It’s probably fair to say that Owen Paterson was not a household name until the events that led to his resignation last week. However, he played a significant role in the Brexit saga, albeit of a particular sort. During the 2016 Referendum he had neither the high campaigning profile of, say, Boris Johnson or Michael Gove nor quite the media profile of Brexiter backbenchers like John Redwood or Jacob Rees-Mogg. Instead, he was a central figure in the complex networks of pressure groups and thinktanks that both prepared the ground for the referendum and which thereafter proselytised for hard Brexit.
Thus as well as being on the steering group of the ERG, with Redwood he was one of the founder members in 2015 of Conservatives for Britain. This group prepared the ground for Tory MPs who were dissatisfied with whatever David Cameron achieved in the pre-Referendum ‘re-negotiation’ with the EU to campaign to leave when the Referendum came. He went on to become one of the three MPs who founded the Vote Leave campaign.
He brought to the campaign the authority and respectability of someone who had held cabinet roles in two key areas affected by Brexit. Between 2010 and 2012 he had been Northern Ireland Secretary and between 2012 and 2014 the Secretary of State for DEFRA. During the same period, he acquired, in 2013, a holiday home in the Drôme, France – like some other leading Brexiters, his Euroscepticism did not extend to disdain for the ease with which such purchases were possible as a result of EU membership.
UK 2020
Once outside the cabinet, in 2014 Paterson founded and was chairman of the thinktank UK 2020, one of numerous pro-Brexit, libertarian and climate change sceptic groups that at one time or another have been housed at 55 Tufton Street (as was the Vote Leave campaign in its early days). Indeed Paterson had a range of connections with this nexus of groups, both in the UK and the US.
Because this thinktank was a private company, he was not required to reveal the identities of the donors funding it. In turn, this meant that when it provided Paterson with thousands of pounds of funding for various overseas trips, he was only obliged to name the UK 2020 itself as the source of the money, rather than its funders. However, an investigation by the Guardian in 2019 identified two of them, one of which was Randox which is also one of the firms for which Paterson’s lobbying led to his being found in breach of parliamentary rules. Paterson closed UK 2020 in October 2019.
Meanwhile, Paterson served on the political advisory board of the Leave means Leave campaign, also resident at 55 Tufton Street, dedicated to ‘clean Brexit’ (aka the hardest, and possibly no deal, form of Brexit). It was dissolved at the end of January 2020 when Britain left the EU. He then became (and appears still to be) the Chairman of the Centre for Brexit Policy, yet another pro-Brexit thinktank, which was founded in March 2020.
Replacing the Withdrawal Agreement
Amongst this Centre’s publications the most remarkable, because of what it portends, is that of July 2020 entitled Replacing the Withdrawal Agreement. As its title suggests, it proposes that the entire Withdrawal Agreement, including the Northern Ireland Protocol (NIP), is flawed because it is not “sovereignty compliant”. Many of the ideas go back to the longstanding claim of the Brexit Ultras that the entire issue of the Northern Ireland border is false or exaggerated, and easily soluble with technology. Paterson himself, invoking his authority as a former Northern Ireland Secretary, had made almost identical arguments in 2018.
As I discussed in detail when it was published, these ideas are very deep-rooted amongst the Brexit Ultras, and I warned at the time that although what it proposed was “extraordinary”, the history of the Brexit process shows how such fringe ideas quite quickly become government policy. Indeed, within months of the Centre’s report, the government was proposing to renege on parts of the NIP, as part of the Internal Market Bill. Now, a year later, the government’s position on the NIP is effectively identical with that of the report, including the now ubiquitous Brexiter claim that it was negotiated and signed because the government was in a weak position and held hostage by ‘the remainer parliament’.
I would suggest that if, as seems quite likely now, the government triggers Article 16 and effectively torpedoes the NIP then it will not be long before it moves on to wanting to scrap the entire Withdrawal Agreement. Indeed it is very easy to imagine that if, as is possible, the EU suspends or terminates the Trade and Cooperation Agreement, on the basis that it was only agreed because there had been a Withdrawal Agreement including the NIP, then the government will say that it only agreed the financial settlement in the Withdrawal Agreement in anticipation of a trade deal. In other words, it is by no means improbable that the entirety of the July 2020 Centre for Brexit Policy report will become government policy.
“Only a madman would actually leave the market”
Whether or not all of this happens, Paterson has already made a major contribution in pushing what was once Euroscepticism to the full-throated Jacobinism of the Brexit Ultras. Nowhere is that journey more obvious than in the quote with which he will always be most associated. In 2015, when asked about the impact of Brexit, were it to happen, on trade with the EU he assured the public that “only a madman would actually leave the market” (1.26 minutes in to clip). The only reasonable interpretation that could be put on that was that after Brexit the UK would remain a member of the single market. Yet, after the referendum, he, like many other Brexiters, insisted that only the hard Brexit of leaving the single market would be true Brexit.
Subsequently, in 2019, Paterson claimed that he had been misunderstood, and that what he meant was that the UK would go on trading with the EU – that is, trading ‘with’ the market rather than as a ‘member’ of it. It is very hard to give credence to that, since what could ‘not leaving’ mean other than ‘staying in’ the market? Moreover, the full quote goes on to refer to “the members of the market”.
The most charitable explanation – and it requires a lot of charity - is that he, like many other Brexiters, genuinely didn’t understand the difference between single market membership and a free trade agreement or just ‘market access’. But even if that is really so, it is utterly reprehensible that someone involved so deeply and for so many years in campaigning to leave the EU should be confused about so basic a fact. There can be little doubt that as a result of claims such as Paterson’s many voters may, with far more justification, have taken Brexit to mean leaving the EU but remaining in the single market.
Paterson’s legacy
Paterson’s career as an MP has now ended in disgrace, although he may well continue to play his part in the ‘Brexitosphere’ of thinktanks and pressure groups in which he has had so prominent a role. In that role he was central to the development of the ever-hardening demands of the Brexit Ultras. I can’t help thinking that history will judge him even more harshly for that than for the lobbying that led to his downfall.
Showing posts with label Owen Paterson. Show all posts
Showing posts with label Owen Paterson. Show all posts
Sunday, 7 November 2021
Friday, 17 July 2020
Brexit gets more real, Brexiters get more unrealistic
This week, the practical realities of what Brexit is going to mean came into central focus for perhaps the first time, with a new government information campaign. Although there have been earlier exercises in ‘no deal’ preparation – when that meant no Withdrawal Agreement – now the public are being told what ending the transition period that followed the Withdrawal Agreement (WA) will mean.
The Border Operating Model
Much of this will apply whether that period ends with a trade deal or not (i.e. ‘no deal 2.0’). Given that, one might ask why it is only now, with less than six months to go, that these preparations are being communicated and in some cases being developed. For example, the £705 million border investment just announced was going to be needed anyway, as was the huge lorry park in Kent for which land has only just been purchased (it will be one of over ten similar sites). Moreover, despite Boris Johnson’s bluster and lies, it has been known for months that new processes, which were announced this week with the Border Operating Model, were going to be needed not just for UK-EU trade but for goods moving from Great Britain to Northern Ireland yet the facilities for this are only now beginning to be developed.
After all, it has been UK policy to leave both the customs union and the single market since January 2017. To have left matters so late is not just incompetence but, very likely, reflects the refusal to understand or accept that the result of that policy was necessarily going to entail increased border friction. That is politically significant because, recalling the circumstances of 2017-2019, it is at least conceivable that had the government admitted this, rather than pretending that a “frictionless” trade deal was possible, the closely-fought battle over a second referendum would have gone the other way.
Not only is it very late in the day, with significant doubts as to whether either the government IT systems or businesses will be ready in time, but also the new Border Operating Model is still very far from providing all the information that businesses will need in order to comply. For small trading businesses, in particular, this is an impossible situation in itself. Worse, as the full complexity and costs (£) become known some, at least, will simply cease to be viable, especially coming during the ongoing pandemic crisis. For those, large and small, that do continue these new costs will have to be absorbed in some way or passed on to customers.
The cost of customs
These costs – just as regards customs declarations, before any other costs are considered – will amount to £7 billion a year (£) to UK businesses trading with the EU, rising to £13 billion (£) when EU businesses trading with the UK are included. It’s worth reflecting on these figures. They compare to the approximately £9 billion net contribution the UK made to the EU in 2018. It’s not a one-off, but a recurring annual cost. And, to repeat, it exists whether or not there is a trade deal – it is nothing to do with any tariffs that may be levied or any other trade barriers that may arise.
The slogan for the information campaign is ‘Let’s Get Going’, which some businesses might reasonably take as a suggestion to relocate abroad while there’s still time. Individuals might take it as cue to go on holiday but if so they, too, need to be quick as they are now having it spelled out in more detail what Brexit will mean for them when they travel to the EU in terms of new border controls, health insurance, and pet passports.
For those who have been paying attention, none of this will be a shock – although seeing the practical details of what it means may still be a surprise. For others, it may be puzzling. For they were told before the Referendum and ever since that such Brexit effects were just Project Fear, then that Brexit had been done on 31 January with no obvious changes, and throughout that a deal would be negotiated which – although the ‘exact same terms’ lie has been long ago dropped – by implication would mean things pretty much carrying on as normal.
In fact, many of the things that remainers have long warned about are set to happen. Perhaps this is why the government resolutely refuse to describe them as being about Brexit (£) but, instead, as “the UK’s new start”, a new start which is said to bring ‘exciting opportunities’. What these are has not been specified and there is a reason for that, too: there are no exciting opportunities. It’s simply a self-inflicted change for the worse. A new start, perhaps, but the start of new barriers to trade and travel, new costs, new regulations and new bureaucracy resulting from leaving both the single market and the customs union. To coin a phrase, “only a madman would actually leave the market”. Britain is that madman.
What new madness is this?
The speaker of those words was, of course, Owen Paterson MP (whose explanation of the ‘madman’ comment is here; apparently ‘leaving the market’ and ‘leaving the single market’ are different things, so now you know) who has cropped up again this week, being listed as one of the contributing authors of a new report by the Centre for Brexit Policy (of which he is also the Chairman). Entitled ‘Replacing the Withdrawal Agreement’, this is being widely publicized, with coverage in the Daily Telegraph (£) and of course The Express, and a write-up by the Centre’s Director-General, John Longworth, on the Politico website. So it has the look of a concerted campaign.
The report itself, as its title suggests, propounds the extraordinary idea that the government should unilaterally create a new ‘Sovereignty Compliant Agreement’ to replace the WA and present it to the EU. If they do not agree, the UK would no longer regard itself as being bound by the WA. The report lists many ways in which the WA is not ‘sovereignty compliant’, including the Northern Ireland Protocol, and within that the role of the ECJ, as well as the ECJ’s role with respect to Citizens’ Rights and other matters, and the size – and by implication even the existence - of the financial settlement. Contained within all this seems to be a bemusement that the terms of the WA hold whether or not there is a trade deal. The authors – and David Davis in a tweet endorsing them – seem to imagine that the withdrawal terms were contingent on the trade deal, reprising the ‘row of the summer’ of 2017 that Davis famously threatened and then lost (or didn’t fight) which has rankled with the Ultras ever since.
It’s important to be clear – and the report is – that this isn’t about questioning this or that detail within the WA, it is that “the entire WA and Protocol are incompatible with UK sovereignty” (p.7). They want to revisit every single part of the Article 50 negotiations. But those negotiations are over. Unsurprisingly, a European Commission spokesperson immediately ruled out a renegotiation. The Longworth article gives full rein to the sentiments underlying this proposal: they are that the entire WA is a “poison pill” deriving from May’s lack of belief in Brexit, and the way her “government worked hand-in-glove with Remain elements of the British establishment and in cahoots with Brussels and foreign powers”. So Britain remains in “Teutonic chains” paying “reparations” and faces (yawn) a “Dunkirk” moment. It is a spectacularly vicious piece of writing.
Re-writing history
There are some very obvious problems with this proposal – even leaving aside the legal issues involved in breaking the WA - which involves a substantial re-writing of history. The UK signed the WA less than six months ago, as an international treaty. It was signed by Boris Johnson, following his much-trumpeted re-negotiation, and was put to the electorate as the ‘oven ready deal’ which was the centre piece of his re-election. At that election, the Brexit Party initially threatened to run a candidate in every seat if Johnson didn’t scrap the WA but then withdrew that demand and did not field candidates in Tory-held seats. John Longworth, then a Brexit Party MEP (he was later expelled from it), welcomed this change of strategy (£) on the grounds that “the Government’s exit agreement is Brexit and, whilst it has drawbacks, could result in a good deal”. No talk of a “poison pill” then. The Brexit Party itself garnered 2% of the vote and did not win any seats.
Thereafter, the WA Act was passed by a large majority in the House of Commons with support from ERG MPs, including Paterson. Did they not want the British Parliament to make its own decisions? It may be that some MPs did not read or understand it: if so, tough. They should have done their job properly. It may be that they believed it was all up for re-negotiation in the future: if so, tough. They were wrong. As for Longworth, as a, by then, Conservative MEP he also voted (in the European Parliament) for the WA and at the time said that as a result we will leave the EU and “become once again an independent, sovereign nation”. Now he says it was drawn up by “fools or knaves” and is incompatible with being “a truly sovereign nation”.
The proposition that Johnson had no time to re-negotiate properly is nonsense both because the time frames were of his choice and because he himself declared it to be “a great new deal” and the Conservative Party manifesto for the 2019 election also described it as such. The Conservative Party website explicitly said that those who criticized it (in context, this presumably meant Farage) were wrong and that the deal did indeed “take back control”. And even – to be far more charitable than is warranted – if none of that were true, it’s simply absurd to think that any country can conduct itself in such a manner as to rip up major international agreements within months of signing them because it hadn’t created an adequate process to consider the commitments it was making.
The Ultras have never accepted the WA
The roots of this latest outburst from the Brexit Ultras go deep, as regular readers of this blog will know. Immediately after the 2019 election I wrote:
“I suspect that many in the ERG will now be thinking that Johnson’s deal was only the bastard offspring of May’s ill-fated premiership and the ‘remainer parliament’, and feel no allegiance to it. They kept quiet during the election campaign, which required them to pledge support for Johnson’s deal, but that won’t necessarily last. For one thing, many of them are rebels by temperament, with a track record going back in some cases to John Major’s premiership, and ruthlessly indifferent to party loyalty or discipline …. With all that said, in the aftermath of his fresh election victory and on a scale that was so unexpected, it is far more likely that the ERG will keep their powder dry. But all that means is that even as Brexit ‘gets done’ they will hold on to the belief that the WA meant that ‘this was not really Brexit’ and will be watching keenly – in both senses of the word – for further ‘betrayals’.”
That suspicion has now proved correct – though how much overt support the current campaign against the WA will have amongst Tory MPs remains to be seen. It might be tempting to dismiss the CBP Report as the work of a fringe minority group of cranks. But that would be a very serious mistake. Over and over again, this group or one of its other incarnations has quickly seen its initially outlandish positions become mainstream, aided by the way that, as new research shows (figure 2), MPs affiliated with groups like the ERG and Leave means Leave (co-founded by John Longworth) get disproportionate media attention. The concerted way in which they are pushing this new message leads me to think it could rapidly gain traction.
Indeed, as I suggested in a more recent post, there have already been ominous signs that the government – and, implicitly, Dominic Cummings – regard the WA as ‘defective’, with the potential to lead Britain down the path to international pariahdom. I thought then, and still think, that even this government would not renege on an international treaty at least unless no trade deal is reached in which case the pressure to do so will intensify perhaps to irresistibility. The proposition in the CBP report, of course, is that whether or not there is a deal the WA should be ditched.
It is, frankly, an insane idea – politically, legally and diplomatically - but it grows from the long-evident way that the Ultras are never satisfied with Brexit, however hard and in whatever form. This is partly because the ideas they have of what is possible are total fantasy, and so as soon as they encounter reality, as they did in the Article 50 negotiations, they are doomed to be ‘betrayed’. But the deeper issue is that there is, actually, a desire to be betrayed, a desire always to be campaigning for something even more extreme, always to be insisting that Brexit is being denied them. In the most recent example, as in the past, this extends to denouncing as betrayal even things that they themselves have supported or voted for in the past. It is a pathology which has totally deformed British politics so that, now, at the moment of their victory, they are still complaining, still unhappy, still spitting out vitriol, still blaming remainers.
The prospect of endless Brexit battles
Clearly, there are significant and dangerous connections between these demands to scrap the WA and what is emerging about the effects of Brexit. For as these effects unfold the Ultras will never admit that all (or anything) that they were warned of was true. Instead, they will insist that the effects are the consequence of Brexit not having been done properly. In this way, they keep their dream and their pathological victimhood intact, whilst blaming remainers for the effects of the policy they themselves advocated. It is a form of politics that is deeply immature but, worse, totally destructive, endlessly revisiting the same battlefields until there is nothing left but dirt and ashes.
Its consequence is likely to be that even as we all suffer the many adverse consequences of the Brexit they forced on us with lies and fantasies we do not even get the consolation prize of an end to their complaints, their taunts, and their vicious slurs. Any kind of hope – as proposed in my recent post – of initiating a new post-Brexit conversation with and about Europe is dashed as a result. Any idea of healing domestic divisions is destroyed, because these Ultras do not want to heal divisions: they thrive upon them. So we get Brexit and we also get endless screeches of Brexit betrayed. They now call the WA a “poison pill” but it is their own poison, one which has now infected the entire body politic.
There’s still the slimmest of chances of an antidote – but unfortunately it rests almost entirely with Boris Johnson, though others may have some influence. Perhaps it could be possible to finally say to these Ultra Brexiters than enough is enough. It is simply insane for a country to keep putting itself through – or being put through – this torture. We’ve had years of it, and the Brexiters have got their Brexit. Every possible thing to accommodate them has been done. We can’t just go on and on revisiting it, lurching endlessly from one crisis to another in order to satisfy the whims of a tiny minority of politicians and commentators. We can’t poison every domestic and international well with their needs, their priorities, their insatiable obsessions.
In his article, John Longworth writes that “the battle to leave the EU is coming to an end. The battle for Britain is just beginning”, and invites Johnson to be (of course) a Churchill not a Halifax. But Britain is being destroyed by this endless desire of the Brexit Ultras to engage in battles. If we really must use these constant war analogies, with Brexit having happened, what we need from Johnson is an Attlee-like rebuilding of a battered, broken, and nearly broke country. It’s unlikely it is in his range, but if he can’t find it, and won’t go, then I fear that Longworth and his ilk will drag us all yet again into a pointless, debilitating, destructive conflict.
If so, there will be no victors, just as there have been none from Brexit. For the most remarkable and the most tragic thing about Brexit is how rare it now is to hear anyone – and certainly the Brexit Ultras - speak of it as something that gives them any pleasure.
The Border Operating Model
Much of this will apply whether that period ends with a trade deal or not (i.e. ‘no deal 2.0’). Given that, one might ask why it is only now, with less than six months to go, that these preparations are being communicated and in some cases being developed. For example, the £705 million border investment just announced was going to be needed anyway, as was the huge lorry park in Kent for which land has only just been purchased (it will be one of over ten similar sites). Moreover, despite Boris Johnson’s bluster and lies, it has been known for months that new processes, which were announced this week with the Border Operating Model, were going to be needed not just for UK-EU trade but for goods moving from Great Britain to Northern Ireland yet the facilities for this are only now beginning to be developed.
After all, it has been UK policy to leave both the customs union and the single market since January 2017. To have left matters so late is not just incompetence but, very likely, reflects the refusal to understand or accept that the result of that policy was necessarily going to entail increased border friction. That is politically significant because, recalling the circumstances of 2017-2019, it is at least conceivable that had the government admitted this, rather than pretending that a “frictionless” trade deal was possible, the closely-fought battle over a second referendum would have gone the other way.
Not only is it very late in the day, with significant doubts as to whether either the government IT systems or businesses will be ready in time, but also the new Border Operating Model is still very far from providing all the information that businesses will need in order to comply. For small trading businesses, in particular, this is an impossible situation in itself. Worse, as the full complexity and costs (£) become known some, at least, will simply cease to be viable, especially coming during the ongoing pandemic crisis. For those, large and small, that do continue these new costs will have to be absorbed in some way or passed on to customers.
The cost of customs
These costs – just as regards customs declarations, before any other costs are considered – will amount to £7 billion a year (£) to UK businesses trading with the EU, rising to £13 billion (£) when EU businesses trading with the UK are included. It’s worth reflecting on these figures. They compare to the approximately £9 billion net contribution the UK made to the EU in 2018. It’s not a one-off, but a recurring annual cost. And, to repeat, it exists whether or not there is a trade deal – it is nothing to do with any tariffs that may be levied or any other trade barriers that may arise.
The slogan for the information campaign is ‘Let’s Get Going’, which some businesses might reasonably take as a suggestion to relocate abroad while there’s still time. Individuals might take it as cue to go on holiday but if so they, too, need to be quick as they are now having it spelled out in more detail what Brexit will mean for them when they travel to the EU in terms of new border controls, health insurance, and pet passports.
For those who have been paying attention, none of this will be a shock – although seeing the practical details of what it means may still be a surprise. For others, it may be puzzling. For they were told before the Referendum and ever since that such Brexit effects were just Project Fear, then that Brexit had been done on 31 January with no obvious changes, and throughout that a deal would be negotiated which – although the ‘exact same terms’ lie has been long ago dropped – by implication would mean things pretty much carrying on as normal.
In fact, many of the things that remainers have long warned about are set to happen. Perhaps this is why the government resolutely refuse to describe them as being about Brexit (£) but, instead, as “the UK’s new start”, a new start which is said to bring ‘exciting opportunities’. What these are has not been specified and there is a reason for that, too: there are no exciting opportunities. It’s simply a self-inflicted change for the worse. A new start, perhaps, but the start of new barriers to trade and travel, new costs, new regulations and new bureaucracy resulting from leaving both the single market and the customs union. To coin a phrase, “only a madman would actually leave the market”. Britain is that madman.
What new madness is this?
The speaker of those words was, of course, Owen Paterson MP (whose explanation of the ‘madman’ comment is here; apparently ‘leaving the market’ and ‘leaving the single market’ are different things, so now you know) who has cropped up again this week, being listed as one of the contributing authors of a new report by the Centre for Brexit Policy (of which he is also the Chairman). Entitled ‘Replacing the Withdrawal Agreement’, this is being widely publicized, with coverage in the Daily Telegraph (£) and of course The Express, and a write-up by the Centre’s Director-General, John Longworth, on the Politico website. So it has the look of a concerted campaign.
The report itself, as its title suggests, propounds the extraordinary idea that the government should unilaterally create a new ‘Sovereignty Compliant Agreement’ to replace the WA and present it to the EU. If they do not agree, the UK would no longer regard itself as being bound by the WA. The report lists many ways in which the WA is not ‘sovereignty compliant’, including the Northern Ireland Protocol, and within that the role of the ECJ, as well as the ECJ’s role with respect to Citizens’ Rights and other matters, and the size – and by implication even the existence - of the financial settlement. Contained within all this seems to be a bemusement that the terms of the WA hold whether or not there is a trade deal. The authors – and David Davis in a tweet endorsing them – seem to imagine that the withdrawal terms were contingent on the trade deal, reprising the ‘row of the summer’ of 2017 that Davis famously threatened and then lost (or didn’t fight) which has rankled with the Ultras ever since.
It’s important to be clear – and the report is – that this isn’t about questioning this or that detail within the WA, it is that “the entire WA and Protocol are incompatible with UK sovereignty” (p.7). They want to revisit every single part of the Article 50 negotiations. But those negotiations are over. Unsurprisingly, a European Commission spokesperson immediately ruled out a renegotiation. The Longworth article gives full rein to the sentiments underlying this proposal: they are that the entire WA is a “poison pill” deriving from May’s lack of belief in Brexit, and the way her “government worked hand-in-glove with Remain elements of the British establishment and in cahoots with Brussels and foreign powers”. So Britain remains in “Teutonic chains” paying “reparations” and faces (yawn) a “Dunkirk” moment. It is a spectacularly vicious piece of writing.
Re-writing history
There are some very obvious problems with this proposal – even leaving aside the legal issues involved in breaking the WA - which involves a substantial re-writing of history. The UK signed the WA less than six months ago, as an international treaty. It was signed by Boris Johnson, following his much-trumpeted re-negotiation, and was put to the electorate as the ‘oven ready deal’ which was the centre piece of his re-election. At that election, the Brexit Party initially threatened to run a candidate in every seat if Johnson didn’t scrap the WA but then withdrew that demand and did not field candidates in Tory-held seats. John Longworth, then a Brexit Party MEP (he was later expelled from it), welcomed this change of strategy (£) on the grounds that “the Government’s exit agreement is Brexit and, whilst it has drawbacks, could result in a good deal”. No talk of a “poison pill” then. The Brexit Party itself garnered 2% of the vote and did not win any seats.
Thereafter, the WA Act was passed by a large majority in the House of Commons with support from ERG MPs, including Paterson. Did they not want the British Parliament to make its own decisions? It may be that some MPs did not read or understand it: if so, tough. They should have done their job properly. It may be that they believed it was all up for re-negotiation in the future: if so, tough. They were wrong. As for Longworth, as a, by then, Conservative MEP he also voted (in the European Parliament) for the WA and at the time said that as a result we will leave the EU and “become once again an independent, sovereign nation”. Now he says it was drawn up by “fools or knaves” and is incompatible with being “a truly sovereign nation”.
The proposition that Johnson had no time to re-negotiate properly is nonsense both because the time frames were of his choice and because he himself declared it to be “a great new deal” and the Conservative Party manifesto for the 2019 election also described it as such. The Conservative Party website explicitly said that those who criticized it (in context, this presumably meant Farage) were wrong and that the deal did indeed “take back control”. And even – to be far more charitable than is warranted – if none of that were true, it’s simply absurd to think that any country can conduct itself in such a manner as to rip up major international agreements within months of signing them because it hadn’t created an adequate process to consider the commitments it was making.
The Ultras have never accepted the WA
The roots of this latest outburst from the Brexit Ultras go deep, as regular readers of this blog will know. Immediately after the 2019 election I wrote:
“I suspect that many in the ERG will now be thinking that Johnson’s deal was only the bastard offspring of May’s ill-fated premiership and the ‘remainer parliament’, and feel no allegiance to it. They kept quiet during the election campaign, which required them to pledge support for Johnson’s deal, but that won’t necessarily last. For one thing, many of them are rebels by temperament, with a track record going back in some cases to John Major’s premiership, and ruthlessly indifferent to party loyalty or discipline …. With all that said, in the aftermath of his fresh election victory and on a scale that was so unexpected, it is far more likely that the ERG will keep their powder dry. But all that means is that even as Brexit ‘gets done’ they will hold on to the belief that the WA meant that ‘this was not really Brexit’ and will be watching keenly – in both senses of the word – for further ‘betrayals’.”
That suspicion has now proved correct – though how much overt support the current campaign against the WA will have amongst Tory MPs remains to be seen. It might be tempting to dismiss the CBP Report as the work of a fringe minority group of cranks. But that would be a very serious mistake. Over and over again, this group or one of its other incarnations has quickly seen its initially outlandish positions become mainstream, aided by the way that, as new research shows (figure 2), MPs affiliated with groups like the ERG and Leave means Leave (co-founded by John Longworth) get disproportionate media attention. The concerted way in which they are pushing this new message leads me to think it could rapidly gain traction.
Indeed, as I suggested in a more recent post, there have already been ominous signs that the government – and, implicitly, Dominic Cummings – regard the WA as ‘defective’, with the potential to lead Britain down the path to international pariahdom. I thought then, and still think, that even this government would not renege on an international treaty at least unless no trade deal is reached in which case the pressure to do so will intensify perhaps to irresistibility. The proposition in the CBP report, of course, is that whether or not there is a deal the WA should be ditched.
It is, frankly, an insane idea – politically, legally and diplomatically - but it grows from the long-evident way that the Ultras are never satisfied with Brexit, however hard and in whatever form. This is partly because the ideas they have of what is possible are total fantasy, and so as soon as they encounter reality, as they did in the Article 50 negotiations, they are doomed to be ‘betrayed’. But the deeper issue is that there is, actually, a desire to be betrayed, a desire always to be campaigning for something even more extreme, always to be insisting that Brexit is being denied them. In the most recent example, as in the past, this extends to denouncing as betrayal even things that they themselves have supported or voted for in the past. It is a pathology which has totally deformed British politics so that, now, at the moment of their victory, they are still complaining, still unhappy, still spitting out vitriol, still blaming remainers.
The prospect of endless Brexit battles
Clearly, there are significant and dangerous connections between these demands to scrap the WA and what is emerging about the effects of Brexit. For as these effects unfold the Ultras will never admit that all (or anything) that they were warned of was true. Instead, they will insist that the effects are the consequence of Brexit not having been done properly. In this way, they keep their dream and their pathological victimhood intact, whilst blaming remainers for the effects of the policy they themselves advocated. It is a form of politics that is deeply immature but, worse, totally destructive, endlessly revisiting the same battlefields until there is nothing left but dirt and ashes.
Its consequence is likely to be that even as we all suffer the many adverse consequences of the Brexit they forced on us with lies and fantasies we do not even get the consolation prize of an end to their complaints, their taunts, and their vicious slurs. Any kind of hope – as proposed in my recent post – of initiating a new post-Brexit conversation with and about Europe is dashed as a result. Any idea of healing domestic divisions is destroyed, because these Ultras do not want to heal divisions: they thrive upon them. So we get Brexit and we also get endless screeches of Brexit betrayed. They now call the WA a “poison pill” but it is their own poison, one which has now infected the entire body politic.
There’s still the slimmest of chances of an antidote – but unfortunately it rests almost entirely with Boris Johnson, though others may have some influence. Perhaps it could be possible to finally say to these Ultra Brexiters than enough is enough. It is simply insane for a country to keep putting itself through – or being put through – this torture. We’ve had years of it, and the Brexiters have got their Brexit. Every possible thing to accommodate them has been done. We can’t just go on and on revisiting it, lurching endlessly from one crisis to another in order to satisfy the whims of a tiny minority of politicians and commentators. We can’t poison every domestic and international well with their needs, their priorities, their insatiable obsessions.
In his article, John Longworth writes that “the battle to leave the EU is coming to an end. The battle for Britain is just beginning”, and invites Johnson to be (of course) a Churchill not a Halifax. But Britain is being destroyed by this endless desire of the Brexit Ultras to engage in battles. If we really must use these constant war analogies, with Brexit having happened, what we need from Johnson is an Attlee-like rebuilding of a battered, broken, and nearly broke country. It’s unlikely it is in his range, but if he can’t find it, and won’t go, then I fear that Longworth and his ilk will drag us all yet again into a pointless, debilitating, destructive conflict.
If so, there will be no victors, just as there have been none from Brexit. For the most remarkable and the most tragic thing about Brexit is how rare it now is to hear anyone – and certainly the Brexit Ultras - speak of it as something that gives them any pleasure.
Friday, 17 January 2020
As costs mount, Brexit goes round the same old circles
A report from Bloomberg Economics this week estimates the cost of Brexit since the Referendum result to be £130 billion, with a further £70 billion predicted by the scheduled end of the transition period. £200 billion is a colossal sum and in any other political context you’d expect it receive far more attention than it has. Of course it is only one estimate, but it comes from a credible source (and it is consistent with others) and, again of course, it is a cost compared with what would have happened and, in that sense, one which does not present a bill to be paid nor something directly felt in people’s pockets. Still, it does make the raging debates over who should pay for the cost of the Sussex’s security seem rather trivial.
Perhaps there’s a sense, now, that we all know Brexit is going to be hugely expensive and so it’s not worth discussing it anymore. Not that committed Brexiters necessarily accept this. Just as the predictions of economic costs were dismissed on the grounds that ‘you can’t predict what is going to happen in the future, anything might happen’, so, now the costs are racking up, they are dismissed on the grounds that ‘you can’t know what caused past events to occur, they might have occurred anyway’.
It is a hermetically sealed logic that cannot be reasoned with. And even to try provokes the second, though contradictory, line of defence, where we are invited to believe that Brexit was chosen as the result of an earnest political science seminar about theories of sovereignty, and was nothing to do with economics at all (this, presumably, is why the slogan chosen for the bus was a claim about … the supposed economic benefits of Brexit).
As for what the economic costs of Brexit will eventually end up being, that will to some degree depend on what kind of trade deal gets done and here confusion continues to reign. The EU have produced two detailed briefing packs (here and here) which, so far as I know, have no counterpart on the UK side, at least in the public domain. There is a sense that we are heading towards a re-run of what was symbolised by the famous picture of the opening of the withdrawal talks, where the EU side sat with bulging files whilst the UK relied upon David Davis’s vacuous grin.
The recurrent dynamics of Brexit
If so, there are good reasons for that and they go back to the three unchanged underlying dynamics of Brexit which I outlined after the election result. In brief, these are lack of realistic definition of what Brexit means or how to do it; the insatiable demands of the Brexit Ultras; and the general political imperative of all governments to avoid economic and social breakdown. These are contextualised by a fourth factor, namely (largely self-inflicted) time pressure.
As regards the first of these, the UK government is still to a degree in thrall to the Brexiter fantasies of a quick and easy deal in which the complexities and trade-offs are seen as just a ploy by the EU that will be overcome by determined negotiation by a ‘true Brexit’ administration. So, at times, the government is still talking as if a comprehensive, deep trade agreement, perhaps with a substantial services element (£), can be achieved by the end of the year whilst at other times the implication is that it will be much more limited, but that that is fine. As from the outset, the Brexiters – who are now firmly in control of the government – have no agreed, realistic idea of what they want.
In consequence, there are other ways in which the start of the trade negotiations is likely to be analogous to that of the Article 50 talks. It is already written into the Political Declaration that the highly technically complex and politically contentious issue of fisheries will be amongst the first matters to be discussed. It may well play the part of the financial settlement, which the UK first tried to deny the EU had any right to. But with EU briefings suggesting that they will insist (£) on a more or less status quo deal on fishing as a prerequisite for any progress on other issues, it may also be the subject for a re-run of the 2017 ‘row of the summer’ over sequencing.
This brings into play the second of the recurrent dynamics. There are clear signs that Brexit Ultras like John Redwood and Owen Paterson are squaring up to make fisheries, which have always been totemic to Brexiters despite being a tiny part of the UK economy, a defining issue. With some suggesting that the UK might accept that EU proposal in return for a better deal on financial services there is a good chance that this will prove to be an early flashpoint between the government and its hard line MPs. Their position will be not just that the UK should not accept the EU proposal, but should not make any agreement on fisheries until the entire deal is done or, simply, walk away from the talks without a trade deal at all.
If so, that will add impetus to the established pattern in which the Brexit Ultras always push for a harder or ‘purer’ form of Brexit. That saw the shift from their advocacy of soft (single market/ Norway) to hard (FTA/ Canada) Brexit. It has reappeared now in the demand that the UK should, in parallel with or even as a priority over negotiating an EU trade deal do so with the US, as argued by ERG leader Steve Baker this week (£).
As with the fisheries issue, there is no economic logic to this at all. The geographic closeness of the EU and the volume of UK trade that results from that, as well as from decades of EU membership, makes a EU trade deal massively more important than any Free Trade Agreement with the US could ever be. Moreover, to some extent, the two deals are mutually exclusive in that they entail alignment with different regulatory orbits.
But the issue here is not economic logic, even though its advocates present it as if it were by, for example, their irrelevant talk of the size of the US economy. Rather, having belatedly understood that the trade deal they for so long championed will entail some regulatory alignment with the EU – and the deeper the deal, the greater that alignment – the Ultras find even that hard Brexit to be unbearable.
For some that may be informed by an ideological belief in low regulation, small state politics – the Singapore-on-Thames delusion – and, to that extent, there’s an obvious reason why it will preclude a deal with the EU. However, I believe that the more fundamental reason is a pathological loathing of the EU in every manifestation, and indeed of non-EU European institutions such as the European Court/ Convention of Human Rights (ECHR). They want to expunge every last trace of the EU’s presence in the UK. It is much closer to a religious mania than an ideological axiom, and, as for economic cost, that is irrelevant. No cost is too high to pay. If they were to gain the next concession, and get a US trade deal ahead or instead of an EU deal then they would certainly then make leaving the ECHR their next demand.
It is that ‘Brexit at any cost’ fixation which comes into conflict with the third dynamic that for any government, even one fixated by Brexit, the basic political pressure to avoid economic meltdown means that reality sometimes has to intrude. That could include recognizing the economic case for sacrificing fishing for financial services. More generally, to the extent that it is understood that there is only time for a minimal deal, if that, it may also be understood by government that, for many sectors of British business, such a deal would be little or no different to there being no deal at all [£]. It may also be sinking in that, trade deal aside, there is little prospect of the new arrangements for Northern Ireland being ready in time.
That, presumably, is what lies behind Boris Johnson implicitly recognizing, for the first time, that it may not be possible to do a deal in time (£). This may be the precursor to accepting that there will be an extension to the transition period. Time will tell on that, but as was shown by the ease with which he dropped his ‘die in a ditch’ pledge, such a volte face is well within his range.
Businesses and Brexit
Whether or not he extends (though especially if he does not) what is in prospect is the gradual leaching away of business from the UK, ratcheting up the costs of Brexit. This may well attract as little attention as the Bloomberg report and of course – as with all the examples so far – Brexiters will deny the cause. In this, they will be aided by the fact that few companies which relocate or (which is even more below the radar) decide to make new investments elsewhere will publicly attribute this to Brexit.
For it is important to understand that now that Brexit is unavoidable the relationship between business and the remain cause has fundamentally changed. Before, business lobbying against Brexit was consistent with, and part of, the remain campaign. But businesses rarely lobby on the basis of political principle rather than their own self-interest. With the remain cause lost, they will now make decisions based on that self-interest but will have no motivation to denounce Brexit policy as they do so.
On the contrary, especially to the extent that many will want to go on doing some business in the UK they will have no interest in alienating many customers and the government. An individual remainer might – for example – seek to publicise their decision to emigrate and to take their skills and taxes elsewhere in order make the political point that this is what Brexit has done. Few if any businesses will do anything like that. So it will be a slow and quiet economic puncture, not a noisy blow-out.
This scenario is made all the more likely because whatever economic realism derives from the third dynamic, it is in conflict with the lack of realism of the first and second. This can be seen in the report this week that Business Secretary Andrea Leadsom has substantially reduced contact with business groups (£) such as the CBI because she is irritated by them raising concerns about Brexit.
Here, again, there is a recurrent pattern in which those – in business, or the civil service, or elsewhere – who know the realities and complexities are sidelined for their lack of ‘true belief’. In ways that would have been astonishing to the traditional Tory Party, the CBI have long been regarded with scorn by Brexiters and, more generally, there were many reports during May’s administration of businesses being excluded by DExEU if they voiced scepticism about Brexit.
The paradox of Brexit
It is one of the biggest paradoxes of Brexit, because most of those who understand what it entails at a practical level do not support it, whilst most of those who support it strongly do not understand what it entails at a practical level. That is evident in microcosm even in the current row about Big Ben chiming on ‘Brexit Day’, with those who know the costs and technicalities involved advising against it, whilst the Brexit ‘bongers’ insist this is just remainer negativity and that a can-do attitude will overcome any obstacles if, indeed, they really exist.
At the wider level, this paradox presents any Brexit government with a massive problem. Either it ignores those with the knowledge and flounders around trying to square the impossible circle of ‘true Brexit’ with no adverse consequences, or it listens to those with knowledge and has to compromise on at least aspects of ‘true Brexit’.
Whilst that has been true throughout the Brexit process, it is now an acute issue with the trade negotiations starting and the timescale tightening. A key part of any trade negotiation process – and one reason they take a long time – is that governments need to engage and consult with the business and other groups which will be affected by whatever is agreed. If government as a whole persists with the Leadsom line then the incentives for businesses to stay and invest in Britain sharply diminish, as they see that the government does not have – and, worse, does not want to have - a serious grasp of the issues involved. With time running out, the business decisions will need to be taken before realism intrudes, if, indeed, it ever does. And businesses will make those decisions.
However, if the government does start to engage seriously with business (and other experts and stakeholders) then the paradox asserts itself in a new way, with this realism conflicting with the first two dynamics. This is exactly what we saw with the May government. Having delighted the Ultras by embracing hard Brexit, and accepted the lack of realism of the Brexit promise by imagining that, even so, there could be ‘frictionless trade’ for goods and services, there came a point in 2018 when May understood how damaging this would be. That was what led to the Chequers Proposal which – flawed as it was – began to recognize some of the complexities and trade-offs. Cue Johnson and Davis resigning and the government falling into the disarray from which it never recovered.
It is true that Johnson’s majority makes him far more secure than May. On the other hand, the time pressures Johnson has created for himself are all the greater, and his negotiating position with the EU is also much weaker than May’s at the time of Chequers. May had the possibility of extending Article 50, as she did, and, until the Withdrawal Agreement was completed, the core EU concerns around the financial settlement, Irish Border, and Citizens’ Rights remained unresolved. Now, Johnson could only extend the transition period with difficulty, both because of domestic politics and because, on the EU side, transition extension is less assured than it was for Article 50 extension. Meanwhile, the EU’s core withdrawal demands have been met. And, in any case, the votes of the ERG are more than enough to defeat Johnson, despite his majority.
Thus the conflict between economic realism and political exigency continues to be unresolved and resolution is unlikely to occur via a single decision taken at a single moment. Rather, we can expect an ongoing process of tacking this way and that as the negotiations with the EU progress and the internal fights of the Tory Party continue. The consequence is that neither economic realism nor political exigency will definitively win out. Instead, so many concessions will be made to the Ultras as to ensure considerable economic damage, whilst so many concessions will be demanded of them that they will always regard Brexit as having been betrayed.
Thus, as has been clear for a long time, we will end up a country made much poorer in order to please the Brexiters whilst having to endure their perpetual displeasure with what has been done. It is as perfect a lose-lose scenario as can be envisaged, and the Bloomberg report has put a figure on just the first instalment of just the economic aspect of that loss. There is much, much more to come.
Perhaps there’s a sense, now, that we all know Brexit is going to be hugely expensive and so it’s not worth discussing it anymore. Not that committed Brexiters necessarily accept this. Just as the predictions of economic costs were dismissed on the grounds that ‘you can’t predict what is going to happen in the future, anything might happen’, so, now the costs are racking up, they are dismissed on the grounds that ‘you can’t know what caused past events to occur, they might have occurred anyway’.
It is a hermetically sealed logic that cannot be reasoned with. And even to try provokes the second, though contradictory, line of defence, where we are invited to believe that Brexit was chosen as the result of an earnest political science seminar about theories of sovereignty, and was nothing to do with economics at all (this, presumably, is why the slogan chosen for the bus was a claim about … the supposed economic benefits of Brexit).
As for what the economic costs of Brexit will eventually end up being, that will to some degree depend on what kind of trade deal gets done and here confusion continues to reign. The EU have produced two detailed briefing packs (here and here) which, so far as I know, have no counterpart on the UK side, at least in the public domain. There is a sense that we are heading towards a re-run of what was symbolised by the famous picture of the opening of the withdrawal talks, where the EU side sat with bulging files whilst the UK relied upon David Davis’s vacuous grin.
The recurrent dynamics of Brexit
If so, there are good reasons for that and they go back to the three unchanged underlying dynamics of Brexit which I outlined after the election result. In brief, these are lack of realistic definition of what Brexit means or how to do it; the insatiable demands of the Brexit Ultras; and the general political imperative of all governments to avoid economic and social breakdown. These are contextualised by a fourth factor, namely (largely self-inflicted) time pressure.
As regards the first of these, the UK government is still to a degree in thrall to the Brexiter fantasies of a quick and easy deal in which the complexities and trade-offs are seen as just a ploy by the EU that will be overcome by determined negotiation by a ‘true Brexit’ administration. So, at times, the government is still talking as if a comprehensive, deep trade agreement, perhaps with a substantial services element (£), can be achieved by the end of the year whilst at other times the implication is that it will be much more limited, but that that is fine. As from the outset, the Brexiters – who are now firmly in control of the government – have no agreed, realistic idea of what they want.
In consequence, there are other ways in which the start of the trade negotiations is likely to be analogous to that of the Article 50 talks. It is already written into the Political Declaration that the highly technically complex and politically contentious issue of fisheries will be amongst the first matters to be discussed. It may well play the part of the financial settlement, which the UK first tried to deny the EU had any right to. But with EU briefings suggesting that they will insist (£) on a more or less status quo deal on fishing as a prerequisite for any progress on other issues, it may also be the subject for a re-run of the 2017 ‘row of the summer’ over sequencing.
This brings into play the second of the recurrent dynamics. There are clear signs that Brexit Ultras like John Redwood and Owen Paterson are squaring up to make fisheries, which have always been totemic to Brexiters despite being a tiny part of the UK economy, a defining issue. With some suggesting that the UK might accept that EU proposal in return for a better deal on financial services there is a good chance that this will prove to be an early flashpoint between the government and its hard line MPs. Their position will be not just that the UK should not accept the EU proposal, but should not make any agreement on fisheries until the entire deal is done or, simply, walk away from the talks without a trade deal at all.
If so, that will add impetus to the established pattern in which the Brexit Ultras always push for a harder or ‘purer’ form of Brexit. That saw the shift from their advocacy of soft (single market/ Norway) to hard (FTA/ Canada) Brexit. It has reappeared now in the demand that the UK should, in parallel with or even as a priority over negotiating an EU trade deal do so with the US, as argued by ERG leader Steve Baker this week (£).
As with the fisheries issue, there is no economic logic to this at all. The geographic closeness of the EU and the volume of UK trade that results from that, as well as from decades of EU membership, makes a EU trade deal massively more important than any Free Trade Agreement with the US could ever be. Moreover, to some extent, the two deals are mutually exclusive in that they entail alignment with different regulatory orbits.
But the issue here is not economic logic, even though its advocates present it as if it were by, for example, their irrelevant talk of the size of the US economy. Rather, having belatedly understood that the trade deal they for so long championed will entail some regulatory alignment with the EU – and the deeper the deal, the greater that alignment – the Ultras find even that hard Brexit to be unbearable.
For some that may be informed by an ideological belief in low regulation, small state politics – the Singapore-on-Thames delusion – and, to that extent, there’s an obvious reason why it will preclude a deal with the EU. However, I believe that the more fundamental reason is a pathological loathing of the EU in every manifestation, and indeed of non-EU European institutions such as the European Court/ Convention of Human Rights (ECHR). They want to expunge every last trace of the EU’s presence in the UK. It is much closer to a religious mania than an ideological axiom, and, as for economic cost, that is irrelevant. No cost is too high to pay. If they were to gain the next concession, and get a US trade deal ahead or instead of an EU deal then they would certainly then make leaving the ECHR their next demand.
It is that ‘Brexit at any cost’ fixation which comes into conflict with the third dynamic that for any government, even one fixated by Brexit, the basic political pressure to avoid economic meltdown means that reality sometimes has to intrude. That could include recognizing the economic case for sacrificing fishing for financial services. More generally, to the extent that it is understood that there is only time for a minimal deal, if that, it may also be understood by government that, for many sectors of British business, such a deal would be little or no different to there being no deal at all [£]. It may also be sinking in that, trade deal aside, there is little prospect of the new arrangements for Northern Ireland being ready in time.
That, presumably, is what lies behind Boris Johnson implicitly recognizing, for the first time, that it may not be possible to do a deal in time (£). This may be the precursor to accepting that there will be an extension to the transition period. Time will tell on that, but as was shown by the ease with which he dropped his ‘die in a ditch’ pledge, such a volte face is well within his range.
Businesses and Brexit
Whether or not he extends (though especially if he does not) what is in prospect is the gradual leaching away of business from the UK, ratcheting up the costs of Brexit. This may well attract as little attention as the Bloomberg report and of course – as with all the examples so far – Brexiters will deny the cause. In this, they will be aided by the fact that few companies which relocate or (which is even more below the radar) decide to make new investments elsewhere will publicly attribute this to Brexit.
For it is important to understand that now that Brexit is unavoidable the relationship between business and the remain cause has fundamentally changed. Before, business lobbying against Brexit was consistent with, and part of, the remain campaign. But businesses rarely lobby on the basis of political principle rather than their own self-interest. With the remain cause lost, they will now make decisions based on that self-interest but will have no motivation to denounce Brexit policy as they do so.
On the contrary, especially to the extent that many will want to go on doing some business in the UK they will have no interest in alienating many customers and the government. An individual remainer might – for example – seek to publicise their decision to emigrate and to take their skills and taxes elsewhere in order make the political point that this is what Brexit has done. Few if any businesses will do anything like that. So it will be a slow and quiet economic puncture, not a noisy blow-out.
This scenario is made all the more likely because whatever economic realism derives from the third dynamic, it is in conflict with the lack of realism of the first and second. This can be seen in the report this week that Business Secretary Andrea Leadsom has substantially reduced contact with business groups (£) such as the CBI because she is irritated by them raising concerns about Brexit.
Here, again, there is a recurrent pattern in which those – in business, or the civil service, or elsewhere – who know the realities and complexities are sidelined for their lack of ‘true belief’. In ways that would have been astonishing to the traditional Tory Party, the CBI have long been regarded with scorn by Brexiters and, more generally, there were many reports during May’s administration of businesses being excluded by DExEU if they voiced scepticism about Brexit.
The paradox of Brexit
It is one of the biggest paradoxes of Brexit, because most of those who understand what it entails at a practical level do not support it, whilst most of those who support it strongly do not understand what it entails at a practical level. That is evident in microcosm even in the current row about Big Ben chiming on ‘Brexit Day’, with those who know the costs and technicalities involved advising against it, whilst the Brexit ‘bongers’ insist this is just remainer negativity and that a can-do attitude will overcome any obstacles if, indeed, they really exist.
At the wider level, this paradox presents any Brexit government with a massive problem. Either it ignores those with the knowledge and flounders around trying to square the impossible circle of ‘true Brexit’ with no adverse consequences, or it listens to those with knowledge and has to compromise on at least aspects of ‘true Brexit’.
Whilst that has been true throughout the Brexit process, it is now an acute issue with the trade negotiations starting and the timescale tightening. A key part of any trade negotiation process – and one reason they take a long time – is that governments need to engage and consult with the business and other groups which will be affected by whatever is agreed. If government as a whole persists with the Leadsom line then the incentives for businesses to stay and invest in Britain sharply diminish, as they see that the government does not have – and, worse, does not want to have - a serious grasp of the issues involved. With time running out, the business decisions will need to be taken before realism intrudes, if, indeed, it ever does. And businesses will make those decisions.
However, if the government does start to engage seriously with business (and other experts and stakeholders) then the paradox asserts itself in a new way, with this realism conflicting with the first two dynamics. This is exactly what we saw with the May government. Having delighted the Ultras by embracing hard Brexit, and accepted the lack of realism of the Brexit promise by imagining that, even so, there could be ‘frictionless trade’ for goods and services, there came a point in 2018 when May understood how damaging this would be. That was what led to the Chequers Proposal which – flawed as it was – began to recognize some of the complexities and trade-offs. Cue Johnson and Davis resigning and the government falling into the disarray from which it never recovered.
It is true that Johnson’s majority makes him far more secure than May. On the other hand, the time pressures Johnson has created for himself are all the greater, and his negotiating position with the EU is also much weaker than May’s at the time of Chequers. May had the possibility of extending Article 50, as she did, and, until the Withdrawal Agreement was completed, the core EU concerns around the financial settlement, Irish Border, and Citizens’ Rights remained unresolved. Now, Johnson could only extend the transition period with difficulty, both because of domestic politics and because, on the EU side, transition extension is less assured than it was for Article 50 extension. Meanwhile, the EU’s core withdrawal demands have been met. And, in any case, the votes of the ERG are more than enough to defeat Johnson, despite his majority.
Thus the conflict between economic realism and political exigency continues to be unresolved and resolution is unlikely to occur via a single decision taken at a single moment. Rather, we can expect an ongoing process of tacking this way and that as the negotiations with the EU progress and the internal fights of the Tory Party continue. The consequence is that neither economic realism nor political exigency will definitively win out. Instead, so many concessions will be made to the Ultras as to ensure considerable economic damage, whilst so many concessions will be demanded of them that they will always regard Brexit as having been betrayed.
Thus, as has been clear for a long time, we will end up a country made much poorer in order to please the Brexiters whilst having to endure their perpetual displeasure with what has been done. It is as perfect a lose-lose scenario as can be envisaged, and the Bloomberg report has put a figure on just the first instalment of just the economic aspect of that loss. There is much, much more to come.
Wednesday, 21 November 2018
Brexit redux
Beneath the
headline drama of possible leadership challenges, and whether May’s deal will
make it through the House of Commons, the Brexit Ultras are making a concerted
fightback against what Dominic
Raab calls the “dictated terms” of the Withdrawal Agreement (WA).
That diagnosis conceals the uncomfortable truth that those terms were indeed dictated – by the government’s own red lines about the single market and customs union which the Ultras enthusiastically support, and about the Northern Ireland border having to be free of any physical infrastructure, which the Ultras have never been able convincingly to rebut, and having no customs border in the Irish Sea, which they share. It also arises from the consequences of the timing of the Article 50 notice, which the Ultras absolutely insisted upon.
Return of the zombies
Thus the Ultras are now engaged in the pretence that a different outcome could derive from those same preconditions. One version is the familiar one of needing no exit deal and just reverting to trading on WTO terms ‘as we do with the rest of the world’. This zombie claim refuses to die, despite the fact that the UK does not trade with any country on WTO terms alone and that, in any case, there are numerous non-trade issues, such as aviation, which have nothing whatsoever to do with the WTO.
The other version, at its most general, is that what is needed is a Canada +++ Free Trade Agreement (FTA). But that idea, apart from the limitations it has in its own terms, confuses the eventual agreement on future terms with the WA. An FTA cannot substitute for, and requires as a pre-condition, a WA.
The most peculiar twisting together of these two arguments came from David Davis, who wrote on the Conservative Home website this week that “if we need to leave with no deal and negotiate a free trade agreement during the transition period, then so be it”. But self-evidently the transition period only exists as part of the WA. If there’s no deal, there is no transition period. This is hardly some abstruse, technical detail and it is truly extraordinary that someone who was for two years the Brexit Secretary apparently doesn’t understand it.
That a lack of understanding abounds amongst the Ultras was shown by another very bizarre episode this week in which Owen Paterson (of ‘only a madman would leave the single market’ fame) bemoaned the fact that UK-Oklahoma trade deals were precluded by the WA. Perhaps he just meant commercial deals – in which case he is wrong because neither EU membership nor the WA prevent that. But if he meant an FTA it is nonsense since of course it is the USA, not individual states like Oklahoma, which makes FTAs.
Or perhaps, to be charitable, he was referring to the UK-USA FTA dream so beloved by Brexiters. If so, it is a rather unexciting dream: the estimated long-term benefit of such a deal is 0.1-0.3% GDP compared with a Brexit cost of 1-12% GDP. There’s never been a ‘trade’ justification for an independent trade policy, only the symbolic justification of its being ‘independent’.
Friction about facts
Meanwhile, the ERG produced two documents this week. One was a direct response to the WA in which the strangest in a litany of complaints is that it means the UK “will become a ‘rule-taker’ and will have surrendered our sovereignty”. But the central Brexiter criticism of EU membership is that we have already lost our sovereignty. If so, how can the WA surrender it? To lose sovereignty once might be regarded as misfortune; to do so twice looks like illogic.
Mixed in with this was the predictable moan about having to pay the financial settlement without getting anything back in terms of a trade deal. This, another of the lexicon of zombie Brexiter ‘facts’, again shows the failure to understand the difference between the WA and the future terms agreement.
Perhaps most tellingly, the document makes repeated references to the WA not honouring “the spirit of the 2016 Referendum”. This is significant as it acknowledges, by implication, that the letter of the vote could be met in numerous different ways – including the form it has taken – but arrogating to the ERG the high priest’s role of interpreting the votes of 17.4 Million as a mysterious ‘spirit’ which – amazingly – turns out to be their own interpretation of it.
The second ERG report, fronted by Peter Lilley (he of ‘a deal can be done in 10 minutes’ fame, a line he shamelessly repeated this week) and launched by a veritable ‘Manel’ of ageing Brexiters sought to ‘explode the myths’ of what leaving the Customs Union means. The document was entitled ‘Fact – NOT friction’ (even in the Brexit high command there appears to be a belief that writing something in capital letters makes it extra true) and contained still more confusions.
Throughout it, features of the Single Market and Customs Union are conflated, and whilst some of the points about customs checks are valid, a series of cherry-picked assertions and half-truths simplified and distorted the deeply technical issues involved. The overall problem, as trade expert David Henig identified, is that whilst identifying ways that customs costs and checked can be reduced, these do not amount to their entire removal, which is what is at stake as regards the Northern Ireland border in particular.
When some of these problems were put to Peter Lilley during a BBC interview he reacted with anger, accusing Chris Morris, the BBC’s Brexit fact-checker, of arguing for remain. But whilst there is plenty of room for opinion in the Brexit debate there are plenty of facts too, and dismissing them because they are inconvenient is the kind of confirmation bias which has made that debate so intractable. It is evident in the Ultras’ dismissal of the Treasury, and of the civil service in general, as remainer propagandists.
Of course this creates the difficulty that Brexiters like Bernard Jenkin promptly decried the fact-checker’s facts as being no more than remainer opinion. Our opinions are facts, your facts are just opinions is a logic doomed to infinite circularity. And whilst it proved very successful for the Brexit campaign, it is hopeless when it comes to delivering policy.
The only way out of this impasse is to go outside the very tiny coterie of economists and lawyers upon whom the Ultras rely for advice, mostly affiliated with the Institute for Economic Affairs. For within the wider world of economists, business people and trade experts there is broad agreement on the core facts of how trade and supply chains actually work. Ignoring that is a bit like basing policies on smoking only on the advice of the tobacco industry, on the basis that the medical profession has an anti-smoking bias.
What if the Brexiters were in charge?
How can we explain the rehearsal of all of these, to be charitable, misunderstandings? Given that there is nothing new in them, it’s unlikely that the Ultras really expect the government to change policy. More likely, they are setting the stage for years of culture wars to come in which they will disown the problems caused by Brexit by saying – rather as diehard Marxists say of actually existing communism - that all would have been well if only it been done ‘properly’.
Which leads to a thought experiment, for which a rather strong stomach is needed. Imagine for a moment that the Ultras had been given their head, and we play the whole of the last 2 years again, redux. Rees-Mogg would be PM and, say, Peter Bone the Chancellor, with Nadine Dorries as Foreign Secretary. For Brexit Secretary – why not? - David Davis could bring valuable energy and diligence to the role. And every other ministerial position would be filled with true believers – Bridgen, Rosindell, Jenkyns – truly a government of all the talents. The civil service would have had to be cleared out, of course, to give the dream team a clear run, but they could be replaced with, say, Patrick Minford, Melanie Phillips, John Longworth and Tim Martin. After all, they all appear convinced that the perfect Brexit would be easily delivered.
This is an extension of an idea in Robert Shrimsley’s recent FT column (£) where he considers the complaint that ‘it would all have been different if a leaver was in charge’ – this, of course, arising from the persistent refrain that May is a closet remainer. Shrimsley’s excoriating view is that we know how that would work out because we’ve seen in the last two years that the record of the Brexit hardliners is “an uninterrupted litany of cowardice, incompetence and blame shifting”. And, indeed, it is hard to resist the conclusion that a government of the sort I’ve described would be an unmitigated, catastrophic disaster.
And yet it is at least plausible that such a government would actually end up delivering something remarkably similar to the Withdrawal Agreement that May has come up with, and which they so despise. For, as I said at the beginning of this post, it is from the decisions that May took with the full approval of the Ultras that the present situation has arisen.
I don’t think that she was being dishonest in embracing their hard Brexit, always intending to backtrack somewhat. At the time of the Lancaster House speech, which they were so happy with, I am quite certain that she had believed it to be workable.
It was the ineluctable logic of the negotiations, of the Good Friday Agreement, and of the concerted business lobbying that spelt out the economic consequences of her approach that led her away from that position, whilst stubbornly retaining many of its core features. Whoever was in charge would have faced that same logic had they made the same initial decisions. Which is another way of saying that although Brexiters can shout down the fact-checkers, they can’t shout down the facts.
That diagnosis conceals the uncomfortable truth that those terms were indeed dictated – by the government’s own red lines about the single market and customs union which the Ultras enthusiastically support, and about the Northern Ireland border having to be free of any physical infrastructure, which the Ultras have never been able convincingly to rebut, and having no customs border in the Irish Sea, which they share. It also arises from the consequences of the timing of the Article 50 notice, which the Ultras absolutely insisted upon.
Return of the zombies
Thus the Ultras are now engaged in the pretence that a different outcome could derive from those same preconditions. One version is the familiar one of needing no exit deal and just reverting to trading on WTO terms ‘as we do with the rest of the world’. This zombie claim refuses to die, despite the fact that the UK does not trade with any country on WTO terms alone and that, in any case, there are numerous non-trade issues, such as aviation, which have nothing whatsoever to do with the WTO.
The other version, at its most general, is that what is needed is a Canada +++ Free Trade Agreement (FTA). But that idea, apart from the limitations it has in its own terms, confuses the eventual agreement on future terms with the WA. An FTA cannot substitute for, and requires as a pre-condition, a WA.
The most peculiar twisting together of these two arguments came from David Davis, who wrote on the Conservative Home website this week that “if we need to leave with no deal and negotiate a free trade agreement during the transition period, then so be it”. But self-evidently the transition period only exists as part of the WA. If there’s no deal, there is no transition period. This is hardly some abstruse, technical detail and it is truly extraordinary that someone who was for two years the Brexit Secretary apparently doesn’t understand it.
That a lack of understanding abounds amongst the Ultras was shown by another very bizarre episode this week in which Owen Paterson (of ‘only a madman would leave the single market’ fame) bemoaned the fact that UK-Oklahoma trade deals were precluded by the WA. Perhaps he just meant commercial deals – in which case he is wrong because neither EU membership nor the WA prevent that. But if he meant an FTA it is nonsense since of course it is the USA, not individual states like Oklahoma, which makes FTAs.
Or perhaps, to be charitable, he was referring to the UK-USA FTA dream so beloved by Brexiters. If so, it is a rather unexciting dream: the estimated long-term benefit of such a deal is 0.1-0.3% GDP compared with a Brexit cost of 1-12% GDP. There’s never been a ‘trade’ justification for an independent trade policy, only the symbolic justification of its being ‘independent’.
Friction about facts
Meanwhile, the ERG produced two documents this week. One was a direct response to the WA in which the strangest in a litany of complaints is that it means the UK “will become a ‘rule-taker’ and will have surrendered our sovereignty”. But the central Brexiter criticism of EU membership is that we have already lost our sovereignty. If so, how can the WA surrender it? To lose sovereignty once might be regarded as misfortune; to do so twice looks like illogic.
Mixed in with this was the predictable moan about having to pay the financial settlement without getting anything back in terms of a trade deal. This, another of the lexicon of zombie Brexiter ‘facts’, again shows the failure to understand the difference between the WA and the future terms agreement.
Perhaps most tellingly, the document makes repeated references to the WA not honouring “the spirit of the 2016 Referendum”. This is significant as it acknowledges, by implication, that the letter of the vote could be met in numerous different ways – including the form it has taken – but arrogating to the ERG the high priest’s role of interpreting the votes of 17.4 Million as a mysterious ‘spirit’ which – amazingly – turns out to be their own interpretation of it.
The second ERG report, fronted by Peter Lilley (he of ‘a deal can be done in 10 minutes’ fame, a line he shamelessly repeated this week) and launched by a veritable ‘Manel’ of ageing Brexiters sought to ‘explode the myths’ of what leaving the Customs Union means. The document was entitled ‘Fact – NOT friction’ (even in the Brexit high command there appears to be a belief that writing something in capital letters makes it extra true) and contained still more confusions.
Throughout it, features of the Single Market and Customs Union are conflated, and whilst some of the points about customs checks are valid, a series of cherry-picked assertions and half-truths simplified and distorted the deeply technical issues involved. The overall problem, as trade expert David Henig identified, is that whilst identifying ways that customs costs and checked can be reduced, these do not amount to their entire removal, which is what is at stake as regards the Northern Ireland border in particular.
When some of these problems were put to Peter Lilley during a BBC interview he reacted with anger, accusing Chris Morris, the BBC’s Brexit fact-checker, of arguing for remain. But whilst there is plenty of room for opinion in the Brexit debate there are plenty of facts too, and dismissing them because they are inconvenient is the kind of confirmation bias which has made that debate so intractable. It is evident in the Ultras’ dismissal of the Treasury, and of the civil service in general, as remainer propagandists.
Of course this creates the difficulty that Brexiters like Bernard Jenkin promptly decried the fact-checker’s facts as being no more than remainer opinion. Our opinions are facts, your facts are just opinions is a logic doomed to infinite circularity. And whilst it proved very successful for the Brexit campaign, it is hopeless when it comes to delivering policy.
The only way out of this impasse is to go outside the very tiny coterie of economists and lawyers upon whom the Ultras rely for advice, mostly affiliated with the Institute for Economic Affairs. For within the wider world of economists, business people and trade experts there is broad agreement on the core facts of how trade and supply chains actually work. Ignoring that is a bit like basing policies on smoking only on the advice of the tobacco industry, on the basis that the medical profession has an anti-smoking bias.
What if the Brexiters were in charge?
How can we explain the rehearsal of all of these, to be charitable, misunderstandings? Given that there is nothing new in them, it’s unlikely that the Ultras really expect the government to change policy. More likely, they are setting the stage for years of culture wars to come in which they will disown the problems caused by Brexit by saying – rather as diehard Marxists say of actually existing communism - that all would have been well if only it been done ‘properly’.
Which leads to a thought experiment, for which a rather strong stomach is needed. Imagine for a moment that the Ultras had been given their head, and we play the whole of the last 2 years again, redux. Rees-Mogg would be PM and, say, Peter Bone the Chancellor, with Nadine Dorries as Foreign Secretary. For Brexit Secretary – why not? - David Davis could bring valuable energy and diligence to the role. And every other ministerial position would be filled with true believers – Bridgen, Rosindell, Jenkyns – truly a government of all the talents. The civil service would have had to be cleared out, of course, to give the dream team a clear run, but they could be replaced with, say, Patrick Minford, Melanie Phillips, John Longworth and Tim Martin. After all, they all appear convinced that the perfect Brexit would be easily delivered.
This is an extension of an idea in Robert Shrimsley’s recent FT column (£) where he considers the complaint that ‘it would all have been different if a leaver was in charge’ – this, of course, arising from the persistent refrain that May is a closet remainer. Shrimsley’s excoriating view is that we know how that would work out because we’ve seen in the last two years that the record of the Brexit hardliners is “an uninterrupted litany of cowardice, incompetence and blame shifting”. And, indeed, it is hard to resist the conclusion that a government of the sort I’ve described would be an unmitigated, catastrophic disaster.
And yet it is at least plausible that such a government would actually end up delivering something remarkably similar to the Withdrawal Agreement that May has come up with, and which they so despise. For, as I said at the beginning of this post, it is from the decisions that May took with the full approval of the Ultras that the present situation has arisen.
I don’t think that she was being dishonest in embracing their hard Brexit, always intending to backtrack somewhat. At the time of the Lancaster House speech, which they were so happy with, I am quite certain that she had believed it to be workable.
It was the ineluctable logic of the negotiations, of the Good Friday Agreement, and of the concerted business lobbying that spelt out the economic consequences of her approach that led her away from that position, whilst stubbornly retaining many of its core features. Whoever was in charge would have faced that same logic had they made the same initial decisions. Which is another way of saying that although Brexiters can shout down the fact-checkers, they can’t shout down the facts.
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