease trading with the EU or to cease business altogether. Yet Hunt, despite emphasizing the need to support small businesses, had nothing to say about this.

The particular impact on SMEs is sometimes acknowledged by Brexiters, such as in the recent Institute of Economic Affairs report by pro-Brexit economist Catherine McBride (aptly described by Professor Gerhard Schnyder as “a truly fascinating piece of post-truth economics”, this is what Badenoch based her critique of the OBR forecast on). But they typically downplay its significance on the basis that, precisely because they are small, the aggregate economic effect of that impact is small.

This is misguided in two ways. One is that although big firms may be better placed to deal with Brexit this doesn’t mean, as McBride blithely puts it, that they “can easily absorb any additional costs”. It is rather that, as Allianz Trade’s Head of Economic Research recently said, Brexit has “become a structural hurdle for UK exports” (the same is true of imports, and will become even more so if the latest promise to introduce UK-EU import controls next January is kept). Many big firms may indeed ‘absorb’ these costs, but they are still real, impacting on competitiveness, prices, employment, tax base or any number of other things. But it is also misguided because of the particular economic, social, communal and, indeed, emotional and psychological costs of Brexit’s impact on SMEs.

Those costs are well-illustrated in Foster’s reports, including the one on the beauty industry, which also illustrates the micro-level equivalent of the counterfactual issue in the aggregate modelling. For, as he says of Apothecary 17, a small Doncaster-based maker of male personal grooming products, the issue is not so much that it has adjusted to now being a domestically focused business, it is the ‘counterfactual’ that it might otherwise have continued to expand as an international business. That in turn has implications for the people it might have employed, the foreign currency it might have earned, the taxes it might have paid, and its resilience in the event of a domestic downturn.

There are numerous similar examples highlighted in Brexit and Businesses: In their own words, a recent European Movement (EM) report in which, along with survey results, individual SME owners and managers explain what Brexit has meant for them. Issues include not just the new complexities of trade and regulatory change, but labour shortages. Here, too, it is important to understand how SMEs often struggle more than large businesses because, although net migration figures remain at similar levels to before Brexit, the costs and bureaucracy of hiring workers from overseas are far greater than was the case under freedom of movement of people within the EU. Moreover, sectors like hospitality which are more likely to need workers who don’t qualify for visas are also more likely to have large numbers of small firms within them.

Sometimes, the profiles in the EM report are painful to read, as with that of Carol, who ran a niche bridal lingerie business in Devon. The last line is “Brexit was the final nail in the coffin of the business” (p. 12). Or that of Darren, who ran a specialist motorsport vehicle engineering firm in Cornwall and Essex. His profile concludes “our business is finished” (p. 17). These are affecting, personal stories of individual dreams shattered, whilst at the same time implicitly telling of damage to whole families and to local communities, often in ‘left-behind areas’.

It is ironic to think how fervently Tory politicians used to, and still sometimes do, declaim themselves to be the party of entrepreneurs, and to insist that small businesses were the bedrock of the British economy, and yet they presided over Brexit. Ironic, too, how so many Brexiters claimed that it was only ‘big Business’ that felt threatened by Brexit, and what mattered were the true, British, salt of the earth, small businesses, and yet now dismiss the effects on SMEs as all but irrelevant because big Business has been more able to weather the Brexit storm.

Britain limps on

Back, then, to this week’s Autumn Statement, when it was clear, though again not surprising, that the Labour Party are as taciturn as the government about the damage of Brexit. Thus Shadow Chancellor Rachel Reeves’ response speech made no mention of it at all. As if it were the seedy uncle who has to be tolerated at family get-togethers, everyone is too embarrassed to comment on the dubiously-stained mac, the off-colour jokes and the whisky-fumed breath that Brexit brings to the parties.

For the Tories, the embarrassment is the result of having been the architects of Brexit. For Labour, it is because, otherwise, they would be forced to explain why they don’t propose to seek to reverse it, even to the extent of seeking single market membership. The political reasons for that, both domestic and as regards the EU, are understandable and, in my view, justifiable. But, whether justifiable or not, they don’t change the basic fact that the country is accepting – or being forced to accept – that, year after year, it is going to get poorer and poorer than it would otherwise have been.

I’ve argued before that, even so, Labour’s post-Brexit policy is a real, if limited, alternative to that of the Tories. But no-one should think, and Labour shouldn’t pretend, that the accommodations that are possible within the Trade and Cooperation Agreement (TCA) framework will make much economic difference. Equally, as Michel Barnier has said in a recent interview (£), there’s no prospect of the EU re-visiting the basic architecture of the TCA. Yet, although Reeves made no mention of it, other Labour politicians, such as Shadow Business Secretary Jonathan Reynolds [approximately 10 minutes in], are including changes to the TCA as one of the ways a Labour government would boost growth.

And so Britain is set to limp on, if not the sick man of Europe then, at least, the only one who has shot himself in the foot. Sunak talks of making tough “long-term decisions for a brighter future”, and in his recent conference speech Keir Starmer said that under Labour “Britain will get its future back”, but the truth is that by far the biggest long-term decision of recent times was made in 2016. It wasn’t a ‘tough’ decision: it was made glibly, carelessly, almost casually. But its consequences are certainly tough, and not at all bright. What that bland and, to some, obscure little word ‘counterfactual’ in the economic estimates means is that each year those consequences will get tougher as Britain pays the growing price of a foregone future.

 

 

*The basic difference between the models, as I (a non-economist) understand it, is that the NIESR model compares UK actual and forecasted performance since Brexit with a UK counterfactual scenario in which Brexit had not happened, whereas Springford’s CER doppelgänger compares UK actual and forecasted performance since Brexit with the actual and forecasted performance of a weighted basket of economies which pre-Brexit were comparable to the UK and so is taken to be the counterfactual scenario for the UK had Brexit not happened. Springford has commented on Bluesky on how the NIESR model differs from his, and on some of the advantages and disadvantages of each. Springford’s model has been criticised by some pro-Brexit economists, and he has responded to, and rejected, their critique. Separately, Professor Jonathan Portes of King’s College London has argued that not only is their critique theoretically flawed but that their preferred model actually yields similar results to Springford’s doppelgänger.

Damage limitation

It has been a quiet week for Brexit news, but a revealing one too. The main story, if it is a story, is the latest though still not absolutely definitive report (£) that the government will pull back on the scope of scrapping Retained EU Law (REUL), so that it will ‘only’ remove 800 rather than all of the estimated 4000 pieces of legislation. That is still quite a lot of law that is going, and, crucially, there doesn’t as yet seem to be any confirmation of what these 800 laws are. Nor is it even clear whether the new plan is actually to ‘scrap’ all 800 or, as was originally proposed for the whole body of law, for this to be the default outcome but with provision to retain or amend in particular cases. So whilst this would be a sensible scaling back of the original plans, the damaging uncertainty about which parts of REUL will disappear, and when, remains.

As with all Brexit stories, this one has multiple dimensions and reveals much about the incoherence and inconsistency of the entire project.

A new pragmatism?

At one level, it is the latest sign, of which the Windsor Framework was the first, that Rishi Sunak’s government is more ‘pragmatic’ about Brexit than its predecessors. Notably, this decision seems to emanate from Kemi Badenoch, an enthusiastic Brexiter, in her newly expanded brief as Trade and Business Secretary which might suggest either that Sunak hopes that this will blunt the opposition of her fellow Brexiters or that, having to face the realities that they prefer to ignore, she, herself, has become a pragmatist.

Not that Sunak’s hands are clean. The Retained EU Law Bill started life under Boris Johnson as what was going to be the ‘Brexit Freedoms Bill’, and its legislative passage began, under the baleful stewardship of Jacob Rees-Mogg, during Liz Truss’s brief and disastrous premiership. But Sunak, in his ill-fated first bid to become Tory leader, was its enthusiastic champion, saying he would review or replace all REUL within the first 100 days of being Prime Minister. Then, as Prime Minister, he insisted it would go ahead in its original form as recently as this January even as a ‘senior government source’ was leaking that this was “impossible” (£).  

It may well be that in the first case this was purely to appeal to the Conservative membership voting in that leadership election, and in the second case was from fear of the ERG’s anger, something that their failure to derail the Windsor Framework now emboldens him to defy. If so, it serves to illustrate the wretched deformity that a relatively small number of Brexiter ideologues in the Tory Party have inflicted on politics. For without them, even given Brexit had happened, this self-evidently unworkable piece of legislation, which had even been ‘red-rated’ by the government’s independent Regulatory Policy Committee because of the inadequacy of its Impact Assessment process, would never have gone as far as it has. Nor would the retreat from it have had to be made inch-by-inch so as to avoid their tantrums, leaving things in this still indeterminate position.

The Brexiter reaction

Naturally it is all but impossible for Brexiters to recognize that what they had wanted was as impractical as it was undesirable. Ever the blameless victims, it had to be someone else’s fault. Thus, for some, Badenoch joined the list of those who, like Steve Baker, are deemed to have ‘sold out’ the true faith of Brexit purity. More commonly, in line with last week’s post, it was the lazy, incompetent and anti-Brexit civil service that got the blame.

Inevitably it was Rees-Mogg, in full spiteful schoolboy mode, who used his GB News bully pulpit to lead that line of attack, although it could be found across the Brexit bubble. Within that critique, the usual Brexiter simplism was also on display, with one pro-Brexit barrister claiming he could undertake all the work needed to scrap the full 4000 laws on his own in a year, or that a law firm could do so in a month.

Yet it's not entirely clear why this issue has become so totemic for Brexiters. Even in their own terms, to the extent that all these laws were carried over on to the UK statute book by vote of parliament, in the 2018 EU Withdrawal Act, they do not violate the principle of sovereignty. Indeed, if anything, it is the power the REUL Bill’s provisions give the Executive which does so (£).

In any case, when the 2018 legislation, described as the ‘Great Repeal Act’, was passed, let alone before the 2016 referendum, few if any Brexiters said, as Rees-Mogg does now, that passing the REUL Bill is “fundamental to the completion of Brexit”. So it seems to be yet another example of Brexiters making ever-harder demands for ‘true Brexit’ and, in the process, creating new tests to enable themselves to proclaim a “betrayal of Brexit”, in ways which even some Brexit supporters are beginning to see is ridiculous.

If there is no good Brexiter argument for the principle of the Bill, and especially for its original scope and speed, what is their case for its substance? Here, there is a remarkable coyness. There must be more than a suspicion that their desire is significant reduction in, in particular, employment rights, including the provisions of the EU Working Time Directive, although even Truss ruled out Rees-Mogg’s proposals for this as “half-baked”.

Certainly, now, Brexiters, including Rees-Mogg, are insistent that no diminution of employment rights or environmental protections is envisaged, instead talking airily of “pettifogging” product standards which supposedly make the UK less competitive and are “just annoying to people”, giving the example of vacuum cleaner power, apparently a reference to the EU rules introduced in 2017.

REUL and product standards

Reportedly (£), when Badenoch asked ERG members to identify examples of retained EU laws they wanted repealed, it was product standards that they, too, came up with. Although it’s not clear which product standards they were referring to, she rejected this suggestion “as Business Secretary and as a mother”.

That rather curious formulation doesn’t reveal what her specifically maternal concerns are, but perhaps she knows her Brexiter colleagues well enough to suspect they might not baulk at a good pinch of arsenic in baby food, just as they would perhaps regard sending small children up chimneys as a good way of boosting competitiveness, with the added benefit of giving woke and snowflake youths a short, sharp lesson in traditional British values.

However, the significance of Badenoch’s business brief is clear enough. Right across the business world there is substantial concern about the REUL Bill, with Roger Barker of the Institute of Directors criticising its entire approach and saying “ideally, we would like to see this Bill dropped”. Bluntly, those who know anything about product standards are quite happy to see the relevant retained EU law stay retained.

Of course, in the strange new world of Brexiter Conservatism, business and its representative bodies are seen as part of the whole ‘remainer Establishment blob’ but, that aside, this pre-occupation with diverging from EU product standards reveals one of the key ways that Brexiters don’t understand the single market, or the role of regulation in modern trade generally. Nor do they understand why, for both consumers and businesses, harmonized product standards are highly desirable.

For consumers, they offer a reliable guarantee without the need to delve into the technical minutiae of comparing UK and EU standards or worrying about compatibility issues. That guarantee may extend, as in the vacuum cleaner example, to the environmental impact of the product. As for people finding EU regulations annoying, in February last year Rees-Mogg, then the Brexit Opportunities Minister, called for the public to identify laws they wanted scrapped but, although the full results have never been reported, it seems to have yielded only trivial results. Certainly nothing has been heard of it since, rather like yet another absurd Rees-Mogg initiative, the government consultation on the supposedly burning public desire to remove the EU prohibition on selling goods using imperial measures only, which closed last August with the results still unpublished and probably quietly filed in the ‘Brexit stupidity archive’.

For businesses, far from divergence making them more competitive it makes them less so to the extent that it forces them to produce to different standards for the UK (or GB) and EU markets. Indeed, that’s well-illustrated by the fact that, to the relief of all British mothers, UK manufacturers will choose to follow the new EU standards on arsenic in baby foods, even if the British government doesn’t adopt them. It’s true that maintaining product standard alignment doesn’t in itself maintain all the benefits of single market membership, but it does reduce the costs of having given up membership. Clearly the same thing applies to conformity assessment marking, and it is to be hoped that the apparent turn to pragmatism over REUL will be followed by the final scrapping of the long-delayed UKCA mark* and that it, too, will be lodged in the Brexit stupidity archive where even Rees-Mogg seems to realise it belongs.

As I’ve pointed out in previous posts, this is not to deny that, Brexit having happened, there may be some areas where UK divergence makes sense. But that needs to be decided on a case-by-case basis, involving consultation with those who have relevant expertise or legitimate interests, undertaken in a sensible timescale, and with open public and political debate and parliamentary scrutiny. The REUL Bill process meets none of these criteria, even in its slimmed-down form (though the scale is more realistic). They are even more important if what is envisaged is indeed, despite the denials, the downgrading of employment rights or environmental protections.

The legacy of lies

All this would be true anyway, but it is made more true by the persistent dishonesty and bad faith with which Brexiters sold their project, and their long track-record of careless ignorance about what that project entails. This makes it all too easy to believe that the REUL Bill covers malign intent and/or that it will inadvertently create legislative and regulatory blackholes.

There is no better illustration of that mixture of the dishonesty, bad faith and careless ignorance than Boris Johnson. Whilst not exactly a news story, the full horror of Johnson’s premiership is freshly revealed with the publication yesterday of Anthony Seldon and Raymond Newell’s book Johnson at 10. The Inside Story. I haven’t read it yet and I’m not sure I could bear to do so, but the extracts (£) that have already been published, the early reviews, and an interview with Seldon paint an almost unbelievable, but all too easily believable, picture. It’s not just one of incompetence, venality and vanity, but of a person so psychologically and morally empty as to be unfit for even the lowliest position of responsibility, let alone that of Prime Minister.

It's a terrible indictment of the Conservative Party, and perhaps of the whole political system, that he ever came to power. As regards Brexit, specifically, it may be over-reductive to say that it wouldn’t have happened without Johnson, but he must have made a difference and, in such a close vote, even a small difference may have been decisive. It would certainly be untrue to say that he was alone in bringing grotesque dishonesty to the Vote Leave campaign, and for that reason it is hard to feel much sympathy for those ‘principled’ Brexiters who always knew he was ‘not one of them’. For they were happy enough to have him as their front man, just as those ‘liberal Brexiters’ who affect to despise Nigel Farage were happy enough with the votes be brought.

Leaving aside his role in the referendum, Johnson’s impact on how Brexit subsequently played out was utterly malign. Of the many examples that could be given, perhaps the most disgusting was what he did with the Northern Ireland Protocol, about which he lied to the electorate and to his own MPs and as a result of which he deeply damaged the UK’s international reputation and caused long-term harm to UK-EU relations. At the same time, he showed not just carelessness about Northern Ireland and its fragile peace, but reckless contempt.

The politics of damage limitation

Like the Windsor Framework, the tentative retreat from the REUL Bill is an example of repairing the worst of Johnson’s damage, as is the recent news that Sunak is seeking a new deal over passport checks. A report this week from the House of Lords European Affairs Committee points to further ways in which the UK-EU relationship could be improved, and the new EU Envoy to the UK has recognized that, post-Windsor, this is now a possibility.

These are all welcome things, so far as they go, but they amount to no more than damage limitation. And even the damage they are very slowly limiting is that of the way Brexit was done by Johnson and others – amongst whom should certainly be numbered Theresa May, whose early ‘red lines’ so constrained the parameters of how it was done – rather than the damage inherent in Brexit itself.

It is tempting to demand something better than gradual damage limitation from a future Labour government, but the biggest constraint upon that is the massive row that, under that or any government, Brexiter politicians and journalists kick up even at damage limitation, let alone anything bolder. It is they, as the instigators and defenders of Brexit, who bear primary responsibility not just for it having happened but for the political difficulties of addressing its failure now.

It is too much to expect it of Johnson, but if just one of the high-profile advocates of Brexit in 2016 had the honesty and courage to admit they had made a mistake that would help. To the extent that it might lead to more of them doing so it could make a decisive difference. Not one has done so. Until that happens, we seem set to limp on, a nation that has shot itself in one foot and is now trying to compensate by slowly fashioning a rudimentary crutch, all the time shackled and heckled by those who insist that to do so is a betrayal of hopping.

 

 

 

*As always, it’s more complex than this. One possibility is that the UK government decides to continue to recognize CE marking as valid for goods placed on the UK market as a whole (GB and NI). That wouldn’t mean scrapping UKCA marking but in practice, as with the baby food example, businesses would probably choose to use the CE mark. Another possibility is that UKCA marking will be required, but could be used without additional testing/ certification for goods which have been tested/ certified for CE conformity. There are also issues about what the fate of the planned UKNI mark will be. And there are different issues for, specifically medical devices. For an overview (though note it predates the most recent extension) see the briefing from Lexology. Clearly there is an interaction between decisions about product standards made in relation to REUL, and also those about whether to mirror (i.e. align with) subsequent changes in EU law, and if so in which areas, and those about conformity assessment testing, certification and marking. This whole area is a minefield and goes to the heart of the practical complexity of slogans about ‘taking back control’ and ‘sovereignty’, especially given the extensiveness of UK-EU trade and supply chain integration.

Britain's Brexit purgatory

There was never any possibility that last week’s announcement of the Windsor Framework would be immediately transformative. Even so, it’s surprising that there’s been so little attempt by Rishi Sunak’s government to build on the momentum it seemed to offer to create the kind of new post-Brexit strategy discussed in my previous post. Instead, we have uncertainty, drift, and strategic incoherence.

The Windsor Framework on hold

One reason for this was the decision, which looks to have been a tactical error, not to set a timetable for the next steps, either in terms of a parliamentary vote or a decision from the DUP on whether to accept it as a basis to re-enter the power-sharing institutions. The rationale, presumably, was to avoid the charge of trying to ‘bounce’ people into accepting the agreement, hence Sunak emphasising that everyone would have ample time to study it.

The consequence is that the DUP have been able to announce the creation of their own scrutiny process, which may not yield an outcome until next month. That in turn gives the Tory Brexit Ultras a skirt to hide behind, since many of them have said they will defer judgement until the DUP have pronounced. As I suggested last week, this is all rather bogus since the issue isn’t really about the legal fine print of the agreement so much as the extent to which its opponents are politically willing and able to pursue their dogmatic purism. On that, the DUP, especially, are authoritatively reported by Sam McBride of the Belfast Telegraph to be split.

To the extent there is any time pressure, it comes from the fact that Joe Biden may be unwilling to visit the UK for the twenty-fifth anniversary of the Belfast Good Friday Agreement in April with matters still unresolved, especially the matter of the functioning of the Northern Ireland Assembly. But, if he doesn’t, that will be an embarrassment to the UK government which is certainly not something which will much bother the DUP or the ERG.

Drift and uncertainty: Horizon, REUL and GDPR

This leaves the Windsor Framework in limbo, which also means that some of the gains which could follow from it are on hold. The most obvious example is UK participation in Horizon Europe, with multiple reports suggesting that the government isn’t even committed to pursuing this. It is hard to decode this. One possibility is that, until the Windsor Framework is secured, the government does not want to stoke Brexiter opposition to it by emphasising that it is a path to a more general rapprochement with the EU. But many of the reports suggest another possibility, which is that Sunak genuinely doubts whether UK scientific research is best served by participation in Horizon, rather than spending the money in some other way – even though the scientific community is very clear (£) of the central importance of the programme.

The same uncertainty attends the Retained EU Law Bill (REUL), for reasons discussed acutely by Paul Waugh in the i. For now, it continues its passage – it is currently being mauled in the House of Lords – but again the reason isn’t clear. It could be to sweeten the Windsor pill for the Ultras. It could be because, despite the implications of Windsor, Sunak is still flirting with the divergence agenda implied by REUL. Either way, just as snubbing Horizon would go against what scientists want, pursuing REUL would be in total contradiction to what businesses, and multiple charities and environmental groups, want, as well as being a constitutional disgrace and administrative nightmare. It would also go against the grain of the Windsor Framework’s attempt to improve the tone of UK-EU relations and the UK’s international reputation generally.

Less widely reported is the latest stage in the ongoing saga of divergence from EU GDPR regulations, with the government this week introducing a new data protection Bill, replacing the previous one which it paused last October after Sunak came to power. It is too early to be sure, but the new version seems to somewhat backpedal on substantive divergence whilst continuing with the nonsensical idea of a UK only approach which will mean businesses that trade with the EU facing dual regulation or, just as likely, ignoring the UK system – exactly the same conundrum that faces all post-Brexit attempts at regulatory divergence. So the approach seems to be neither full divergence nor complete conformity, again showing strategic confusion, ultimately leading to the key unknown of whether the outcome will mean the EU withdrawing, as it is always free to, the UK’s GDPR adequacy recognition.

Incoherence and folly: the Illegal Migration Bill

Nothing illustrates this lack of strategic coherence better than the current Illegal Migration Bill which began its legislative passage this week. It’s not clear whether the government is unaware of the double meaning of its title or simply doesn’t care. It’s certainly striking to see the almost psychotic glee with which Suella Braverman talks about pushing “the boundaries of international law” and indeed, already, the UN High Commissioner for Refugees has warned that the plans are likely to breach the 1951 Refugee Convention. At root, this reflects the Brexiters’ absurd idea, endorsed by Braverman in relation to the Internal Market Bill when she was Attorney General, that ‘parliamentary sovereignty’ trumps international law.

Meanwhile, gravel-voiced thugs like Lee Anderson grind on about “pandering to the ECHR”. For, of course, it’s no secret that for a huge swathe of Brexiters, from Braverman herself, through Nigel Farage to Theresa May’s former advisor Nick Timothy, derogation from the ECHR is the end game. From their point of view, the very fact that, notwithstanding the cruelty it will inflict, the Bill will almost certainly not solve the overblown ‘small boats crisis’ doesn’t matter at all. It will just serve to justify their push for the sunny uplands of international pariahdom. In the meantime, there are fresh opportunities to attack the civil service and the BBC.

Sunak gurns along with all this, presumably seeing some electoral advantage in it, but more bystander than leader since none of it sits remotely easily with his Windsor Framework announcement. That was not simply about resolving the Northern Ireland Protocol row. It was also about doing so in ways which drew back from previous threats to break international law, first with the Internal Market Bill and later with the Northern Ireland Protocol Bill, as well as from the flouting of the original Protocol by unilaterally extending some of the grace periods within it. In this way, it was not just about having better relations with the EU but, more widely, repairing the huge damage done to Britain’s international reputation by its Brexit shenanigans.

The Illegal Migration Bill puts all of that in jeopardy, making a nonsense not just of the Windsor Framework’s aspirations in that respect but also of Britain’s post-Brexit international role more generally. For Brexiters have constantly claimed that this role will be one of global ambition, a pivotal player in upholding the rules-based international order. Much of that is overblown rhetoric, of course, but as support for Ukraine has shown it is not totally meaningless (which isn’t to say that, as Boris Johnson and others are still fraudulently claiming, it was Brexit that enabled that role to be played).

However, supporting Ukraine points up sharply the incoherence of Britain flouting international law with respect to refugees, since that hardly provides the moral high ground for opposing Russia’s attempts to annexe Ukraine. Of course, they’re not the same thing, but once a country starts picking and choosing which parts of the rules-based international order it will honour it inevitably loses the ability convincingly to criticise other countries for doing the same.

As always, it comes back to Brexit

If all this illustrates the incoherence of the post-Brexit strategy that the Windsor Framework agreement seems to presage that is for two reasons (or three, if we include Sunak’s political weakness) and, unsurprisingly, they relate to Brexit.

The first is that the Illegal Migration Bill is the clearest current example of how, to frame it in the terms of recent posts on this blog, Brexitism is still very much alive and kicking in UK politics. As Adam Bienkov argued in Byline Times this week, Braverman’s Bill mobilises the same dishonest tactics as Vote Leave (and, for that matter, Leave.EU) used during the Referendum campaign, especially the claims made that ‘Turkey is joining the EU’ and what that would mean. And beyond that direct comparison lies the miasma of a racism that (often) doesn’t quite dare speak its name, the bogus conflation of illiberalism with patriotism, and the invocation of external threats and internal saboteurs. But for these, the great British people would have ‘simple’ solutions to all that ails them.

If that reprises the tropes of the pre-Brexit arguments, the second reason is a distinctively post-Brexit one. For the Illegal Migration Bill is also about the way that Brexit has failed to deliver its promises to ‘control our borders’, a promise which itself was based on the utterly dishonest conflation of immigration in general, EU freedom of movement, and refugees and asylum seekers. More than that, as regards refugees and asylum seekers, who are the Bill’s targets, Brexit has actually made things worse. A recent report by Professor Thom Brooks of Durham University shows that Brexit is “the primary factor” in the sharp growth of small boat crossings since 2020.

The reason for this is that, with Brexit, the UK left the Dublin III regulations, deriding them as an example of EU bureaucracy, and failed to negotiate an alternative agreement, the suggestions the government made being rejected by the EU as an attempt at ‘cherry-picking’. In particular, this means the UK no longer participates in the part of the regulations that allows for asylum seekers to be returned to the ‘first safe country’ they reached in order for their claim to be assessed. It is deeply ironic that Brexiter politicians, including Braverman, constantly parrot the line that asylum seekers should make their claim in the first safe country they reach rather than travelling to the UK when it derives from an EU system they have chosen to leave (they garble this, anyway, as there is no such requirement on the asylum seekers themselves, rather, it is a requirement on the countries involved).

A common Brexiter objection is that, prior to 2020, relatively few asylum seekers arriving in the UK were returned to the first safe country, but the Brooks report (pp. 23-24) explains that this reasoning is fallacious. The point is that, now, people smugglers have an incentive to direct asylum seekers to the UK with the promise that, if they manage to arrive, they will no longer be subject to Dublin III return rules. Nor was this unexpected or unpredicted: as Brooks explains, the government was repeatedly warned that this would be the effect. Whether through indifference or incompetence this created an opportunity for Farage, especially, to whip up new fears, fears which now constitute both a political problem for the government as well as a political opportunity for it to exploit.

This isn’t the place to discuss all the iniquities and absurdities of the Illegal Migration Bill, or indeed the long and dismal story of Britain’s hostility to refugees and asylum seekers, a hostility wholly disproportionate to the relatively limited extent of its exposure, in global terms, to the pressures that refugee movements can bring. It’s certainly not obvious why, rather than simply face up to and rectify its failure to administer an effective system to check asylum applications, anyone thinks the only answer is the pariahdom of ECHR derogation.

Instead, the particular point to emphasise here is that the current migrant panic is bound up with the twin unsayables of the false promises made for the ‘control’ Brexit would deliver and the blunt fact that Brexit has actually exacerbated the problems. This inability to be honest about Brexit then leads to a policy which, if pursued, directly contradicts any strategy of rehabilitating Britain’s reputation as a stable and respected bulwark of global order and standards, a reputation damaged by Brexit in general and the antics of Johnson in particular.

Brexit: unsayable but omnipresent

This nexus of dishonesty about Brexit and the strategic drift which accompanies it goes well beyond the issue of refugees and asylum seekers. Seven years from the Brexit referendum the government still has no clear, articulated idea of what Brexit actually means or what it is for. In those circumstances, it’s inevitable that decisions become simply tactical ones about the politics of party management or news management. This strategic drift blights not just science and business but farming and the environment, regional policy, and just about every other area of British life, including some of the most basic, bread-and-butter issues.

For example, it makes it impossible to properly address the NHS crisis, because doing so would mean admitting the adverse impact of Brexit, especially but not only in terms of staff shortages, as outlined in a recent Nuffield Trust report. It can’t even be publicly acknowledged by government ministers that Brexit plays any role at all in current food shortages, despite expert analysis and even though the majority of the public themselves recognize that this is so (ironically, the lack of political honesty about this may actually lead the public to over-estimate how much of the problem is attributable to Brexit).

It's tempting, and to some degree right, to think that one reason for this lack of strategic coherence is because this is a tired, conflict-ridden government, almost serving out time until it is dispatched, and buffeted by constant scandals and crises. Yet, even in this respect, the long hand of Brexit plays its part. The revival this week of recriminations over the handling of coronavirus, fuelled by self-proclaimed “scoop getter” Isabel Oakeshott (scoop apparently no longer meaning the hard-won fruit of diligent journalistic investigation, but persuading some gullible sap that, prior history notwithstanding, you can be trusted not to break a confidence), is a reminder of the multiple connections between that and Brexit. Indeed, to the extent that Oakeshott is both an avid Brexiter and lockdown sceptic, as were many of those who rushed to defend her (£) as if she was a latter-day Nellie Bly, it was not just a reminder but a continuation.

Similarly, Partygate returned to the news and, with that, a reminder of its own relationships with Brexit and populism. That then became bound up with the role of Sue Gray, giving another opportunity to bash ‘remainer’ civil servants. And lest anyone think that I am reaching to find a Brexit connection, the link between Gray’s supposed ‘stitch-up’ of Johnson and civil service remainerism wasn’t made by me but by Tory MP and former Party Chairman Sir Jake Berry. In any case, as with last week’s squeaking about the constitutional proprieties of King Charles meeting the European Commission President, the supposed outrage about Gray came ill when from the mouths of those who have spent years trashing established norms of conduct in the name of ‘getting Brexit done’.

Re-visiting Brexit botches

In short, Brexit remains an inescapable feature of British politics, constantly present at the same time as being ignored or denied, and resistant to being corralled into any kind of coherent strategy. Whether that is because Sunak doesn’t have such a strategy, or because he is too weak to pursue it, or because it is inherently impossible isn’t clear. He has further chances coming, starting with today’s Franco-British summit, an opportunity to improve relations so strained by Brexit, but with the issue of returning refugees re-inflamed by the Illegal Migration Bill reports already suggest (£) there will be no progress on that, another indication of the perils of incoherence. Still, Sunak may well be able to repair the damage caused, amongst many other things, by Liz Truss’s ‘the jury’s out’ maladroitness and Johnson’s ‘punishment beatings’ calumny.

There will be another opportunity next week when the revised version of the Integrated Review is published, which is expected to coincide with his trip to the US to meet Joe Biden and Anthony Albanese for talks about the AUKUS agreement. At one level, such a review is mandated by the changed foreign and defence policy landscape created by the Ukraine War. At another, it reflects the lack of realism of the original March 2021 review, which, as I noted at the time, downplayed the UK’s European role whilst making grandiose claims about its ‘Indo-Pacific tilt’ with little sign of the resources to make good on it. Having made some similar observations, defence analyst Joshua Huminski notes that this did not impress the US, obviously Britain’s main and crucial security ally, and that what is needed this time round is “pragmatic realism”, meaning a “clear reprioritization of continental European security” that “reflects reality”. In other words, precisely what is needed for the wider re-set of national post-Brexit strategy that the Windsor Framework gestured towards.

Perhaps that will happen, but the longer it takes, the more the damage will mount up. So much of what needs to be done has been made worse by the rushed, hubristic decisions already made. The Integrated Review is one example as, though it is of a very different sort, is the absurd, now delayed, but still planned replacement of CE conformity assessment marking with the UKCA mark. So too is the revamp of data protection legislation mentioned earlier. For that matter, the REUL is the legacy of Liz Truss’s brief, ill-fated, premiership and Jacob Rees-Mogg’s ludicrously over-promoted role within it. Admittedly, the latter formulation suffers from the implication that there is any role for which Rees-Mogg might be considered suitably qualified other than that of understudy for one of Flashman’s less charismatic henchmen in an Amdram production of Tom Brown’s Schooldays.

In other words, there have already been attempts, if piecemeal, to articulate a post-Brexit strategy but, for the most part, these already need to be undone because of Brexiter hubris and incompetence. There is perhaps some sign that the government has learned something from rushing through the largely pointless, if not downright damaging, trade deals with Australia and New Zealand, but if the anticipated accession to CPTPP is simply trumpeted as a Brexit benefit rather than a minor piece of damage limitation, and itself damaging to some sectors, it will suggest that the Brexiter delusions still hold sway.

Waiting for strategic coherence

What is crucial to grasp is that almost everything I have discussed in this post is interconnected, a series of moving parts which need to move in the same direction if there is to be strategic coherence. For example, it is widely understood that securing the Windsor Framework is central to securing CPTPP accession. It is also central to improving relations with the US, which will be further improved by a Europe-focused Integrated Review, and both will help to normalize UK-EU relations, which could lead to improvements in trade and security cooperation. None of these things will eliminate the damage of Brexit, but at least they won’t increase it and at best they might mitigate it. But, at the same time, the UK turning its back on Horizon, continuing with REUL, diverging from GDPR, and especially pursuing an internationally-despised and illegal policy on refugees will work in the opposite direction.

So for the time being it is not just the Windsor Framework that is in limbo, but Brexit Britain itself. The first may resolve one way or another fairly soon, and give an indication of the national direction of travel, but the second may last for months or years. Donald Tusk once remarked that there was a “special place in hell” for those who had advocated Brexit “without even a sketch of a plan” for how to deliver it. In fact, it is not they but the country that is suffering the consequences, if not in hell, then at least in purgatory. The first half of that word derives from the Latin for ‘to cleanse’, whilst it is fitting that the second half is Tory.

Purgatory isn’t an altogether pleasant place to be, clearly, and it brings with it the possibility of even worse to come, but, by the same token, there’s still at least some hope.