Proustian moments at Le Café Brexit

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

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

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

The sight of once familiar faces

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

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

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

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

Why are we seeing them again now?

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

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

Dating isn’t the same as marriage

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

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

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

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

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

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

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

It takes two to tango

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

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

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

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

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

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

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

The realities of single life

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

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

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

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

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

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

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

Brexit: unloved and unlovable

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

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

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

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

Notes

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

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

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

There's a better Brexit strategy available to Labour

I’ve spent quite a lot of time both in last week’s post and the one before discussing Labour’s Brexit position. That’s because, as the earlier of those posts concluded, it’s the only question that really matters now in terms of how Brexit proceeds. That assertion is predicated on two, related, assumptions.

The first is that the Tories are incapable of substantively changing the form of Brexit because of the strength and rigidity of the Brexit Ultras, and the fear of a Farageist resurgence (£). That should be qualified by adding that they might, even so, be capable of changing it for the worse, for example by pursuing the EU Retained Law Bill and, in particular, by re-igniting the Northern Ireland Protocol row. More generally, Rishi Sunak’s administration seems to be going through the motions of governing, bereft of ideas, lacking a policy agenda, riven by internal divisions, and simply serving out time until it is put out of its misery. Its decaying stench is captured with acidic humour by the journalist Matt Carr in his latest substack newsletter.

The second and related assumption is that it is highly likely that Labour will win the next election, probably with a majority or, if not, leading a minority administration. It is an assumption that is widespread, even, and perhaps especially, amongst Conservatives. This explains why Labour is attracting more donations, much greater interest from lobbyists and businesses, and coming under much more intense media scrutiny now, across all policy areas but including Brexit. Victory seems there for the taking unless Labour blows it, but with that comes an understandable degree of caution, not least about Brexit.

Today, in the absence of much Brexit news, I’m going to devote the whole post to discussing Labour’s Brexit policy, including a proposal for a totally different strategy, one that is not so much bolder as more imaginative than anything I’ve seen suggested so far.

What is Labour’s Brexit policy?

As things stand, the Labour policy is to seek improvements within the existing Trade and Cooperation Agreement (TCA) framework, although the nature of these has not been fully spelt out. In particular, it has been suggested that Labour would seek a ‘veterinary agreement’, but it hasn’t been clarified whether this means committing to the ‘dynamic alignment’ on EU sanitary and phyto-sanitary regulations which is the key to reducing much of the border friction, including that on the Irish Sea border. The obvious assumption is that it does mean this, otherwise it is meaningless, but it hasn’t been made explicit, nor whether it establishes a more general principle for dynamic regulatory alignment in other sectors, and if so which.

The strategy appears to many commentators to be one of ‘alignment by stealth’ (£), giving enough hints to encourage anti-Brexit voters whilst being sufficiently vague to avoid alienating leave voters. One problem with this, apart from the obvious danger of pleasing neither group of voters rather than both, is that it reduces the legitimate space for extensive alignment, if this is indeed the goal, once the election is over. That may end up meaning only minimal changes, but, minimal or maximal, they would do relatively little – not nothing, but not much – to undo the economic damage of Brexit.

Is Labour getting it right?

As to whether this approach is right, there is a broad spectrum of opinion even amongst acute and well-informed commentators on Brexit and politics in general, and there is merit in all of the different things they say. For example, the Guardian columnist Rafael Behr argues that, despite the frustrations of erstwhile remainers and others, if Keir Starmer’s strategy was working the results would look … very much as, in fact, they do! I read that as a call for patience and realism rather than pushing Labour to take a more ambitious position, whether on Brexit or anything else. If so, there is some wisdom in that. The dangers of ‘purism’ in politics are well-evidenced, not least in the history of the Labour Party.

However, another Guardian columnist, Jonathan Freedland, points out that with the economic damage of Brexit now moving from the abstract to specific consequences for, for example, household food bills, it can’t continue to be politically ignored. Freedland doesn’t explicitly comment on what this means for Labour, but does remark that “in the eyes of the voters, Brexit was always a Tory project”. I read that as a call for Labour to make explicit the linkages of the cost-of-living crisis, Tory economic incompetence, and the Tories’ Brexit, and to offer a more extensive re-shaping of Brexit than at present. If so, that’s very much in line with what I’ve been arguing in recent posts.

Meanwhile, writing in the Financial Times, Andrew Duff (£), a former LibDem MEP and founder member of the pro-federalist Spinelli Group, urges Labour to take a far bolder line. This would entail an EU-UK customs union and the creation of a Ukraine-style Association Agreement but with several additional features which, cumulatively, would create a new category of ‘affiliate state’. Duff makes it clear that this proposal is as challenging for the EU as it is for the UK, entailing not just that the EU “orthodoxy” against “cherry-picking” be dropped, but EU treaty change. As he puts it, “[t]here is no post-Brexit solution that does not entail radical reform on the EU side as well as a bold change of gear in Britain.”

For what it is worth, I think that this would be a goodish outcome, and have done since January 2018, not least under the influence of Duff’s earlier writings on this. However, it seems extremely unlikely that Labour would adopt it as their policy, and Starmer’s repeated comments about both the single market and a customs union bear that out. He and Labour may get to this point eventually, but it surely isn’t in prospect before the next election. Moreover, whilst Duff understands the internal politics of the EU far better than I do, I really doubt whether it is ready to undergo the kinds of changes he proposes in order to improve its relationship with the UK.

Even if Labour promised more, could it deliver?

Behind that doubt lies another issue, which the discussion about Labour’s Brexit position too often ignores, my own included. Commenting on my previous post, Bryan Kelly, a long-term reader of this blog, emailed me to make the point that Starmer might sensibly judge that it is not worth expending political energy and capital in proposing a major change to the UK-EU relationship if there is no reasonable chance of the EU accepting it.

To do so would carry not just the electoral risk of making such a proposal but the risk of failing to deliver on it when in government. I would add that it also risks perpetuating what has been pervasive in so much of the Brexit process, namely a chauvinism, or at least myopia, whereby the UK simply has domestic debates about what it wants and doesn’t want, without regard to what is acceptable to the EU.

These risks apply most obviously to Labour adopting a ‘re-join’ policy, and hardly less to any bold, Duff-type, proposals, but they also apply to all versions of the idea of seeking single market membership. The key question, Kelly suggests, isn’t so much whether the EU (or EFTA, for that matter) and its members states would or would not welcome such membership. It is whether they could rely on the UK polity to be able to sustain such membership.

Central to the answer to that question, Kelly argues, isn’t Labour policy, but the Conservative Party. For if a Labour government took the UK into the single market, what would stop a future Conservative government, five years later, or, for that matter, ten or even fifteen years later, from reversing it? Having gone through all the aggravation of Brexit, why should the EU risk going through it again with a second mini-Brexit?

Even if some individual figures within the EU (or EFTA) might say that they would welcome the UK into the single market despite this risk, that isn’t the same as the EU (or EFTA), and its member states, being willing to do so. And it remains a genuine risk at least unless either the Conservative Party completely implodes after the next election or it purges itself of the Brexit Ultras. Those are both conceivable, but the second, especially, is highly unlikely, and certainly can’t be relied on, now, for a policy that Labour must articulate now.

So this is a strong argument for Labour’s current approach of merely seeking refinements within the TCA although, even then, as I argued last week, the refinements sought could be more extensive and more explicit than Starmer is currently articulating, and take the form of the proposals made in the recent Tony Blair Institute report.

Is there a different strategy?

However, accepting that argument, it strikes me that Labour could use it in a far more intelligent and imaginative way. At the moment, Starmer is not only ruling out single market membership but now even claiming that doing so would not improve economic growth, which is obvious nonsense. He is also, with somewhat more reason, saying that renewed political uncertainty about the trading relationship would be de-stabilizing for businesses.

Instead, he could say that single market membership is indeed a solution to many of the economic problems caused by Brexit, but that it is not possible for him to propose it because it is not practically deliverable unless the Tory Party also commits to it. Were they to do so, it would make it viable for the EU to agree to and, whilst meaning a further change for businesses, would also remove the risk to them of that change only being temporary. That the Tories will not give such a commitment, Starmer would say, shows they are putting ideological dogma ahead of the national interest and economic competence.

At one stroke this would be honest and realistic, would have some appeal to erstwhile remainers (as it would show Labour trying to do at least some of what they want), would not alienate many Labour leavers (some of whom would be happy with the idea, whilst those who were not would see that Labour wasn’t actually proposing to do it, because of lack of Tory support), and it would make sense to the many people, not especially partisan for leave or remain, who recognize that Brexit has damaged the economy and that needs to be dealt with.

It would also turn the political spotlight firmly on to the Tories to justify their failed Brexit policy rather than allowing them to present Labour as trying to reverse or undermine Brexit. Obviously, the Tories would still claim the latter, but it is a claim which would be substantially blunted by the fact that Labour would not actually be proposing single market membership. Rather, Labour would be supportive of it if, and only if, it was accepted as a non-partisan, cross-party, common-sense solution to Brexit, something which could have a lot of electoral appeal to those voters who dislike political tribalism, and challenging the Tories to agree to it.

Of course they would not do so, and in that way would cater for their core, Brexit-supporting, voters who will never vote Labour anyway. But they would alienate some swing voters and help Labour to consolidate existing attack lines by depicting them as unfit to govern in the national interest, putting ‘party before country’, and held hostage by a small group of fanatics. All of which happens to be true. In the meantime, Labour would have created the space to openly pursue the most extensive possible upgrade of the TCA as a pragmatic and moderate holding position.

Gateways to this strategy

Needless to say, it may already be too late for this. Starmer’s repeated remarks about the single market may have precluded such a change of strategy. But the election may be eighteen months away – conceivably, as long as two years – so there’s at least the possibility of changing direction, citing changed circumstances. It is always possible to cite changed circumstances, anyway, and in this case it could be justified by the continuing build-up of evidence of economic damage. But there are two more specific gateways through which Labour could develop this strategy.

Supporting British (small) businesses

One is that, whilst Starmer has said this week, not entirely unreasonably, that businesses have now adapted to hard Brexit, so softening it would just create new costs and uncertainties, that really only applies to big businesses. It is SMEs which have suffered most, and would benefit most from softening Brexit. And here there is a certain irony, for Brexiters often claim that it is only big, global business that opposed Brexit, and that small businesses welcomed it. That was never entirely true, certainly of those small businesses that trade with the EU. But in any case what Brexit has revealed is that global firms, which have the resources to navigate new procedures, and which do not have national ties or loyalties, have most easily been able to undertake the relocations and supply chain adjustments it has necessitated.

That isn’t cost-free, for them or for the UK economy, but it is possible to a much greater degree than it is for SMEs. So it is SMEs, which are embedded in communities, localities and regions, and which are also crucial drivers of innovation and economic growth, which have paid the highest price. Yet, precisely because they have these qualities, they should be dear to Labour’s heart. And, crucially, they are exactly the kinds of British businesses that many leave voters (and many remain voters for that matter) want to see flourish, rather than the remote, global owners of casino capitalism: the ‘predator capitalists’ as Ed Miliband dubbed them in 2011, or the “people in positions of power [who] behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass in the street”, as Theresa May put it in her 2016 ‘citizens of nowhere’ speech.

So, for Labour, a focus on improving the form of Brexit in order to come to the aid of British SMEs could be the golden thread to connect their remainer voters and those traditional Labour voters who supported leaving the EU, not to mention some of those who normally vote for others parties, including the Tories. In this scenario, the onus would be on the Tories to explain to voters, and especially to Labour-turned-Tory leave voters in the fabled Red Wall, why they refuse to endorse a cross-party agreement to shift Brexit from a form that disadvantages British local and family businesses to one that supports them.

The Northern Ireland Protocol

The other gateway for Labour to adopt this strategy is over the Northern Ireland Protocol (NIP). Things have gone rather silent this autumn, and it is not really clear what is happening. The NIP Bill has been paused. There was a report this week of a new HMRC database that may meet EU requirements by providing real-time information on which goods travelling between Great Britain and Northern Ireland are bound for the EU single market. That would also greatly assist the creation of the ‘green lane’ system the UK government argues for.

However, as with all the debates between 2016 and 2019 about ‘technological solutions’ for an Irish (land) border, it seems unlikely that there is any technical fix for what are ultimately political issues. In particular, if the Tory government continues to refuse any role for the ECJ it is hard to see a resolution, and yet a resolution has been promised, not least to the US, by April 2023, when the twenty-fifth anniversary of the Good Friday Agreement occurs.

It’s possible that something will be found that the EU and UK government will agree to, and which the Brexit Ultras and the DUP will accept. But at the moment that seems unlikely, suggesting another crisis, probably in the New Year. That would again be a route for Labour to announce the offer of a cross-party agreement on softening Brexit, not (just) for economic reasons but in order to resolve the NIP stand-off. If that, rather than simply economics, were to be the gateway, something like the Duff proposals would be the logical solution since these, unlike single market membership alone, would be necessary to resolve the NIP issue.

Again, the Conservatives would certainly not agree. But, again, the spotlight would be on them to justify a policy which, on their own admission, had failed and to which, in this scenario, they had no solution other than simply to break the NIP, and, with that, international law, whilst risking a trade war with the EU, something made easier for the EU to prosecute under its recent rule changes.

A chance for Labour to lead

Clearly none of this goes as far as many would want Labour to go, especially ‘re-joiners’. Equally clearly, because the Tories would not accept a commitment to it, it would not in itself yield a significant change of direction. But it would be a relatively low-risk way for Starmer to bring some honesty and realism to the debate about Brexit, a debate which is likely to intensify as the election gets closer.

Moreover, it would enable Starmer to provide some substantive leadership to the country in this debate, even whilst in opposition. For he would be inviting the Tories, as they contemplate electoral defeat, to participate in a new national consensus, and one which spoke to the clear public belief that Brexit has been a damaging mistake, yet without taking Britain back into the EU.

And, after all, as I outlined last week, many leading Brexiters are now saying that, simply by being out of the EU, Brexit is vindicated. So Starmer would be making a proposal which gave Brexiters that ‘success’, whilst in a genuine and convincing way showing how Brexit could be ‘made to work better’.

Again, it’s obvious that the Tories would refuse the offer and the proposal would come to nothing but, again, it would open the space for extensive TCA reform as a baseline position whilst identifying a route map for the longer-term, were the Tory Party ever to come to its senses, or if circumstances changed in other ways (for example, sustained and overwhelming public support for single market membership). In the meantime, blame for the economic damage of Brexit would be pinned firmly on the Tories’ recalcitrance.

The need for imagination

So I think there is a strategy for Labour – not perfect, because no strategy is perfect, especially starting from the horrible mess that Britain has got itself into over Brexit, and especially given the conundrums Brexit has always posed for the Labour Party. And it’s not even especially risky, electorally. It has the advantage of an honest acknowledgement of what Brexit has done to the country, of the need for the EU to agree if there is to be a different and durable Brexit, and of the way that the Brexit Ultra wing of the Tory Party is both the cause of the problem and the barrier to a viable solution.

That might not have been possible before, but the mounting evidence of Brexit damage, the change in public opinion about Brexit, the political chaos of the Tory government, and the utter discrediting of the Brexit Ultras by the mini-budget have all made it so. It’s a huge prize for Labour and for the country, replacing the lies and division of the Brexit years with honesty and a plan for consensus, and offering a path to repairing some of the damage of Brexit. It does not even require Starmer to have courage. Only that he has imagination.

Brexit: the next six years

We’re now six years on from the referendum, but I’m not going to do an ‘anniversary round-up post’ because I did that in April, to mark six years since the campaign got underway. That post was entitled ‘six years of failure’, and most of it still applies, although the saga of the Northern Ireland Protocol (NIP) has moved on with the publication of the Northern Ireland Protocol Bill (NIPB), as analysed last week.

The second reading of the Bill will be on Monday, although the DUP are still refusing to take part in the power-sharing institutions*. Meanwhile, the President of the EU Commission has issued a clear statement that it will discuss implementation issues but not re-write the Protocol, and its member states have unanimously backed the Commission both in this stance and in taking legal action against the UK. It is desperately sad, but alas no surprise, to see a senior Dutch journalist, Caroline de Gruyter, drawing direct comparisons between the UK and Russia.

Brexit has failed, but what should be done about it?

There will be much more to follow on that, and of course the NIPB is in itself one important indicator of just how badly Brexit has failed. The big question emerging now, which is likely to pervade the next six years and more of politics, is what to do about that failure. It is only an ‘emerging’ question because, clearly, things are not so neat as that. Some are still fighting a rear-guard action to dismiss the damage of Brexit as the extension of ‘Project Fear’, generally invoking cherry-picked statistics or making bogus claims about vaccines or the Ukraine War, and will no doubt continue to do so forever.

However, that is increasingly the preserve of unpersuadable diehards. There will never be unanimity, but there’s no sensible way of denying that the consensus view of those economists and others with relevant expertise is that Brexit has been, and will continue to be, economically damaging. On this blog, including in the April ‘failure’ post, I’ve cited numerous studies to this effect. Under the telling headline ‘the deafening silence over Brexit’s economic fallout’, this week the Financial Times provided an overview of the evidence (£) showing the damage, drawing on studies from the LSE and the Peterson Institute amongst others. Meanwhile, the Resolution Foundation produced a major new report about the mainly negative impacts on productivity, wages, household incomes, investment and competitiveness, and three major US banks warned that the UK would experience “searing inflation” for years because of Brexit. The idea that all the academics, thinktanks, banks and consultancies have, as David Frost suggested yesterday, “an axe to grind” and their analysis should be ignored is, frankly, puerile.

Indeed, the economic damage is now built in to the government’s own budget plans and modelling and, as mentioned in several previous posts, there are many signs that Brexiters themselves are coming to accept the failure of their project. Jacob Rees-Mogg’s refusal this week to publish any assessments of the success of Brexit itself shows that the government knows it has failed, for you can be sure he would do so if even the slenderest evidence of success existed. So whilst the diehards will continue to decry the damage reports as remainer propaganda, we are seeing, as I argued in a recent post, the gradual revelation of the ‘public secret’ of Brexit’s failure. It’s on the assumption this process continues, and what a New Statesman editorial this week calls the “conspiracy of silence” over Brexit breaks, that the question of how to address its failure becomes crucial.

The Brexit Ultras’ answer

In this context, this week’s widely reported-on document from the Centre for Brexit Policy (CBP), entitled Defining Britain’s Post-Brexit Role in the World, is illustrative and important. In its own way it is an acknowledgement that Brexit has not yielded tangible success, although it ascribes that to the government’s half-hearted implementation rather than to any flaws inherent in Brexit, and tries to chart a future path that will deliver such success for the nation. Not that it is in any sense a blueprint for national unity, being a highly partisan, not to say a paranoid, document, speaking of “rejoiner plots” that are “led by Tony Blair” (p.31) and replete with disparaging references to ‘remainers’.

Crucially, its collective authorship of seventeen are mostly readily identifiable as ‘the usual suspects’ associated with the CBP and similar groups, and partly as a result its proposals are both predictable and predictably flawed. So, for example, although the report is not mainly concerned with trade or economics, where these are discussed it rejects the gravity model of trade, in which geographical proximity is a key factor in trade volumes (p. 39). It’s a model endorsed by the vast majority of trade economists but there are a small number of exceptions, such as Professor Patrick Minford. And, what a surprise, amongst the collective authors we find … Patrick Minford. Reality, at least as understood by the vast majority of those competent to judge, is simply discounted (in this case by the usual trick of disaggregating EU trade into that with individual member states) which makes it hard to regard it as a serious analysis.

This same echo chamber quality permeates the report which, as regards its main geo-political focus, puts huge weight on the Special Relationship with the US (p. 41), the Anglosphere+ (Australia, New Zealand, Canada, India and, um, Japan), and the Commonwealth which, we’re told, “is much more than politics. It is the sense of instantly if indefinably feeling at home in each other’s lands; of the smells of shared, fusion cuisines, shared passions for cricket and rugby, of the Commonwealth Games, of the Duke of Edinburgh’s Award Scheme” (p.34) and which “looks to the UK for leadership” (p.56). It’s hard to know whether to laugh or cry at an analysis so naïve and so inattentive to modern history, but finding John Bolton and Alexander Downer (the former Australian Foreign Affairs Minister who is a leading opponent of Australian Republicanism) amongst the collective authorship helps to explain it.

A less partisan and more realistic account would recognize that for many years now the special relationship has been something of a diplomatic fiction, and one reduced by Brexit because of the loss of the ‘transatlantic bridge’ role. That isn’t to deny there is an important relationship, especially in intelligence services, but it shouldn’t be over-stated. Certainly the days when Australia, New Zealand and Canada looked to the ‘Mother Country’ are long gone, and Australia, in particular, is set to at least reconsider republicanism when the Queen dies. That will also be a pivotal moment for the future nature of the Commonwealth, and Professor Philip Murphy, Director of the Institute of Commonwealth Studies at the University of London thinks that “perhaps the Commonwealth has historically run its course and what you’re really seeing now is the ghost of an organization”. Murphy, who as his job title implies, is a leading expert on the topic, has also written a book that debunks many of the myths the CBP report relies on.

So, at the very least, these are questionable materials from which to build a sustainable post-Brexit future and, as with trade issues, the problem with the CBP approach is that it’s not based on the deep expertise of specialists but instead put together by those whose allegiance is to the Brexit project and discounts or downplays any expertise that contradicts what they would like to be true. The authors of the report would, no doubt, dismiss such criticisms as ‘elitist’, and perhaps enfold them into the category of the ‘declinism’ which they hold responsible both for Britain having joined the EU in the first place and for having failed to capitalise on its post-Brexit opportunities.

But this kind of Brexit ‘revivalism’ is as problematic an account of British history as declinism itself, with both being “symptoms of a nation unable to come to grips with its place in the world” as the historian Professor David Edgerton recently put it. Again, Edgerton is an expert on (and indeed himself a critic of) declinist explanations of British history. Both declinism and revivalism simply get in the way of realism, by constantly invoking historical myths or boosterish projects rather than serious strategic thinking which, to be successful, has to be based on the best available evidence. That evidence also needs to be understood, whereas Phillips O’Brien, Professor of Strategic Studies at St Andrew’s University, whose groundbreaking work on Britain and WW2 is cited in the report, says the authors do so in a way that convinces him they “have no idea what they are saying”. O’Brien also describes the report as a whole as “witch-burning” and “substanceless” and says that the authors “have no realistic understanding of Britain’s place in the world”.

Unsurprisingly, the “witch-burning” comes to a crescendo in proposals for a wholesale ‘reform’ of the Civil Service, which is depicted as being in the grip of declinism and of its supposed “bias against Brexit” and “continuing obstruction” of post-Brexit initiatives (p.87). This has been the perpetual cry of Brexiters since 2016 and it continues for the same reason: because the Civil Service has to enact real policies, it can’t indulge Brexiter fantasies. Since these fantasies persist in the echo-chamber world of bodies like the CBP, the only recourse is to posit that if the Civil Service were true believers then the fantasies would become real. But whereas expertise can be ignored and evidence cherry-picked in order to develop proposals, a Civil Service is needed to deliver policy - so the answer is to get a new one. If this becomes the template for Britain’s post-Brexit future then it will be as doomed to failure as the Brexit process itself because however strong belief is, reality always trumps it.

Why does the CBP report matter?

Despite its evident weaknesses (which would take a book to catalogue) the CBP report matters. Like several similar outfits under various names over the years, the CBP has close affiliations with the ERG MPs. Its Chairman is still the disgraced ERG ex-MP Owen Paterson, and its Fellows include ERG MPs Iain Duncan Smith and David Jones, both listed as authors of this latest report. Time and time again the propositions put forward by such groups move from being the apparently fringe meanderings of extremists to becoming pretty much government policy.

The most important example is the CBP’s July 2020 report on Replacing the Withdrawal Agreement. Some of it has been overtaken by events, but its wholesale objection to the NIP can be seen as setting the direction of travel that has resulted in the current NIPB. This, of course, was months before the NIP came into effect and so was plainly not motivated by the unexpected impacts of its operations.

The chances of the ideas in the latest CBP report, and the closely related deregulatory agenda, having an impact are considerable. That is partly because of Johnson’s current political weakness, making it easy to push him around, limited only by the fact that the Ultras’ wilder proposals would be wildly unpopular with the electorate. It is also for the more fundamental reason that – and in this respect, at least, the Brexit Ultras are right – he and his government have never had any coherent post-Brexit strategy, and indeed hardly mention it beyond boasting that it has ‘been delivered’.

Just as in 2016 there was no plan for how to do Brexit and the Institute for Government was warning that “silence is not a strategy”, so, now, the Brexit government has no plan for what to do with Brexit, as this week’s unveiling of Rees-Mogg’s risible Brexit ‘Public Dashboard’ illustrates. Now, as then, that leaves a vacuum into which the Ultras can push their agenda for the coming years. Crucially, apart from the content of that agenda, that means the continuation of an approach based on wilful distortions of evidence and reasoning, denial of reality, and hyper-partisanship.

This is the reason why things like the CBP report should be paid attention to. For what is at stake now is not Brexit – the question of whether to leave the EU or not - but the multiple severe problems Britain faces, problems which include social and regional inequality, poor productivity, crumbling infrastructure, a rentier economy, and declining living standards. No doubt there are others (including many, such as climate change, which aren’t specifically national) but as a core list it would probably be accepted by people of most political persuasions, including those with different views of Brexit.

In an interesting essay in The Atlantic this week – not all of which I agree with - Tom McTague makes the point that whilst Brexiters need to face the fact that leaving the EU has worsened many of these problems, erstwhile remainers need to accept that they did not begin with Brexit. I certainly don’t have any problems accepting that, though all it suggests to me is that Brexiters were wrong to say that the UK was not free to make its own, often poor, policy choices whilst in the EU, and then exacerbated them by leaving. The implication of that is to make better policy choices now, which includes acknowledging and limiting the damage that Brexit has done, and part of that includes – and here I agree with McTague’s implication – ceasing to treat 2016 as the sole, defining moment of recent British history.

Looking towards 2026

There’s no realistic prospect of the present government doing this. I suppose it’s remotely possible that a future Conservative government could, and Nick Tyrone, author of This Week in Brexitland, has argued that it may well be such a government that will eventually take us back into the single market and even the EU. But that is at best a very long-term prospect and what matters in the more immediate period, given there will be a General Election by 2024, is the other part of the vacuum, namely Labour’s near silence on Brexit. In a recent post I wrote about how Labour have the chance to lead the debate and, though I’m hardly the first person to have made that observation, my post attracted a fair bit of comment on Twitter with some suggesting (as indeed Tyrone argues) that this ignores the electoral risks to Labour of re-opening the Brexit debates and divisions.

I’m not, of course, unaware of those risks. I’m also aware of my own biases. I spend much of my week reading for and writing what are now normally 3000-word blog posts, and over the last six years have written, in various places, well over a million words about Brexit. So I recognize that I’m not exactly typical, that I’m far more likely than most to see merit in talking about Brexit, and therefore highly prone to understating the damage that doing so might do to the Labour Party.

Against that, Alastair Campbell – who knows more than me or most people about political strategy and communication, and who is passionately committed to Labour’s electoral success – also believes that Labour should and could be speaking more directly and forcefully about the damage of Brexit, and ways to mitigate it. Labour MP Stella Creasy has said something similar this week. And, whilst not explicitly mentioning Labour, former Foreign Secretary David Miliband has recently tweeted about the need for “an honest debate about how to limit the damage” of Brexit. Then, just yesterday, Shadow Foreign Secretary David Lammy unveiled some limited ideas on how Labour would try to develop the existing Brexit trade deal, although it remains to be seen how forcefully even these will be pursued. These ideas are a step in the right direction but as yet they fall short of providing the necessary leadership.

Why Labour needs a policy

Clearly there are electoral risks in alienating leave-voting potential Labour supporters, but there are also risks on Labour’s other flank, with its present flaccid stance alienating to the very large number of remain-voting potential Labour supporters. Of course there’s a view that Labour can afford to lose some of these to the LibDems or Greens in urban areas where Labour has huge majorities if it enables them to hold on to, or attract back, ‘Red Wall’ voters, and it may be re-enforced by today’s Wakefield by-election result. However, that ignores how Labour seats in very strongly remain-voting areas like Cambridge (26.3% leave) or Hampstead & Kilburn (23.7% leave) could be lost to the LibDems given not inconceivable swings (9% and 13% respectively), or how Conservative seats that Labour might hope to win on very small swings, like Chipping Barnet (41.1% leave, 1% swing to Labour needed)  or Chingford (49.9% leave, 1.3% swing to Labour needed), might remain Conservative by virtue of disaffected remainers voting LibDem, or not voting at all.

And then there are Labour marginals like Warwick & Leamington (41.6% leave, Tories need 0.7% swing) and Canterbury (45.3% leave, Tories need 1.5% swing), which Labour could lose for lack of remainer support. Beyond such seats, even in those which had majorities, even large majorities, of leave voters, could still be affected by remainers feeling inadequately represented by Labour. In short, Labour can’t simply focus on its leave-voting actual or potential supporters and think that it can bank its remain-voting support.

This can also be put in a different way. Brexit isn’t automatically good territory for the Tories. No doubt it’s true that Johnson believes it would help him to pull Labour on to it, hence they resist going there, but that doesn’t mean he is right. It is not 2016 or even 2019 anymore. Of course the hard core of Tory leave voters will be galvanized by Brexit coming up the agenda again, but opinion polls show a clear and consistent lead for the view that Brexit was a mistake over those thinking it was right, and that many voters, including at least some who voted leave in 2016 and/or Tory in 2019, are now disillusioned by the way it has been done by Johnson including, as the NIPB amply shows, the emptiness of his promise to ‘get Brexit done’. It’s notable that yesterday, the anniversary of the referendum, two leave-voting seats rejected the Tories in by-elections. That may be more about Johnson than Brexit, but either way it is very far from clear that Labour will be monstered if they hold his Brexit record up for scrutiny. But to do that they need to a have a good and suitably crafted answer to the inevitable question: what would you do differently?

The policy that Labour needs

That does not mean a ‘rejoin’ policy, which would effectively go back to the in-out question of 2016. I don’t think that’s in prospect for years, perhaps not ever. It need not even mean a single market policy, and although some, including recently Labour frontbencher Anna McMorrin have called for that, it’s clear from what Lammy said yesterday that Labour are not going to endorse that for now, and I suspect that will hold right through to the election. However, that doesn’t mean that a Labour-led coalition – perhaps the most likely outcome - would not adopt it.

But it could certainly include a commitment to extensive regulatory alignment – perhaps, as, again, David Miliband has recently suggested, for a specified period of five or ten years – to include Sanitary and Phyto-sanitary (SPS) alignment. In itself, that makes the Irish Sea border substantially thinner. Temporarily or permanently abandoning the UKCA mark, already postponed by the government, would barely be controversial but would make life a lot easier for UK businesses. Both of these things go substantially beyond the Lammy proposals, especially as it’s not clear whether the SPS deal he alluded to implies full dynamic alignment. Proposing to add a mobility chapter to the TCA so that musicians and other service providers could more easily travel within the EU would be an equally pragmatic position, and one which Lammy appears to have suggested Labour will endorse.

It's worth recalling that none of the things listed above was remotely controversial even amongst most committed Brexiters until very recently. It is only the rapid radicalization of their demands that has led to the scorched earth ‘sovereignty-first’ Brexit delivered by Johnson and Frost. Labour can, with absolute truth, say to leave voters that this was not the Brexit they were promised. Even leaving aside the whole soft versus hard Brexit issue, a core Brexiter claim was that sovereignty would mean the UK choosing for itself which rules it wanted to follow, according to its own best interests. It didn’t mean eschewing all regulations other than those unique to the UK. So it is perfectly reasonable for Labour to argue that alignment is currently in the UK’s best interest, and to commit to it.

In this way Labour could develop a position that allows them to criticise the damage Brexit is doing and provide a pragmatic alternative, and to do this not as ‘re-opening Brexit’ but as part and parcel of a wider policy offer on the economy, in particular. It won’t please everyone, but nothing will. Crucially this, or a more fully developed version of it, would be a policy rather than the present policy vacuum. That, just in itself, would change the terms of the debate. If Labour won the next election, it would also change the delivery of policy.

Beyond Brexit

The perennial political mistake is to fight yesterday’s battle. To some, that implies, indeed, that Labour should relegate Brexit to the past. But this is to fundamentally misunderstand how Brexit is a still ongoing process and that the post-Brexit condition is the necessary context of all policymaking. This means that those resisting discussing Brexit are actually trapped in yesterday’s battle, thinking it means the 2016-2019 battle over leaving the EU. Indeed Alastair Campbell (in a personal communication) “thinks Labour are fighting the last battle not the next one, which is to re-build Britain’s economy and reputation after austerity, Brexit and Covid, the ABC that has done so much damage”.

That can’t be done without mentioning the damage of Brexit, any more than it can without mentioning that caused by austerity and Covid. The Tories may want to continue to see Brexit through the prism of the dead question of leaving or remaining in the EU even if this has declining salience even in leave-voting areas (as Guardian journalist John Harris suggests, also invoking the motif of ‘generals fighting the last war’, but applying it to Johnson). Labour does not need to do so and should not do so. The new, living, Brexit question, and it is not just a question for Labour but everyone, is: what now?

At the moment, we are still on the cusp. Much of the content and terms of the debate are the same as they have been in the six years since the referendum. That won’t disappear, but it is beginning to shift and in the next years will do so even more. That’s inevitable just because of the passage of time. It’s also because one of the few Brexiter slogans which was true, albeit perhaps not as they meant it, was ‘we’re leaving the EU, we’re not leaving Europe’.

So, here we are, having left the EU but not left Europe. The question, then – and it’s a question with profound implications for economic, foreign, defence, security, science, and many other policy areas – is the nature of that inevitable relationship. This is acknowledged by the CBP report (p.75), but predictably refracted through the hostile and unrealistic lens of seeing the EU as “declining” (declinism being a permitted narrative when applied to the EU), “incoherent” and relatively unimportant, and to be approached more through bi-lateral relations with member states than with the EU bloc.

But the Brexiters do not own this question or its answers, and if they are allowed to do so by default and others’ silence then the failures of Brexit so far will be compounded by those of the coming post-Brexit period. In particular, the UK’s approach to this question needs to break with the evidence-distorting, logic-twisting, reality-denying mentality that has characterised the Brexit process so far.  Crucially, whilst the question arises as a result of the referendum of six years ago the answer is not, as they want it to be, in any way specified by that referendum. This is the coming battle, and it is going to be central to the politics of Brexit for at least the next six years.

*Note: Updated/ corrected at 10.40 on 24/06/22 because an earlier version of this post incorrectly stated that no date had been set for the second reading of the NIPB.

Brexit discredited

This week saw the publication of an update of one of the major studies of the impact of Brexit on UK trade, conducted by John Springford of the Centre for European Reform. It uses a method which compares the actual UK economy with the ‘doppelganger’ UK that didn’t leave the EU single market and customs union. The doppelganger is calculated on the basis of a basket of other countries that closely mirrored UK performance prior to the pandemic and thus provide a good comparison with what has happened to the UK as a result of Brexit. This latest version shows that UK worldwide trade in goods in September 2021 was 11.2% lower than it would have been but for Brexit (and this is still before the UK has introduced full controls on imports of EU goods).

This is consistent with the findings of other studies and, for that matter, with most pre-referendum and post-referendum but pre-Brexit predictions. There is also the beginning of an evidence base about the impact on services trade. Data on what has happened since Brexit are unclear and particularly difficult to disentangle from the pandemic, but a new study by Jun Du and Oleksandr Shepotylo of Aston University suggests that even in the period after the referendum and before Brexit or the pandemic (2016-2019) UK services exports declined by 5.7% a year on average as a causal impact of the vote to leave.

That’s your GDP!

Springford points out that it is not easy to translate the effect on trade into the effect on GDP, but, overall, and consistent with other estimates, he suggests that it looks as if UK annual GDP will be 4%-5% smaller by 2030 than it would have been had Brexit not happened. These are not ‘teething problems’, but long-term damage to national prosperity.

There’s a well-known story about Professor Anand Menon, head of the UK in a Changing Europe thinktank, giving a pre-referendum talk in Newcastle. When he spoke of the likely impact of Brexit on GDP, a heckler called out ‘that’s your bloody GDP, not ours’. It’s a story that has come to stand for the disconnect between ‘experts’ and ‘ordinary people’. But although there are longstanding and good arguments against the use of GDP as an economic measure, it’s wrong to dismiss it as an abstraction that is irrelevant to everyday life. Ian Mulheirn of the Tony Blair Institute calculated that the entirety of the tax rises in the March 2021 budget were attributable to the negative economic effect of Brexit and, hence, tax revenues.

So it may not be ‘our’ GDP, but it is our taxes or our public services. And, despite revisionist claims that Brexit was about ‘freedom at any price’, this is emphatically not how it was presented to the electorate. On the contrary, every warning of its costs was dismissed as Project Fear. Yet as I argued in a recent post, Brexiters seem to have largely given up claiming that Brexit is economically beneficial or denying that it is economically damaging. On the other hand, some, especially on the free market Right, who supported Brexit – notably Spectator Editor Fraser Nelson – are beginning to question its economic rationale.

The strange case of Thatcherite Brexiters

Such questioning opens up the conundrum of why a project which erected barriers with the UK’s largest trade partner should have been so dear to those who regard themselves as free traders. A version of the same contradiction is that so many who are ardent Thatcherites are so opposed to membership of the single market of which she was an enthusiastic architect. In a recent speech to the Centre for Policy Studies – a free market, small state thinktank which Margaret Thatcher co-founded - Boris Johnson went so far as to describe this enthusiasm as having been her “blind spot”.

The apparent contradiction is in many cases explained by the Brexiters’ naïve idea that free trade means tariff-free trade, and hence not to realise (or care) that the single market is about eroding non-tariff barriers (NTBs) as well as removing tariffs, or at least to underestimate the significance of its doing so. Thus in a major speech in February 2020 David Frost – without presenting a shred of evidence – opined that the impact of NTBs and of customs costs was exaggerated by unnamed studies “in some cases by an order of magnitude”, and this clearly informed his approach to the trade negotiations with the EU which were then beginning. Given what has since happened to British trade, it is a line which deserves to go down in history in the same way as, say, that of the record label executive who supposedly rejected the Beatles on the grounds that guitar music was on the way out.

No doubt this is in part ignorance, but I think that it grows from a deeper soil which is the way that many Thatcherite free traders hold a quasi-philosophical belief that markets are a ‘natural’ phenomenon which exist prior to, and function better without, regulation. It is a view of markets, including international trading markets, which is wholly naïve at a conceptual level and unworkable at a practical level. Conceptually, it ignores all those things – from contract law to weights and measures regulations – which are prior conditions for effective markets. Practically, it ignores how creating shared, supra-national regulatory frameworks enables rather than restrains international trade, and in particular services trade. Hence they don’t understand markets in general, or the single market in particular. As regards Brexit, this has had two calamitous effects.

Trade, regulation, and sovereignty

Firstly, it explains why – as is beginning to be more widely discussed than perhaps it was at the time – the Trade and Cooperation Agreement (TCA) was so thin, and effectively little more than mainly tariff-free trade in goods. It’s very important to be careful about this, though. It certainly doesn’t mean that the TCA is worthless, as some Brexiters will undoubtedly argue when it comes up for review and they revive their ‘trading on WTO terms’ fantasy. Without the TCA many industries, notably auto, would massively shrink or even disappear entirely. The real issue is that by opting for a Free Trade Agreement (FTA) rather than single market membership there was inevitably considerably less liberalisation of NTBs and of services trade. As I’ve argued endlessly on this blog, one of the fatal flaws in the entire hard Brexit case was the idea that any FTA, even one more extensive than the TCA, could replicate or even come close to single market membership.

Secondly it explains why far from reducing regulatory red tape Brexit has dumped truckloads of it on British businesses (and also private citizens, for example when travelling or when sending presents to friends and family in the EU). In particular, it has exposed, or may come to expose, firms which trade with the EU to double regulatory and certification requirements – as, for example with the chemicals industry - one for the UK and one for the EU. That’s hardly surprising, as it is exactly the kind of duplication that a single market avoids. Reintroducing it not only hampers British businesses but in some cases will mean EU firms no longer servicing the British market because it isn’t large enough to be worth meeting separate regulations. This is a disadvantage for British consumers.

This also means that Thatcherites are now finding that the scope for post-Brexit regulatory divergence is far less than they had imagined, and government efforts to find examples have not been very fruitful. The big exception is immigration policy with respect to EU countries, but the new restrictions this allows are not economically beneficial for businesses as current labour shortages show and – unlike for many leave voters – immigration control wasn’t a central concern for free market Brexiters. Boris Johnson, like the Lexiters, may now be (dubiously) asserting that it has led to wage increases for workers, but that is hardly a priority for Thatcherites, to say the least. State aid may conceivably come to become (£) an area where divergence is actually beneficial to the UK, but then Thatcherites aren’t very keen on that either.

There are other examples of divergence, ranging from banning live animal exports for slaughter to allowing market traders to use imperial units only, but, whilst these may be important for some, sweeping regulatory reforms are proving elusive (for a detailed listing of where there is and is not regulatory divergence, see the UK in a Changing Europe tracker). For example, there is much talk of creating a more flexible data protection regime than the EU’s GDPR, but doing so would be far more costly for British businesses (£) because for global purposes GDPR is the standard they have to reach. The UK is too small to become a global standard-setter, so exercising its sovereignty in this way just leads back to the problem of duplication. One quiet acknowledgement of that came to fruition this week (£) when it was confirmed that the UK will be able to continue its membership of the European Committee for Standardisation (CEN) and its electrical engineering counterpart (CENELEC). They are not EU bodies, per se, but they do set a huge range of single market standards and these will apply to the UK as well.

In short, because they don’t understand markets and regulation, the rhetoric of Thatcherite Brexiters founders when it meets reality. For with a few exceptions regulatory divergence is uneconomic. Thus, in practice, having regulatory sovereignty is either damaging (when it is used) or pointless (because it isn’t used). Yet Frost, most notably, continues to trot out the line that regulatory divergence is the raison d’etre of Brexit, and a key test of its success. If that is so, he might as well admit that it is destined to be a failure.

Britannia Unchained?

Of course for many Thatcherite Brexiters, such as some of the authors of Britannia Unchained, the real prize was to be deregulation of labour and environmental standards. Indeed it is common to see some – both remainers and leavers - confidently announcing that ‘this was the whole point of Brexit’. That is wrong simply because the only ‘whole point’ of Brexit was that it didn’t have a whole point: it was an assembly of contradictory agendas of which such deregulation was only one, albeit an important one given the power of its adherents. But it turns out that, at least for now, their power is less than they hope and others fear.

For to the chagrin of such Thatcherite Brexiters, here, too, Brexit does not live up to their naïve model of sovereignty. The level playing field provisions of the TCA may not have been as extensive as originally envisaged in the Political Declaration with the Withdrawal Agreement, but nevertheless they exist and constrain the UK through non-regression clauses on labour, social and environmental standards. Indeed free trade agreements in general, including CPTPP membership if it happens, increasingly mandate labour, human rights and environmental standards. It can certainly be argued they do not yet go (nearly) far enough, but the point is that they exist and put constraints on sovereignty in the Brexiter sense of the term.

Moreover, there are domestic constraints. Thatcherite Brexiters like Professor Patrick Minford may be happy to see whole swathes of manufacturing industry and agriculture disappear, but that isn’t something that any government could readily countenance. Nor is there much public appetite for shredding labour and environmental standards. In fact, the government has been quite wary of using Brexit in ways which hard core Thatcherites would wish – not, for example, making use of the freedom to remove the cap on bankers’ bonuses, something bemoaned by Fraser Nelson and others. In part this is because of the peculiar nature of Johnson’s 2019 election victory and his reliance of the ‘red wall’ seats.  The pandemic has also had the effect of, if only temporarily, extending the scale of state activity and intervention.

From these constraints arise the now widely made criticism from the Tory Right that “this isn’t a Conservative government”. It’s certainly the case that Johnson is very different to Thatcher, and not just as regards the single market. She was moralistic where he is amoral, if not immoral. She adhered to a version of business rooted in the thrifty shopkeepers of her childhood. He says ‘f*** business’. But an irony of Thatcher’s legacy is that her image of capitalism was entirely different to the rootless, credit-fuelled ‘casino capitalism’ that her policies begat. If Johnson has any kind of business base it is with hedge funds and private equity firms on the wilder end of that footloose, global capitalism who increasingly fund the modern Tory Party.

However, Johnson is similar to Thatcher in relying, as does support for Brexit, on an uneasy and contradictory coalition of socially traditionalist and protectionist nativists with socially indifferent and free market globalists. In fact it’s quite likely that the electoral coalition that brought Thatcher to power and kept her there included many of the actual individuals, as well as the broad sociological groupings, who were to vote for Brexit in 2016. This (along with the specific ‘red wall’ inflection) means that Johnson is highly constrained in the extent to which he can give the free market, deregulatory Right its head.

Notions of the nation and of national sovereignty are at the fault line of this politics, as they were for Thatcher. Whilst basing much of her appeal on a flag-waving campaign to make Britain great again, the logic of her support for economic globalization undermined the nation state, and the idea of ‘British business’, in particular, became hopelessly antiquated. At the same time, and again as a result of policy decisions, the British economy became far more services based (and hence its international trade needs became far more bound up with removing NTBs than removing tariffs). In some respects, Brexit was a reaction against these changes, but conflating them with EU membership was a catastrophic error, and indeed the post-Brexit acceleration of the sell-off of British businesses illustrates this.

An incoherent and undeliverable strategy

The consequence of that error has been to try to square the circle of nativism and globalism by imagining post-Brexit ‘Global Britain’ to be an independent nation state, trading tariff-free with the world*. Unfortunately for Johnson’s government, the world has moved on from such a model (if indeed it ever existed) to one of national inter-dependence, regionalized economics and increasingly globalised regulation. To the extent that Brexit Britain has a strategy at all, it is to adopt an Eighteenth-Century approach to the Twenty-First Century world, something underscored by Frost’s repeated references to Edmund Burke’s political philosophy as its guiding light.

Such a strategy is totally incoherent and undeliverable for both trade and international relations. At the level of trade it is what gives us a government crowing about trade deals of almost no economic value, simply because they were made by the UK, or endlessly talking about Britain’s ‘world-leading’ qualities whilst presiding over a country which is arguably actually ‘undeveloping’. At the level of international relations it is what yields continual antagonism (£) with the EU, and France in particular, as national sovereignty keeps bumping up against that of others, whilst leaving the UK if not isolated and friendless then at least the object of international ridicule and distrust.

This might at least be a formula for creating a certain kind of national solidarity. It would be a nasty, embittered and chauvinistic one, for sure, but it could be viable in a functional sense. However, the reality is that it fails to deliver even that. For as the Brexit vote, and the high levels of continuing opposition to it, show, at least half the country, if not more, are heavily invested in the world of national inter-dependence, regionalized economics and globalised regulation and are unimpressed, if not repelled, by that offered by Johnson and Brexit. That cleavage is most obvious between Scotland and the rest of the UK, but also significantly divides different parts of the English population. So as well as being externally incoherent Johnson’s Brexit cannot function as a nation-sustaining project either, and will very likely be a nation-ending one as well as initiating an unresolvable culture war within England.

Brexit discredited

It may seem we have come a long way from the trade figures with which I began but that is not so. Those figures are not just about the economic damage of Brexit, but are the most readily quantifiable barometer of the flawed political theory of sovereignty which underlies it. It has become a myth that the case for Brexit was a non-economic one – much of the Vote Leave campaign was explicitly economic – and only about regaining sovereignty or ‘taking back control’. The proposition was that by taking back control, good economic outcomes would become possible, as would good non-economic outcomes but at no economic cost.

Thus the economic case and the political case for Brexit were always inextricably intertwined, and as each becomes discredited so does the other.

 
 

*It’s true that there is another version of this Brexit strategy which puts particular weight on trading relations with the ‘Anglosphere’ and/or the Commonwealth. It is still trotted out by, for example, Dan Hannan who spoke recently of how EU membership had “artificially” (cf. my point above about markets being ‘natural’) diverted trade from Britain’s “cultural hinterland” (apparently referring to some, at least, of what used to be that entirely natural entity the British Empire). But although there are traces of that thinking in its policy, even this government isn’t quite so detached from reality as to explicitly frame a strategy in these delusional, neo-imperial preference, terms.