The Brexit quart won’t fit into Labour’s pint pot

The landscape of the politics of Brexit remains a broad and highly contested terrain, ranging from those convinced it was a great and necessary triumph, to be defended at all costs, to those urging its immediate reversal, with many shades of opinion between. But, under the Labour government, what might be called the immediate practical politics of Brexit operates within a far more restricted space in which only ‘micro-issues’ are subject to political decisions. Those micro-issues and decisions matter, and are worthy of attention, but, ultimately, the question is whether this disjuncture of scale is a sustainable one.

Wes Streeting’s facts of life

The Health Secretary Wes Streeting, whether intentionally or not, recently gave a very clear exposition of the perverse position the government has adopted. He was asked why the idea, not of rejoining the EU, but even of joining the single market was undiscussable. Whilst happy to recall that he, himself, had “campaigned passionately” against Brexit (this, at least, is something which is now sayable for cabinet ministers), he argued that “the people have moved on, the country has moved on and the EU has moved on”, so that there was “no appetite” for such questions to be re-opened.

This is familiar enough stuff, but Streeting then went on to say something more surprising, which I’m not sure has been explicitly expressed by any other cabinet minister: “there’s no doubt that what we warned about in advance of the referendum in terms of the impact on economic growth has come to pass, and that’s a fact of life we have to deal with. I think the sweet spot is working as closely with the European Union where we can, but also showing the agility to work with and through other partners in other markets as well …” [1]

This is different to the kind of things Keir Starmer, in particular, has said, accurately but irrelevantly, about the fact that not all Britain’s economic problems stem from Brexit. Sometimes, that has even morphed into the implication that ‘therefore’ these problems can be solved irrespective of Brexit. By contrast, the Streeting version is that the costs of Brexit are significant but just have to be accepted and, at best, mitigations made at the margin. In effect, this elevates the ‘mustn’t grumble’ mentality, which I alluded to in my most recent post, to the level of government policy.

That still leaves open the question of what Streeting means by “working as closely as possible with the EU where we can”. I wrote in a post at the end of the summer, pointing to the government’s lack of a clear and coherent post-Brexit strategy (a lack which still remains), that the most likely reading of Labour’s approach was that it would be the “maximalist” one of seeking “the maximum closeness, cooperation and alignment with the EU short of breaking the Labour manifesto commitment to its negative red lines”. Actually, it would have been more accurate to say that this is the best that can be hoped for. For that approach has yet to be demonstrated, as illustrated by the current rejection of a Youth Mobility Scheme (YMS), despite that fact it would not violate those red lines.

Backbench pressure?

I also pointed out in that post that one important way in which this government differs from its Tory predecessor is that the backbench pressure will be towards closer ties with the EU, rather than resistant to them or, indeed, agitating for even more distant ties. That is true, but what it is turning out to mean in practice is backbench pressure for such a ‘maximalist’ approach.

Thus, writing recently in the Guardian, Stella Creasy, the MP who chairs the Labour Movement for Europe, set out just that case. It included some of the things mentioned in my post, including seeking to join the Pan-Euro-Mediterranean Convention, and embracing, even extending, the EU’s proposals for a YMS. It also supported amendments to strengthen the governments Product Regulation and Metrology Bill (discussed in another recent post), further enhancing the way it will tend to keep many UK and EU regulations aligned.

What Creasy’s article self-avowedly did not do was make the case for rejoining the EU or for abandoning the government’s red lines. Saying that is neither praise nor criticism. It is simply a fact. What it betokens is that the practical politics of Brexit under this government is therefore now entirely about the nature and extent of Brexit damage limitation. That is, there is no dramatic difference of principle between what Streeting said and what Creasy wrote: the issue is entirely one of specific ‘micro-issues’ to be addressed within the framing they share.

That framing still leaves room for some policy debates and choices. Apart from the government’s stated ambitions, such as an SPS deal with the EU, there will be constant decisions to be made, with important upcoming examples including linking UK and EU Emissions Trading Schemes and aligning UK and EU deforestation regulations. Yet, important as these things are, they are still decisions to be made within the limited parameters of what the present government regards as practical politics.

A vanishingly small space?

A year ago I reviewed a book by Peter Foster, the Financial Times journalist who has been one of the best analysts of Brexit (I apologise for these repeated links to earlier posts, but they help, I hope, to provide context and sometimes corroboration, whist avoiding excessive repetition). That book is perhaps the most detailed articulation of what ‘maximalism’ (in this context) means in terms of specific measures.

In my review, I suggested that: “one danger which a Labour government looks likely to face is that, along with Brexiter denunciations, it will also be attacked by remainers and rejoiners as being insufficient to the magnitude of the task. The positive reading of that is it will push Labour towards Foster’s more maximalist version of its presently disclosed policy. The negative reading is that, squeezed between those who say it is too much and those who say it is too little, the space for pragmatism will remain vanishingly small.”

It's arguably too early to be sure yet, but it looks as if it is the latter outcome which is emerging. In practice this would mean that, rather than post-Brexit policy being located right up against the edge of Labour’s red lines, those lines will mark the far boundary of what is possible, and policy will settle between that and the kind of ad hoc accommodations the Sunak government was forced to make despite Brexiter opposition (e.g. watering down the scrapping of retained EU law, postponing if not effectively scrapping UKCA, agreeing the Windsor Framework). That is, if the Sunak approach is defined as minimalism, and the Creasy (or Foster) approach is defined as maximalism, the Starmer government’s approach will end up being somewhere between the two.

If this is so (and, actually, even if what emerges does turn out to be the maximalist approach), it is likely to come under increasing strain as it collides with economic reality. That was illustrated by the government’s much-vaunted International Investment Summit last week. This was the context of both the Streeting interview and the Creasy article, and it also provoked commentators to ask the question which, even if the government wants to believe that ‘the country has moved on’ will not go away: what about Brexit?

Counting the costs of Brexit: latest news

It is a question given added salience by a report the same week from Stephen Hunsaker of UKICE, calculating that, since 2017, the UK may have lost £44 billion of public investment which it would otherwise have received from the European Investment Bank. Like other counterfactual estimates (i.e. what would have happened if Brexit hadn’t happened), such as those of foregone trade, this may have little cut-through with the public. It is hard for people to get agitated about the loss of something that they ‘would have had’ in an alternative history. But for policymakers such things are, or should be, highly important and, indirectly, they do actually have a political significance: even without recognizing the mechanism, voters react negatively to the effects.

There was also a reminder of ‘the costs of Brexit’ in terms of payments made under the Brexit ‘divorce settlement’. This came as the result of a parliamentary question from SNP MP Stephen Gethins about how much has been paid so far, and how much remains to be paid, to which the answers turn out to be £24 billion and £6.4 billion respectively.

Strictly speaking, these are not ‘costs of Brexit’ because they are payments for liabilities the UK had incurred as an EU member so, in that sense, would have been paid one way or another regardless of Brexit. Nevertheless, it shouldn’t be forgotten that many Brexiters insisted, amongst them Nigel Farage, that there would be no ‘divorce settlement’ to pay or, even, that the EU would owe money to the UK. Even when installed as Foreign Secretary, Boris Johnson said the EU could “go whistle” for a financial settlement. Others of them fantasized that nothing should be agreed until the future terms of trade were also agreed, a fantasy which did not survive what turned out to be the non-existent ‘battle of the summer’ of 2017, although it still lingers on in Brexiter mythology as one of the many ways that Brexit ‘could have worked’.

More generally, the financial settlement was expected to be the most contentious aspect of the Withdrawal Agreement, and one of the more curious parts of the Brexit saga is the way that, having effectively been settled as part of the ‘phase 1 agreement’ in the autumn of 2017, it has scarcely figured in discussion since. By contrast, the issue of Northern Ireland, which had been dismissed by Brexiters as a triviality, proved to be far more toxic, festering on until the Windsor Framework was agreed in February 2023, aspects of which remain unimplemented even now, and is still a running sore to many, including many advocates of Brexit.

All this is worth recalling if only because we should never forget the grotesque ways in which Brexiters fooled themselves and misled others about the most basic realities of leaving the EU. More specifically, in the present context, it serves as another illustration of how, every step of the way, what Brexiters sold as a cost-free project has incurred cost after cost after cost.

A third recent reminder of this is the Reuters’ report that the Lord Mayor of the City of London estimates that Brexit has led to the loss of 40,000 jobs from Britain’s financial centre since 2016. It was a noteworthy report not least because, rather like the financial settlement, the figure for City job losses also has a special place in the iconography of the Brexit process.

Before the referendum, a widely cited report from accountants PWC estimated that the figure would be 70,000 to 100,000. This was dismissed as ‘Project Fear’ by leave campaigners, who later claimed vindication when, in 2022, another accounting giant, EY, estimated that the actual figure had been ‘only’ 7000 jobs. Of course, this was only a vindication because, by then, defence of Brexit had long since moved to claiming it had not been as bad as expected, rather than that it had had the positive benefits promised. If the latest 40,000 figure is correct then, on that logic, it could still be claimed as a vindication. Nevertheless, it would be closer to the lower end of the PWC estimate than to the EY estimate.

Foregoing jobs of this type, on this scale has significant implications. For example, economics commentator Jonty Bloom calculates that, if the figure is indeed 40,000, this represents well over £1 billion per year of foregone tax revenue (even conservatively assuming these jobs to have had an average salary for the sector, and considering only the income tax and national insurance they would have paid). Again, these are counterfactual costs but, whilst that inevitably means they are estimates, counterfactual analysis is the only way of assessing the effects of Brexit. Indeed Brexiters themselves recognize this whenever they claim (usually wrongly or misleadingly) that such-and-such a thing is a ‘benefit of Brexit’ because it wouldn’t otherwise have been possible.

Foregone jobs aside, the wider issue is that, apart from a few pro-Brexit diehards, no one seriously thinks that, overall, Brexit has been anything other than bad for the UK financial services industry. Even the pro-Brexit Telegraph reported (£) earlier this year that Brexit was the “prime suspect in the death of the stock market” and that the referendum was a decisive moment in the City’s “brutal losing streak”. Meanwhile, a review of the sector jointly produced by the City of London Corporation and the Treasury last year (i.e. under the Tory government) identified “strengthening and deepening the EU-UK business relationship” as “a top priority for the UK based financial and professional services sector.”

There’s little sign that this priority will be delivered by the new government, for all Labour’s wooing of the Square Mile. As a recent analysis by Hannah Brenton of Politico explained in some detail, the sector remains “out in the cold”, rarely featuring in the government’s statements about the ‘reset’ with the EU, and barely mentioned in discussions with the EU. Yet, as Brenton points out, financial services account for some 12% of UK GDP and contribute £100 billion in tax revenues (2022 figures). A government which has made GDP growth its central mission and which has a pressing need for tax revenues to repair highly-stressed public services can hardly afford to ignore the sector’s stated priority needs in this way.

Some other facts of life

Constant reminders of the costs of Brexit, such as these, will continue to exert pressure on the narrowness of the political space within which Labour are willing to discuss it. Next week’s budget will be an important example. At one level, it will push discussion of Brexit even further to the margins, as commentators will find many others things in it to talk about.

At another level, it will make the costs of Brexit even more relevant. Battles between the Treasury and spending departments are a basic fact of political life, and those over the forthcoming budget are no different (rather than being, as some reports suggest, the sign of a government in chaos). Nevertheless, they have an added dimension when budgetary constraints are so much tighter than they would have been as the result of a calamitous decision about national strategy.

To put it another way, Wes Streeting may think the costs of Brexit are “just a fact of life we have to deal with”, but he must know that much of the political credibility of the government, not to mention his own career, depends on the funding settlement he obtains for the NHS. The same goes for other ministers and other public services. For this reason, even if ‘the people have moved on from Brexit’ and even if counterfactual losses have no cut-through, it doesn’t follow that bearing those costs has no political consequences. It’s another fact of political life that voters expect results. [2]

From that point of view, the limited space of Labour’s Brexit politics, and the Brexit micro-issues to which it confines the government, is always going to be faced with the question of why it is so small. The ‘macro-question’ of Brexit as a national strategy will not go away. And that isn’t solely or even, ultimately, mainly because of the question of whether Brexit was a mistake. It is for similar, if now updated, strategic reasons to those which, in the 1960s and 1970s, drove the UK repeatedly to seek membership of what was then the EEC (this argument was made with great elegance by the historian Robert Saunders, in an essay marking the day that Britain left the EU). Those reasons, too, are facts of life, deriving from those of economics, geography, and the nature of international relations.

So the issue for this and future governments is the disjuncture between what is economically (and geo-politically) desirable and what is politically viable. The present government has an answer to this, and it is not entirely without merit: it is that re-opening the macro-question of Brexit would be economically damaging because of the instability which would result from the political toxicity of doing so. On this account, there is no disjuncture: it’s not economically desirable because it’s not politically viable. And it’s true that, in particular, many big businesses which have adapted themselves to being outside the single market and customs union are not keen to have that all thrown up into the air again for an indeterminate period with an uncertain outcome.

However, whilst it isn’t unreasonable for the government to take account of those concerns, they do not define the interests of Britain’s economy as a whole, nor those of its citizens. Acting as if they do is not only unhelpful to smaller businesses and to consumer choice, it institutionalizes higher costs, lower investment, and a lower tax base than would otherwise be the case. Equally, it does little to address the geo-political damage of Brexit.

This doesn’t mean, at least in my estimation, that the present government is going to pivot to joining (or rejoining) the single market, let alone the EU. It does mean, though, that an approach based on simply “living with” the costs and damages incurred by choices made by, and in the aftermath of, the 2016 referendum is inherently fragile. It is very unlikely that the politics of Brexit can forever be contained within the small space to which it is currently confined by Labour. For it is also a fact of life that attempts to fit a quart into a pint pot – to use measures that some Brexiters might appreciate – will result in a leakage, if not indeed a flood.

 

Notes

[1] The last words of this quote seem to suggest a continuation of the last government’s faith in post-Brexit Britain’s ‘nimbleness’ in being able to set its own regulations and make its own trade deals. There’s little reason to share it. But in one respect, at least, there has been a departure from this hubris in that all the existing advisers to the Board of Trade have been dismissed, including Daniel Hannan, one of the major architects of Brexit, and Australia’s former leader Tony Abbott, one of its few international champions.

[2] In the present context, it’s an even harsher fact of political life that some voters expect results that they have denied themselves by their vote to leave the EU, or, however they voted in the referendum, by their unwillingness to see that decision revisited. But there’s nothing new about people holding perversely contradictory views, and it’s one of the tasks of political leadership to persuade them of the need to face realities. The core of the present government’s ‘Brexit problem’ is that it believes this is not possible – and it may well be right.

Back to school

There’s a distinct ‘back to school’ feeling in the air – and never has the beginning of the school year been the news story that it is in these Covid times – with that slightly chilly tang in the mornings that presages the end of summer. Nowhere is that more so than for Brexit, with next week’s talks marking the beginning of the final phase of the Transition Period, and the likelihood of considerable political drama. Many people who have, very likely, switched off from Brexit in recent months will see it return with a vengeance. Even leaving aside the UK-EU negotiations there will be a substantial programme of domestic legislation necessary in advance of the transition ending.

Yet for all that feeling of newness, we will be returning to a very familiar landscape. For the more time goes on the clearer it is that Brexit consists of a series of recurring themes. So before we get back to the grind of the detail of state aid, fisheries (£), conformity assessments, equivalence regimes, geographical indicators (£), border queues and all the rest of it (links are to some of the latest reports/ discussions of each issue), this last post of the summer will consider some of these themes and what they mean for the coming period.

Brexit: more about Britain than exit

Little of substance has happened in the negotiations over the summer, which is not a surprise. Boris Johnson talked of putting a ‘tiger in the tank’, but as usual it was just boosterish phrase-making with no substance. As noted in my previous post, the process is in limbo awaiting political decisions that Johnson hasn’t made, or hasn’t communicated. But looking back over the entire Brexit process so far it is striking how many of these long periods of relative inactivity there have been. Despite the loudly-ticking clock of, first, the Article 50 period and, now, the transition period there’s somehow been a remarkable lack of focus on the actual task of exiting the EU. Indeed it Is only very recently that basic practical preparations for, for example, border management have begun to be made.

Some of those quiet periods have, of course, been caused by the inevitable hiatuses of the political seasons in both London and Brussels. But that aside, instead of what should have been focussed and intensive negotiations with the EU, most of the last four years has been taken up with UK domestic politics. The most obvious example is how, almost immediately she had triggered Article 50 and despite repeated promises that it would not be in the national interest, Theresa May launched her ill-fated General Election, wiping two months out of the original twenty-four month schedule. Then, when the first main extension from April 2019 to October 2019 was agreed, and Donald Tusk pointedly advised the UK “not to waste this time”, it was mainly taken up with the Tory leadership contest.

That domestic and, especially, Tory Party politics have been so central is not accidental. It has arisen because the UK tried to undertake Brexit at the same time as trying to define what it meant and how it could or should be done, something which continues to be true right up to the present moment. That obviously flows from the lack of definition by the Leave campaign, but was very much compounded by the secretive and non-consensual way that May came to define Brexit (i.e. no single market, no customs union, virtually no ECJ role), and especially the unnecessary rapidity with which Article 50 was invoked, on the back of fighting a deeply divisive and also entirely unnecessary legal battle to prevent a parliamentary vote on doing so. It was not as if there had been a time frame promised to the electorate but, as with so much of the Brexit story, keeping the ever-angry, ever-suspicious, Brexit Ultras temporarily mollified trumped every other consideration.

Perhaps even worse than that, the ongoing battle to define Brexit whilst simultaneously enacting it has been characterised by repeated refusals to accept quite obvious facts. The consequence is not just that the debate has moved more slowly than the formal process required, but that it has gone round in endless circles. There are several examples that could be given but I’ll highlight a couple of the most important.

Going round in circles

One is the wilful refusal to accept that the terms of leaving would have to be agreed in advance of the terms of the future relationship, including the future trading relationship. That was built into Article 50, which only specified that the exit terms would be agreed “taking account of” the future relationship between the departing member and the EU.

Yet from the outset many Brexiters refused to accept that this was so and in particular to accept that a financial settlement would need to be made in advance of, and separately to, any trade deal (some, indeed, have never accepted that there is any need for a financial settlement at all and some, even, that the negotiations required Article 50 to be invoked at all). May herself did not seem to grasp the issue of there being two separate deals to be done until April 2017, and even in 2019 government ministers were still saying that a trade deal would be in place the day after exit.

One could actually argue that the EU showed flexibility in agreeing to create two phases for the Article 50 talks, one on the exit terms and, if sufficient progress was made, a second phase on future terms, even though that could not yield a signed trade deal in the period. But that, itself, was resented by the Brexiters who, as David Davis, the then Brexit Secretary, put it, threatened the ‘row of the summer’ (of 2017) over this sequencing.

That row never happened, but the sentiment underlying it continues to this very day, with its lineal descendent being the growing clamour from some Ultras to repudiate the Withdrawal Agreement even if there is a trade deal, and certainly if there is not. Even more bizarrely, despite having wanted to get going with trade talks from the outset, when phase 2 was entered, the UK collapsed into internal dissent about what future terms it was seeking, leading to eighteen months of infighting that culminated with May’s defenestration and replacement by Johnson

The second main way that Brexit has gone round in circles is the refusal of Brexiters to accept – or perhaps their inability to understand – the very basic proposition that leaving the single market (SM) and leaving the customs union (CU) both, in different ways, create borders. This isn’t some ruse of the EU’s, still less is it the EU’s punishment or even choice. It is the logical and legal consequence of leaving the institutions that remove borders.

If, as Brexiters insist, Brexit must mean the UK setting its own regulations and its own tariffs, then there must be a territory within which these apply, and if there is a territory then there must be a border delineating that territory. That is true in general, and it has the economic consequence of making ‘frictionless trade’ with the EU impossible. And it is true in the particular case of Northern Ireland, with all the political ramifications of that, something which again some Brexiters still insist is confected by the EU, or Ireland, or both.

Yet for years the UK continued to talk about frictionless trade as perfectly possible, even after hard Brexit had been announced. Even now, it’s common to see Brexiters talking as if post-Brexit borders will only happen if the EU insists upon it. As for Northern Ireland, the number of times under which ‘alternative arrangements’, ‘technological solutions’ and the ‘Malthouse compromise’ have come and gone in the Brexit debate is almost impossible to count. To these examples could be added other zombie ideas, of which the claims about GATT Article XXIV are perhaps the most infamous.

Choices have consequences

So the years of the Brexit process have been characterised by a repetitive grinding down of these recurrent refusals to face reality. What could and should have been understood before the Referendum – and certainly before beginning the Article 50 process – has had to be taught, like simple arithmetic to a child who is simultaneously truculent and dull-witted, to the Brexiters (or, as it seems to outsiders, to the UK itself). And these lessons – whilst varying in content - are all of the same general sort: in choosing Brexit, the UK has chosen the consequences of Brexit, which can’t be magicked away. In particular, if the UK is outside the EU (SM, CU) then none of the things which come with being in the EU (SM, CU) any longer apply.

The impossibility of frictionless trade and the unavailability of ‘alternative arrangements’ for borders has now –  at least at governmental level – been accepted (though, jaw-droppingly, is now described as “growing the customs sector” as if it were some sensible industrial policy rather than the introduction of massive new costs). Yet it is still necessary and justified for Michel Barnier to remind  the UK that ‘Brexit means Brexit’, as he did at the end of the last round of talks.

For although the UK’s negotiating position under Johnson and David Frost has superficially accepted being a ‘third country’ to the EU, it continues to seek things which go well beyond what any third country has* in a whole swathe of areas. And, more subtly, by framing many of its demands in terms of third country precedents, the UK fails to understand that these do not constitute a set of established ‘rights’ for a third country but are contingent upon what – in the specific circumstances of the UK – it is in the interests of the EU to agree.

Brexiters’ negotiating conundrums

This idea that the EU is likely to give the UK a generous deal is one of the strangest features of Brexit. It appears in various slightly different guises. One is that those who most loathe the EU and denounce it for any manner of evils, including that of bureaucratic rigidity and being a ‘protectionist racket’, seem, paradoxically, to have had as their working assumption that the EU would be charitable - or, in Brexiter-speak, ‘flexible’ - in its approach to a departing member.

Another equally contradictory version is that the UK holds all the cards whereas the EU is desperate for a deal (German car makers, trade surplus etc) and in any case moribund and on the point of collapse, but at the same time is a powerful bully, willing and able to punish the UK. Similar ideas are present when it’s claimed that the UK would be fine if there’s no deal and yet when the EU warns of the prospect no deal it is making a ‘threat’ to the UK; or, conversely, that the UK can gain leverage by threatening the EU with the damage of no deal and yet no deal would not damage the UK.

But the underlying issue here is that these negotiations do not conform to the normal idea of two sides each seeking to pursue its own rational interests. On the UK side that is partly because these fantasies about the EU mean that it is treated as this peculiar mixture of ogre and pushover, but it is more because, in pursuing Brexit, the UK is in the position of doing something which is not in its rational interests. If nothing else, that is clear from the fact that, as a trade negotiation, it’s unique in setting out to create worse terms than currently exist for both parties. For the EU, that has been forced upon it, and given Brexit happened it is acting rationally to protect its own interests – which turn out to be different to those ascribed to it by Brexiters, but no less rational for that (in brief: prioritising the protection of single market integrity).

For the UK it arises from the nature of Brexit itself. Brexiters themselves sometimes acknowledge this, when saying that they fought and won an emotional battle for ‘independence’, but don’t then follow through to realise that this has put the UK permanently on the back foot in negotiations over its interests, since these have been defined in irrational terms. That follow through has been avoided by insisting that the costs of the emotional appeal to sovereignty are just Project Fear, and that sovereignty comes, or ought to come, cheaply or even at no cost at all. So the emotional argument is cloaked in a pseudo-rational veneer. No hard choices have to be made because we can gain sovereignty (as Brexiters see it) without losing anything. This is also why Brexiters have repeatedly sought to discredit or conceal projections of the costs of Brexit.

This leads to a negotiating position which is partly captured by the familiar clichés of ‘cakeism’ and ‘cherry picking’, but it’s actually much more perverse than that. The idea of having the cake (of membership) whilst eating the cake (of leaving), or of picking the juicy, enjoyable cherries and leaving the rest does imply a rationality – even if an opportunistic and unrealistic one. But the extreme Brexiter position is so emotionally hostile to everything associated with the EU that actually the cake is tainted and the cherries suspect. So they don’t just want what they can’t have, but they want what they don’t want. They are caught between wanting ‘a’ deal, but not wanting any actual deal.

If all that sounds convoluted, a different way of stating the Brexiters’ negotiating conundrum is this: whatever benefits the EU has economically, they all come at the price of sovereignty – we want sovereignty and we don’t care what it costs – but actually it’s cost free – or it would be if the EU was reasonable and would agree to what we want – then we’d have the exact same benefits as before – but those benefits come at the price of sovereignty -  so if they agree to what we want then it isn’t sovereignty, which is what we want at all costs.

This, which has always been the background to, and in many ways incorporated into, the UK’s official negotiating position, effectively makes any negotiated outcome impossible.

The sand in the gears

But there’s always been some sand in the gears of this rickety Heath Robinson of an argument, which is that any government actually in power, even one defined by Brexit, has to have at least one eye on reality. In power, rather than jeering from the side lines, no government can afford the political and economic price of sovereignty at all costs when those costs become manifest. Which is why Brexiters like David Davis, Steve Baker, Dominic Raab and Suella Braverman all resigned from ministerial positions where they had responsibility for enacting Brexit so that they could preserve their fantasies intact.

That was true for Johnson, as well, when he resigned as Foreign Secretary, but the lure of premiership brought him back to the table. So he now faces a similar situation to Theresa May in being forced to at least partly confront reality. She, of course, got shredded by her party for doing so, a fact that won’t be lost on Johnson not least since he led the charge. Since of his own volition there has been no Transition Period extension, he now has no more room to indulge the fantasies he did so much to promote at the expense of the realities he did so much to deny.

Hence we’re now reaching a pivotal moment, because in the next few months, one way or another, the UK-EU relationship is going to be re-framed by a deal of some sort, or by no deal. Either will have a big negative impact on individuals and businesses but, despite the claims of some, no deal will be considerably worse than a deal. In that sense, what happens matters greatly, including the precise nature of any deal which is done as that could have big impacts on specific sectors or activities. But in some ways the outcome won’t have much effect on the underlying situation.

Deal or no deal, the Brexit psychodrama will continue

If Johnson strikes a deal of any sort, then the Ultras within and outside his party will decry it for having compromised sovereignty. If he doesn’t strike a deal, then that won’t just be an end to matters but the beginning of fresh – and very urgent and difficult - negotiations which will be caught in the same insoluble loops and conundrums of the last four years of Brexit.

There is therefore no scenario that won’t have Brexiters saying ‘this is not what Brexit was meant to be’ and there is no scenario in which they will say ‘now we have what we always wanted’. Not only will they denounce any deal, but If there is the no deal ‘clean Brexit’ the most extreme call for they will say that the UK could have had a perfect deal but for betrayal by May and the remainers, and the intransigence of the EU. And deal or no deal (but especially no deal) they will step up their agitation to renege on the Withdrawal Agreement as a price not worth paying.

That is really worth reflecting upon. No matter how much pain Brexit causes the UK it is never going to stop the Brexiters complaining. David Cameron once famously called on his party to “stop banging on about Europe”. That didn’t happen, and so the Referendum was meant to put the issue to bed. When that was won by Brexiters, it might have been thought that that, surely, would put an end to matters. But it didn’t, and nothing will, no matter what is or is not agreed in the coming months. The Tory psychodrama about Europe, into which they have dragged the entire nation, is far from over.

So as the new Brexit term begins, no one should think that it will bring a resolution. We’re not about to graduate from Brexit, we’re just changing schools. The difference is that we are moving from the sheltered junior school of EU membership and the transition period, to the much harsher senior school outside.

 

*The link at this point is a handy extract of the relevant parts from a speech given by Michel Barnier at the Institute of International and European Affairs in Ireland this week.

As Brexit realities bite, Brexiter fantasies grow

I’m not sure if they still exist – I haven’t noticed any recently – but many butchers and greengrocers used to have large electrical insect killers on the walls of their shops. Every so often there would be a slightly gruesome crackling buzz as some hapless fly or wasp was zapped.

In a similar way, throughout the last couple of years there has periodically been the crunching sound of this or that Brexit fantasy encountering the lethal force of reality. Examples include the realisation that the EU wasn’t going to ‘go whistle’ for the financial settlement, that sequencing wasn’t going to be ‘row of the summer’ of 2017, and the (apparent) acceptance of an Irish border backstop as part of the phase 1 agreement – and of course there are many others.

Reality bites

We are hearing the sound more frequently now, as the Article 50 timeframe inexorably shrinks. It happened on Monday, when Theresa May was forced to accept that she had no hope of getting her deal through the House of Commons, and on Wednesday when the ERG were forced to accept they did not have the strength to oust her. Since then, it has happened again when the Prime Minister went to Brussels to seek ‘concessions’ on the backstop provision.

That trip was bound to end in failure because what was being sought was not a concession but something that by definition couldn’t happen: to make the backstop in some way (for example through a time limit) conditional. But the only way a backstop can function as a backstop is to be unconditional in the sense that it is the solution to keeping the Irish border fully open if no other way of doing so is found.

Tony Connelly, RTE’s Europe Editor, and consistently one of the shrewdest and best-informed writers on Brexit, has provided a detailed explanation of the twists and turns of what happened in Brussels, from which one conclusion might be that May mishandled the discussions. But even had she been the most consummate of diplomats the end result would have been much the same. Aside from the fact that she was seeking the impossible, nested inside this latest misstep are two persistent misapprehensions.

Persistent misapprehensions

The first is that since the outset the government has approached the negotiations as if it is for the EU to come up with ways of delivering what the UK wants. The long months in which Britain failed to table proposals is evidence of this, and of something even more problematic: that the UK couldn’t, and still cannot, agree what it wants. Instead, all Britain has really done is stated the things it doesn’t want and left it to the EU to fashion a deal consistent with that – May’s deal - which is now being rejected as it is not what Britain wants!

At this week’s summit, Jean-Claude Juncker complained that “there is an impression in the UK that it is for the EU to propose solutions. But it is the UK leaving the EU”. It is a complaint that echoes reports from last January that in private meetings with Angela Merkel the Prime Minister repeatedly asked to be “made an offer”, to which Merkel replied “but you’re leaving, we don’t have to make you an offer. Come on, what do you want?” with May responding by simply saying again “make me an offer”.

The same approach was evident at the Salzburg summit, when the PM called on the EU to come up with a form of Brexit acceptable to Britain. This is not just, or even primarily, about Theresa May. Rather, it grows out of the underlying way that Brexiters continually talk and act as if Britain is being forced to leave the EU rather than choosing to do so.

The second misapprehension is that the Brexit negotiations are akin to those over, for example, the various treaties which the UK has taken part in as a continuing member state. Thus, it is often said, negotiations will go the wire with last minute concessions made and deals done and so it will be with Brexit. But the dynamics of the Brexit talks are nothing like this at all. They are not a horse trade amongst 28 countries, with the possibility of alliances between different groupings, and with some flexibility on one issue being traded for acceptance of another, in order to get an overall settlement that all want.

Instead, they are a fairly brutal power play between one very large bloc of 27 countries with a fairly united stance on this issue, and a single country with relatively little (not none, but not that much) leverage because it will suffer economically far more than most of the 27 (with, perhaps, the exception of Ireland and to an extent Holland) if no deal is done. If Brexiters think that this means the EU is ‘being nasty’, all that can be said is: welcome to the real world, and get ready for those ‘independent trade policy’ talks with the US, China and India, as well as fighting your corner in the WTO. This is what taking back control looks like. As Ireland has found, there is, to coin a phrase, power in a union.

New fantasies for old

It might be expected that as reality bites in these and other ways, Brexiters would gradually modify or abandon their fantasies. Indeed, to an extent, this is what Theresa May – having initially embraced those fantasies – has done. But, of course, they do not. Instead, we are now seeing a doubling down on ever more absurd positions. This can be seen in the spate of interventions over the last few days from advocates of ‘a better deal’ or of a ‘managed no deal’.

The fatuity of these ideas cannot be over-stated. Although they appear in different versions, they all circle around the same basic proposition, which is that the Irish backstop is unnecessary and that the £39 billion financial settlement should be reduced and/or made conditional upon completing a future trade deal. They also persistently assume that even with no deal there would be deals on, for example, aviation and customs arrangements – the gaping logical hole in which hardly needs to be spelt out – and of course invariably rest on the canard that ‘trading on WTO terms’ is fine, and the norm for how countries trade (for a comprehensive demolition of this persistent falsity, see Richard Barfield’s magisterial briefing).

Regarding the backstop, the proposals have been comprehensively dismantled by Dr Katy Hayward of Queen’s University Belfast, a leading expert on the Irish border. At their core is that hardy perennial of ‘technological solutions’ but this makes no sense. If those solutions exist, or come to exist, then even within the present Withdrawal Agreement they can obviate the use of the backstop. It is because they do not currently exist, and in case they never materialise, that the backstop exists.

Equally nonsensical is the argument in the ‘better deal’ proposal that there is no need for a backstop because “London, Dublin and Brussels have all ruled out a hard border in any circumstances”. The whole point is: what are the institutional arrangements to make sure this desire is realised once Britain has left the institutions that currently allow it? And even more absurd is the implicit claim being wheeled out by various ERG members that when Iain Duncan Smith and others met with Michel Barnier last October he somehow accepted that a backstop wasn’t needed.

As for the idea of withholding payment of the financial settlement as a condition for a future trade deal, this repeats the failure of Brexiters from the outset to understand the basic fact that it’s a payment to settle past obligations, not a booking fee for future benefits. It really is just going round and round in circles, imagining that, eventually, the circle will turn into a square. Related, and equally unrealistic, is that a managed no deal would see the EU agree to a transition period and/or continued unfettered membership of the single market. In brief, as Tim Durrant of the Institute for Government puts it, there is no such thing as a managed no deal.

Effectively all of these ideas are variants of the claim that there could be a deal (which isn’t a deal) allowing the UK to have the benefits of being an EU member (without being an EU member). It is almost invariably put forward by people who a couple of years ago were saying that a good, quick deal would be easily achieved and now - with no apparent shame - say that no deal will be that good, quick easy deal. It is, unequivocally, pure hokum and, unequivocally, will never and could never be put into practice.

Why bother with this nonsense?

All this is so ridiculous that it would not be worth discussing, but for three reasons. One is that it is still conceivable that the British government will end up trying to adopt such a policy – apparently, it is to be proposed by Penny Mordaunt, the International Development Secretary, in the coming days, and finds favour with Jeremy Hunt and Sajid Javid. In the febrile atmosphere of UK politics, it is just possible that this crazy idea will be attempted and if it is it will unquestionably lead to disaster. It is a one-way street to no deal, packaged up as a way of avoiding no deal. However, it is unlikely to happen given that Parliament would surely not endorse so reckless a policy.

But that brings us to the second reason for giving any attention to these ideas. Given that they are unlikely to be adopted then, whatever happens instead, they will be invoked for years as ‘proof’ that there was a perfectly viable way of doing Brexit if only it had not been betrayed. This will feed a potentially very dangerous ‘stab in the back’ myth.

And thirdly, if there were to be another referendum, and if by some act of supreme folly the ballot paper were to include, as some have suggested, a ‘no deal’ option, we would see all these lies and misunderstandings presented as if they were well-founded. That, allied with the fact that some polls show that many people interpret ‘no deal’ to mean ‘no change’ could lead to the catastrophe of a vote endorsing a no deal Brexit without knowing the truth of what it means.

So it really is vital to keep exposing these ludicrous fantasies to the ‘insect zapper’ of reality. It is a never ending task, because as each one crashes and burns it is resurrected in identical or slightly revised form. An excellent resource for doing so – and if only every MP were to read it – is the most recent of Sir Ivan Rogers’ devastating evaluations. Had he been listened to, rather than hounded from office, by Brexiters then it is conceivable that they might have fashioned a workable Brexit.

Indeed, it is a rich irony that the stubborn refusal of Brexiters to engage seriously with the realities of Brexit may just end up with its being reversed.