Now politics is moving fast - but in what direction?

In my previous post, I argued that economics is moving faster than the politics of Brexit. Further confirmation of that came this week when the car industry urged the government to provide clarity “within months” because investment decisions cannot be postponed much longer. Meanwhile, financial services have been saying the same thing but making the sharper point that from early 2018 the value of agreeing any transition period will “start to erode” as the relocation decisions will have already begun to be made. Although people talk of the danger of a ‘cliff edge’ in March 2019, in a sense there is a mini-cliff edge much earlier than that, perhaps in March 2018.

But we are no longer just in the terrain of making predictions about the effects of Brexit. An NIESR report this week shows that households are already an average £600 a year worse off and that this is “directly attributable” to the Brexit vote. We also now have food rotting unpicked in fields largely because of the difficulties of recruiting EU workers and, similarly, growing problems in nurse recruitment and in other sectors. Also this week the Bank of England identified Brexit as having a damaging effect on the economy leading, in part, to the raising of interest rates.

However no one could deny that politics is now also moving very fast. The trouble is that whereas the economics is going in one direction only it’s not clear where politics is going at all. On the specifics of Brexit there are occasional signs that, belatedly and at snail’s pace, the government are admitting some of the complexities of Brexit, for example with Liam Fox’s recognition that his previous assertion that the UK could just cut and paste EU trade deals after Brexit was incorrect. But for every such small step forward there are contradictory statements on such basic issues as whether no deal means no deal or a “bare bones” no deal (i.e. no trade deal but deals on discrete matters such as air travel); on whether or not there could be a trade deal with the EU completed (£) by March 2019 with an implementation period to follow; on whether and how talks might be speeded up, and on a raft of other things.

Overall, there is very little sign, publicly anyway, of the government taking heed of the detailed technical realities such as those spelt out again this week by Sir Ivan Rogers in his evidence to the Treasury Select Committee. Rogers, it will be recalled, was formerly the UK Ambassador to the EU until he was hounded out of office by the Brexit Ultras back in January. It’s possible that we may get some further clarity on Brexit if (and depending on to what extent) the government’s sectoral impact assessments get released. Forcing this has been perhaps the only effective thing as regards Brexit that Labour have done since the Referendum. It’s conceivable that if they are detailed and alarming then this will change the terms of debate considerably. It is notable that the extremely pro-Brexit Daily Express has this week begun to publish stories reporting, rather than ridiculing as ‘Project Fear’, the likely adverse consequences of Brexit. As the bad news piles up there’s just a sense that things are shifting, but not fast enough to make a difference yet.

Of course the big political story of the week concerns sexual harassment and the unfolding events around this seem likely to further destabilise an already highly precarious minority government. It is more than conceivable that we are not very far away from the government falling, both as a result of scandal but also because, in any case, it just isn’t going to be possible to keep fudging all of the detailed issues around Brexit. Once the fudge ceases, the Tory party will almost certainly implode and/or the support of the DUP that enables the Tories to govern will collapse.

If that happens, it will open up highly unpredictable possibilities which could give an opportunity for a government to do what should have been done by Theresa May right from the start. Namely, to provide some proper political leadership not just of Westminster but of the country as a whole. Such leadership would acknowledge and respect the divisions within the country, acknowledge the full complexities of Brexit, acknowledge the unavoidable trade-offs and constraints, and acknowledge in particular the yawning gap between what leave voters were promised and what is actually deliverable. Parroting about ‘the will of the people’ is no longer, if indeed it ever was, good enough. In short, there needs to be a comprehensive rejection of the politics of “easy answers” which was superbly dissected by David Allen Green in the FT this week.

It is almost certainly too late for May to provide this kind of leadership now. Even for a new government with a new Prime Minister it would need political skill of an extraordinary kind. Nor could it just be a matter of the Prime Minister: what is needed is leadership from across the political class but also a kind of multi-lateral rhetorical disarmament from all of those, on both sides and at all levels, who are passionately engaged in all this. That includes, on the one side, dropping all of the relentless nastiness about saboteurs, traitors and enemies of the people; and, on the other side, dropping the endless derogatory insults about thick, racist Brexshitters. In particular, it means almost all of us accepting that we won’t get everything we want, whatever the government does (including following its present course).

In such a climate we might then be able to seek some form of extension to the Article 50 period and to pursue what is probably the only politically and economically viable solution to the current mess which is single market membership via EEA/EFTA, and membership of the various other agencies such as Euratom which are precluded by the ECJ redline. The entire UK approach deriving from the Lancaster House speech would therefore have to be abandoned – not because it is going to fail but because it already has failed. We already know for certain that what was set out then and in the White Paper cannot be achieved within the time available, and almost certainly that it cannot be achieved within any time frame.

So another approach is needed. This would not, to say the least, be easy, either domestically or diplomatically. But nor is the present approach. Indeed, there is no easy course of action available. But if we don’t get to a situation something like I’ve just described within a very few months then it will be too late to avoid catastrophe. A side-effect of the current scandals afflicting the government might – just – be to take politics quickly enough to the point where it is possible.



Update (5/11/17): Consistent with the argument in this post, the President of the CBI is today reported as suggesting that a transition deal needs to be agreed by March 2018, and that the government should drop its existing ‘red lines’ over the form that a deal should take.
 
 
 
 
 
 

The end of the beginning of Brexit

The holiday season has meant that there have been few substantive developments, but the successors of the Leave campaign have made some high profile interventions in favour of hard Brexit. First, the Leave means Leave group have written to the Chambers of Commerce in all the other EU states asking them to put pressure on their governments for a tariff-free trade agreement for the UK. The initiative is really just a reprise of the familiar refrain that ‘German car manufacturers’ will ensure that the UK gets a good deal, and it suffers from the same difficulties. First, trade policy is not determined by business interests. If it was, there would be no question of the UK leaving the EU! Second, many EU businesses see great gains to be made at the UK’s expense if it gets a bad exit deal. And, yet again, the focus is on tariffs rather than the non-tariff barriers to trade the erosion of which are the main characteristic of the single market. It will be interesting to see what replies they get.

Hard Brexit was also promoted by Lord King, the former Governor of the Bank of England, as bringing “real benefits” but beyond the usual talk of the opportunities of doing new trade deals there was no detail of what these were, and he conceded that no one should think it was going to be “a bed of roses”. Although it was greeted with delight by Brexiters, it seemed to me a fairly cautious, even downbeat, assessment. Detail was provided by another hard Brexit pressure group, Change Britain, which estimated savings of £450M a week as a result. But as usual it was predicated on dodgy assumptions and bogus statistics, with Jonathan Portes of the National Institute of Economic and Social Research (NIESR) denouncing it as “junk” not least because it confused government revenues with exports. And, yet again, it was predicated upon airy expectations of future trade deals with third parties the terms and timescale of which are unknown.

What was really alarming about this was that Portes – a heavyweight figure, formerly the Chief Economist at the Cabinet Office – was then denounced by Michael Gove of Change Britain as a remainer who should have learned some “humility”. In fact, Portes never publicly endorsed either side of the Brexit campaign, leading Gove to challenge him to declare how he had voted. This seems truly monstrous: are we now required to reveal our vote (to leave) in order to be regarded as a legitimate voice in the debate about what to do now?

This mind set is reflected in another alarming development. The leader of the First Division Association (FDA) – in effect the trade union of senior civil servants – has said that politicians, including the Prime Minister, lack the political courage to acknowledge the complexities of Brexit. As a consequence, whenever civil servants raise these complexities they are attacked as seeking to subvert ‘the will of the people’. There are real dangers in all this, both in terms of effective policy-making and also in terms of an incipient totalitarianism in political culture.

One aspect of this is the growing narrative amongst Brexiters that we all somehow have a patriotic duty the ‘get behind’ Brexit. Thus Tory MP Charlie Elphicke responded to the Change Britain report by saying that “now everyone, Remainer or Leaver, has a duty to get on with the job of delivering a brighter future for our land”. Many similar views have been expressed across internet discussion forums. It is nonsense, for the reasons I set out in a previous post (‘Why remainers shouldn’t move on’) and most fundamentally because there is nothing patriotic about getting behind (whatever that really means) a course of action that will be catastrophic for our country.

This bogus patriotism should be completely rejected, as should the emerging Brexiter meme that all would be well if the EU were not refusing to give us a good deal – by which they mean full membership of the single market without free movement of people, budget contributions or EJ jurisdiction. But such a deal was never in prospect and nor is there any reason whatsoever why it should be on offer. That was abundantly clear before the Referendum, but Brexiters refused to accept it. So for them now to try to whip up ‘patriotic’ fervour about it is ridiculous: what it reveals is the mixture of lies and unrealism of their campaign.

On a perhaps lighter note – or is it? – take a look at this mashup video on Brexit ('Brexit means Brexit and we’re making a mess of it’) by Cassetteboy. Next year, we’re going to begin to see the full extent of the mess. It will see (presumably) the triggering of Article 50 and the revelation of whether the UK is seeking hard or soft Brexit. If, as seems increasingly likely, the former it will very likely mean a catastrophic further fall in the value of sterling and significant disinvestment in the UK. It won’t be the beginning of the end of the Brexit process, but it will be the end of the beginning, as the Phoney War of the hiatus between the referendum and A50 finishes.