The first post-Brexit election

So the election is here, and it is one of the strangest there has been. For months now it has seemed overdue, yet its sudden, unexpected announcement for July makes it also seem premature. It was called by the third Prime Minister to hold office since the previous election, his predecessors having been deposed amid scandal and chaos, itself inseparable from the chaos unleashed by Brexit. If the outcome is a majority for either of the main parties it will be in some way extraordinary. For the Tories, it would mean an unprecedented recovery from months of huge deficits in the opinion polls. For Labour, it would mean recovering in a single electoral cycle from its worst defeat since 1935.

As Sunak announced it, there was a swirl of rumours that his backbenchers were about to call a vote of no confidence in his leadership, and his entire party, including the cabinet, were apparently totally unprepared for what he was to say. And the announcement itself was almost comically maladroit, as the rain soaked him and his words were almost drowned out by the sound of the ‘Things can only get better’ anthem of Labour in 1997 (apparently played by the indefatigable ‘Stop Brexit’ demonstrator Steve Bray).

It will also be the first election since the UK left the European Union, but it seems highly likely that Brexit will hardly be discussed. However, that very lack of discussion will be of significance. For it will betoken the continuing destabilization and dishonesty Brexit has brought to British politics, with the two being linked: to talk honestly about Brexit would destabilize both the main parties.

Nevertheless, Brexit will lurk in the shadows, and will continue to haunt politics whatever the election outcome. In this sense, regardless of whether Brexit features explicitly in the campaign, this election is part-and-parcel of the still-unfolding Brexit process. As the campaign develops over the next six weeks, I will discuss it in those terms.

The Brexit silence

In last week’s post, I talked about the near-silence of the Tory leadership about Brexit, arguing that this is because:

“It can’t claim Brexit to be a success, because those who do not have a foundational belief in its rightness can clearly see it has failed, whilst those for whom its rightness is a foundational belief also believe that it has been betrayed. But it can’t denounce Brexit as a failure or a betrayal, since it is the Brexit the Tory leadership actually delivered … It can neither boast of Brexit nor disown it.”

That silence, and that of the Labour Party, is already being commented on, for example by Daniel Finkelstein, who also discussed it in his Times column this week (£), but what is less discussed is that the Tories have been trapped partly as a result of just how successfully the Labour Party have neutralised Brexit as an electoral issue. They have done so partly through their own reticence about it, and partly by the extremely limited, though not entirely trivial, commitments they have made to softening the form of Brexit created by the Conservatives.

I’m very well aware that many Labour supporters, remainers, and Labour-supporting remainers are deeply unhappy with this strategy – and indeed that this is true of many readers of the blog. However, it’s not necessary to be happy about it to consider the effect it has had, possibly unintentionally, on the election and on the Brexit saga more generally.

A brief review of Labour’s Brexit strategy

As is well-known, the origins of Labour’s approach lay in the desire to regain the support of those leave voters who had traditionally voted Labour, especially in the ‘Red Wall’ seats (in the more expanded meaning that term has come to have). Arguably, the recent local election results demonstrate that this approach has been successful, but that is, indeed, much-debated, especially in the light of Professor Sir John Curtice’s influential analysis. His work suggests a much more complicated picture resulting from the interplay between voters’ positions on the question of ‘re-joining’ versus ‘staying out’ and their perceptions, mis-perceptions, and lack of knowledge of Labour’s position on that question.

However, even within Curtice’s analysis there is some support for the Labour strategy, in that it finds that:

“Among those who would vote to stay out, support for the party is twice as high among those who think Labour shares their view as it is among those who think Labour has no clear policy, and four times as high as it is among those who would re-join. … [whereas] re-joiners seem inclined to back the party in substantial numbers irrespective of where they think the party stands on the issue.” 

In other words, even though most Labour voters are anti-Brexit, the party can hang on to their votes without taking an anti-Brexit stance, and in the process make it more likely that they can hang on to, or regain, pro-Brexit voters. There are also more micro-level considerations here about ‘vote efficiency’ (£), in that Labour’s positioning on Brexit (along with some other issues) may lose the party some anti-Brexit voters in urban constituencies where it has large numbers of voters and can expect to win anyway, whilst gaining the support of pro-Brexit voters in marginal and target seats.

The impact on the Tories

Whatever the validity of this approach as regards the Labour vote, discussing it solely in those terms ignores what it means for the Tory vote. I’ve made this point before, last December, in a detailed appraisal of Curtice’s earlier analysis of the Labour vote, when he suggested that they could still win the election even if they had a far more anti-Brexit policy. That policy would, if it were to be in any meaningful way more anti-Brexit than at present, have to mean at the least seeking to re-join the single market, and at most seeking to re-join the EU.

Both then and now, I think that what’s missing from the analysis is that a shift to such a policy would have enabled the Tories not just to break their silence but to become very vocal about Brexit. Freed from the trap defined in my previous post, and repeated at the top of this one, they would have been able to talk about Brexit not in terms of its success, and not in the face of Brexiter criticisms that it hasn’t been done ‘properly’, but solely in terms of it having been done at all.

In this way, they would be able to reprise a version of the ‘get Brexit done’ line of the 2019 election, by depicting Labour as wanting to re-open all the battles of Brexit with which many voters – regardless of whether they are in favour of Brexit or not – had become so bemused and bored. What better terrain, indeed, to deploy to great effect their current, and currently rather feeble, slogan that a Labour government would mean “going back to square one”?

More than that, the Tories would have been able to regress to deploying the powerful “will of the people” line which, flawed as it was, acted as a battering ram in the period between the referendum and the 2019 election. Every single media interview with a Labour politician during the campaign would have become focused on the one question of Labour’s plans to reverse Brexit. Literally no other part of Labour policy would be mentioned. Meanwhile, every part of the Tory campaign, and every interview with a Tory politician, would have focussed solely on Labour’s Brexit policy, in the process absolving Tories from scrutiny of their government’s record and enabling them to unite their currently fractious party in way which is otherwise totally inconceivable.

More even than that, the chances of a deal between the Tories and Reform UK would have massively increased, under a ‘defend Brexit’ campaign banner. Instead, despite the attempts by Tories such as David Frost (£), such a message has no credibility. The most the Tories can credibly claim is that Labour would keep the UK ‘within Brussels’ regulatory orbit’. But since, to the chagrin of the Brexiters, the government has broadly speaking realised that there is no realistic alternative to this, that has little traction. However, if Labour had any kind of rejoin policy, a ‘defend Brexit’ message would become highly credible and, as happened with Farage and the Brexit Party in 2019 for the same reason, it is easy to envisage that Reform would only run candidates in constituencies where it would hurt Labour (instead, the important question now is whether and to what extent Reform will be able to hurt the Tories, especially as Nigel Farage has opted not to stand in the election).

In short, it is hard to see how a different Labour policy on Brexit could do anything other than reduce its chances of winning the election, or at least reduce the majority it might otherwise expect.  Whether or not it is accepted that this is the best strategy for Labour to win, it remains the case that it is one of the major reasons why the Tories seem likely to be largely silent about Brexit during the campaign. Deprived of the opportunity to ‘defend Brexit’ simply because it is Brexit, they now only have reason to talk about it if there were positive things to say. But what might these be?

Brexit boasting à la Badenoch?

If the Tories do say anything substantive about Brexit during the campaign, they are likely to follow the kind of line taken in recent months by Kemi Badenoch, possibly the only government minister to attempt to make positive claims for it. As Business and Trade Secretary, she has been able, as Liz Truss did when she had the Trade portfolio, to truthfully point to something major which the UK can now do which it couldn’t as an EU member, namely run an independent trade policy. Moreover, it is propitious ground for Brexiters because it is an area where the supposed benefits can be presented in a way which is simple to understand and yields ongoing results.

The simplicity is akin to that of the independent Covid vaccine policy, but that was a one-off and relatively quickly forgotten (of course it also wasn’t even remotely true that it was down to Brexit, but many believed it to be). Trade policy also chimes with the core ideology of many members and traditional supporters of the Tory Party. For most of them, except, perhaps, those who are farmers, the details don’t really matter: what they think of as ‘free trade’ – typically, some dated notion of it being all about tariff-free trade – is simply ‘a good thing’ (on which topic, a new report from the UK Trade Policy Observatory this week underscores the significance of non-tariff barriers to UK-EU trade).

So Sunak could try, as Badenoch has done, to woo the gullible with things like the pointless statistic that (largely because of the rollovers of previous EU deals) the UK has ‘more trade agreements’ than any other country, or with talking up the one-sided and economically rather trivial deals with Australia and New Zealand, locations which make a certain kind of voter get moist-eyed about ‘old friends in the Dominions’. No doubt it is also their memories of ‘old Eastern hands’ in the family which give CPTPP accession some of its lustre, along with the apparently hard-headed, but actually utterly stupid*, suggestion that the fast growth rates of some of the countries involved makes it a great prize for Buccaneering Britain.

Appealing, too, though most facile of all, is the claim that Brexit has enabled the UK to achieve ‘the best trade deal the EU has ever given a third country’, as if that did not entail a downgrade from the previous terms of trade. Though, actually, that isn’t quite the most facile claim about Brexit’s trade opportunities. That title surely belongs to the virtually worthless Memorandums of Understanding signed with individual states within the US, which, except possibly for some very minor provisions, didn’t require Brexit anyway. Throw in some bogus graphs produced by the handful of economists who maintain that Brexit is good for trade and the UK economy generally, and the transposition of the truth of having an independent trade policy into the falsity that it is a net economic benefit of Brexit is easy to sell to some voters, though mainly to those who would vote for the Tories anyway (but perhaps also some who are tempted by Reform).

However, it would be much more difficult to persuade the wider public, who have already come to a different view, with only 12% thinking Brexit has had a positive effect on the current state of the UK economy (70% think the effect is negative), and only 21% thinking it will have a positive effect on the prospects of future economic growth (55% think it will be negative). Other polls show that on trade, specifically, 49% think that Brexit has had a negative impact on the ability to import goods from outside the EU, and 57% think that is so for importing goods from the EU. And on what might be the public’s biggest economic concern, 63% think Brexit has had a bad impact on prices in shops, and just 7% that it has had a good impact.

So, although trade policy may be an area where the Tories try to campaign on Brexit, if they do so it will be in the teeth of the public image of Brexit as one of practical failure, and therefore much more difficult than if Labour had given them the opportunity to re-mobilize around ‘defending Brexit’ in the abstract.

Red tape in the open air

Trade aside, the other Brexit-related campaign line the Tory Party might attempt to run is that of having ‘freed Britain from Brussels’ red tape’. This has been Badenoch’s most recent focus, with her twin announcements of the progress of the Smarter Regulation Programme, which has been running for the last year, and a new White Paper, also on Smarter Regulation. The press release covering the two was, indeed, entitled ‘Brexit freedoms used to slash red tape for business’, a typically disingenuous claim which backfired, as it led to media reports that one such freedom was going to be allowing al fresco dining. This caused much mockery since such dining is, to say the least, hardly forbidden within EU countries.

In fact, the story related to one of the items in the announcement, about possible simplifications of regulations in serving alcohol for outdoor consumption, and it wasn’t actually claimed to be anything to do with Brexit. In that sense, the mockery was misguided because the reporting was misleading. But the government had only itself to blame for choosing to badge the whole exercise in terms of ‘Brexit freedoms’, just as it previously made itself ridiculous with the consultation on imperial units of measurement.

Actually, looking down the Badenoch list, many of the other items had nothing to do with Brexit. Of those that did, one was a re-announcement of reforms to the reporting requirements relating to the Working Time Directive, which have been known about since last November (and came into force this year). These changes notably fall very short of the dreams of the deregulatory Brexiters to abolish the provisions of the Directive altogether, as it was rumoured the Truss government planned to do.

Another Brexit-related item in the announcement was a consultation on “an alternative model for UK REACH”, the post-Brexit chemicals regulatory system which is due to be phased in over the period 2026-2030. Long-term readers of this blog will know, as I’ve been discussing it since March 2020, when Michael Gove first confirmed the government’s intention to diverge from EU REACH, that this has been one of the longest-running post-Brexit regulatory sagas. Anyone working in the industries affected will be even more familiar with it and, whilst insiders have welcomed the new consultation, to posit this as some new Brexit freedom, rather than the latest stage in an utter fiasco, takes quite some brass neck.

Indeed, almost all of the announcements Badenoch made were for ‘consultations’ and ‘proposals’ on various regulatory issues. In itself, that isn’t to be disparaged, since far too many of the government’s post-Brexit initiatives have foundered on lack of consultation or due consideration – UKCA markings being an obvious example – but it is hardly evidence of the supposed ‘nimbleness’ of regulatory decision-making outside the EU that so little has been achieved so slowly. Crucially, this, along with the dull technical nature of so many regulatory issues, also shows why the Tories can’t make much of it as an electoral campaign issue. Few voters will care that, at some unspecified time in the future, some EU law on widgets may be changed.

So, again, Labour have spiked the Tories’ guns by closing off the possibility of them returning to the generalities of defending Brexit ‘sovereignty’. No doubt they will frequently mention having ‘taken advantage of Brexit freedoms’, as Sunak did in his launch speech on Wednesday, but when it comes to specifics all they have is a patchy and limited record of, frankly, rather dull initiatives which few voters will care about. If anything about Brexit and red tape has lodged in voters’ minds it will be the delays for travellers and goods that Brexit has caused.

Picardo rocks

Beyond the regulatory sphere, that same gap between the abstraction of sovereignty and its practical consequences continued to unfold in this week’s story about the negotiations over Gibraltar. I wrote about this issue in detail a few weeks ago, and the latest reports confirm, as suggested in that post, that part of the likely deal David Cameron is negotiating will involve EU Frontex officials checking passports at the Rock’s airport and ports. This would enable Gibraltar to be in the Schengen area, thus removing border controls with Spain, but could have the consequence of British citizens arriving at the airport being refused entry to the territory. This was the inevitable cue for the Brexit Ultras who dominate the European Scrutiny Committee (ESC), chaired by superannuated dullard Bill Cash, to start chuntering on about ‘sovereignty’.

Interestingly, this provoked an unusually sharp response from Fabian Picardo, Gibraltar’s Chief Minister. In it, he not only endorsed and praised Cameron’s approach, he also pointedly observed that “the ESC need to understand they are not decision makers in relation to Gibraltar”. Even more brutally, he criticised the ESC for their failure to understand the issues Brexit has created for Gibraltar and for their predilection for “asking provocative questions” rather than seeking “deliverable outcomes”, and for seeming to want “to believe everything they read in the newspapers over the evidence they are given”. Subsequently, he issued an even more dismissive rebuke to a predictably snide and silly comment from Jacob Rees-Mogg. Already Cash, Rees-Mogg et al., are beginning to look like yesterday’s men, and their fixation with ‘sovereignty’ to be, as it always was, and should have remained, the niche obsession of a few cartoonish freaks.

It's conceivable that Gibraltar will play a part in the election, since it seems that the negotiations are set to continue throughout the campaign, reflecting the fact that the Tory and Labour parties have a bipartisan approach to this issue. I don’t know how likely it is that a deal will be done in that period but, if it is, then it is easy to imagine that Ultras will erupt in fury, revealing how riven the Tories continue to be over Brexit, and how much the Brexiters loathe Sunak and are consumed by Brexit purism. Starmer, by contrast, will be able to welcome such a deal, with no dissent in his party, and have another illustration of the ‘Tory chaos’ that is set to be a central theme of Labour’s campaign.

The road back

There is certainly nothing to celebrate in the fact that we face an election in which the biggest political event since the last vote, and the biggest in recent history, looks likely to be virtually undiscussable. On the contrary, it is deeply depressing and, of all the adverse consequences of Brexit, it is perhaps the worst. As Michael Heseltine said this week, it is set to be the most dishonest election campaign he can remember, although actually the 2017 and 2019 elections were also almost entirely bereft of detailed discussion of the issue.

It is also the case that whilst Labour’s approach has had the effect of depriving the Tories of what would most aid them, the ability credibly to rally around a ‘defend Brexit’ message, it has also deprived Labour of what, in a rational polity, would be their most potent attack line. For the Tories’ flagship policy since 2016 has been an abject failure, not just in practice but in principle, yet, at best, Labour will only be in a position to attack the way that it was delivered, and that only in relatively marginal ways.

But, as the cliché has it, we are where we are, and perhaps the political silence reflects the fact that ‘as a country’ the wounds of Brexit are still insufficiently healed for it to be discussed. That will take time, but be hastened if this election sees the maximum damage inflicted on the party which brought us to this wretched point. The road back is a long one, and its route unpredictable, but it certainly passes through a crushing defeat of the Tory Party. Labour’s Brexit stance may disappoint re-joiners, but its ruthless determination to inflict such a defeat is more than evident. That defeat is by no means assured but, this week, it has come into sight.

 

Note

*It’s stupid because even if countries have fast growth rates, it doesn’t necessarily follow that their international trade grows at the same rate and, even if it does, and does so with the UK specifically, then if the existing amount of trade with the UK is low then even a large percentage increase in it will not be large in absolute terms. The converse proposition, that UK trade with the EU matters less as the EU has relatively slow growth, is stupid for the converse reason: it is still a large amount of trade in absolute terms. And even that is less stupid than the idea that the trade with the EU is of declining importance because, over time, the EU is becoming a smaller part of the global economy (which, of course, is the inevitable consequence of global economic development), as if that meant it was becoming smaller in absolute terms.

A country on hold

Writing this weekly blog creates a certain rhythm, though the nature of it has changed over the years. In fact, in the early years it wasn’t always weekly, as I often wrote several short posts in some weeks. But it gradually settled into a weekly pattern of posting on a Friday morning, not necessarily rounding-up the week’s events but certainly based around them. As that happened, the length of posts also settled to being about 2000-3000 words each week. Occasionally they become even longer, but I try to keep to a 3000-word ceiling although it is often difficult to do so, and sometimes impossible.

For a long time, throughout most of 2017-2019, I more or less knew what the week ahead would bring in terms of particular scheduled parliamentary events, or negotiations with the EU. Of course the exact detail of what those events would bring could be highly unpredictable so that, often, the bulk of the post would be written in the small hours of Friday morning.

Since that period things have changed in that it is less common for there to be a predictable set of events, with the consequence that almost every Sunday and Monday I find myself thinking that there will be nothing to write about this week. Yet, invariably, and despite Brexit featuring less in the news than it did in previous years, there has always been plenty to say by Friday and the problem is just that of trying to find a coherent theme which isn’t simply a repeat of things I’ve already written, and which keeps close to my self-imposed word limit.

No news is bad news

All of this is a long-winded prelude to saying that this week, for the first time in over seven years, there is almost nothing new worth saying about Brexit. Of course there are, as always, a few news stories of note. In last Friday’s Financial Times (£) Valentina Romei, drawing on the latest ONS figures, reported that “UK goods trade has suffered its steepest five-year fall on record”, with Brexit at least one factor, and possibly a major factor. But it was hardly a huge surprise, any more than was the usual ‘yesbuttery’ from the usual suspects.

The most superficially plausible objection to Romei’s report is that the focus on UK goods trade ignores the far better post-Brexit performance in services trade, as discussed by Emily Fry, the Resolution Foundation's Senior Economist. However, as John Springford of the Centre for European Reform explains, “if the UK had remained an EU member, its services exports would probably have grown much faster”. Brexiters would no doubt huff and puff about the ‘probably’, but the basic fact remains that there’s no plausible reason to explain how three years of increased trade barriers with the UK’s biggest trade partner, and only very marginal, and very recent, reductions in (mainly goods) trade barriers with a couple of very small trading partners, could possibly mean anything other than less trade, including less services trade, being done than would otherwise have been the case.

To avoid this obvious fact, Brexiters go through all sorts of contortions, with Kemi Badenoch yesterday using the shop-soiled trick of claiming post-Brexit export growth by using figures without adjusting for inflation. It’s like someone who earns £30K a year saying that they are much better off than their granddad was because he only earned £25K when he was their age. It’s bad enough when it comes from some pseudonymous Twitter account, or some woeful Brexit-dogma website. But this was the Trade Secretary, giving a major speech the central point of which was the need for "realism, realism, realism" in discussions about trade! Inevitably it was picked up to be the front page of this morning’s Express, a screaming headline of Brexit’s success, based on a claim which bears as much relation to economic realism as potato printing does to fine art.

Relatedly, we have also learned this week that, on top of the recently announced ‘pause’ in the UK-Canada negotiations, an imminent UK-India Free Trade Agreement is looking increasingly unlikely. But that’s not surprising, either, and it makes little difference anyway. The entire idea that having a trade policy independent of the EU’s is of any value was always bogus. Even the now moribund idea of a UK-US trade deal, supposedly the great economic prize of Brexit, would make only a tiny dent in the costs of leaving the EU. In passing, it is almost forgotten now but, during the referendum, the then real possibility of an EU-US trade deal (TTIP) was regarded with horror by many Brexiters and touted by some as the main reason to leave (on the spurious grounds that it would have meant privatization of the NHS). It’s another small reminder of the contradictions, dishonesty and opportunism with which Brexit was sold.

Meanwhile, ‘Global Britain’ Brexit ideologue Daniel Hannan is reduced (£) to lauding Argentina’s Javier ‘El Loco’ Milei as an inspirational model for British economic policy. This, apparently, is what we could have had if only Liz Truss had been allowed free rein and, in fairness, that, at least, may be true. This one was especially striking because prior to the referendum one of the most perspicacious warnings about Brexit came from the Conservative commentator Garvan Walshe, in which he suggested that it would set Britain on a pathway of decline similar to that which Argentina took from its relative prosperity at the start of the twentieth century. In doing so, he noted that the country “suffers from a chronic political virus: with only brief interludes, it has since the 1930s been run by populists who maintain that the system is run for the elite, and against the people; that any experts are the system’s hired clerks, their wisdom corrupted by money; that the plain anger of the ordinary man isn’t just right, but righteous”. Now, Milei’s loony-tunes regime, which exemplifies such ‘anti-Establishment populism’, is proposed by Hannan as the template for post-Brexit Britain. At least it shows that one thing can be relied upon: if nothing else, there will always in any given week be one, and probably several, insane articles by Brexiters in the Telegraph.

Other than that, the sorry saga about import control introduction also continues to limp on, this week with the news that physical checks on goods moving from Ireland to Wales are unlikely to begin before spring of 2025. This is a delay within a delay in that, as is well-known, controls on imports from the EU have been delayed five times, and are only this year being implemented in full, with the physical checks aspect due to begin at the end of April. However, goods from Ireland (which mainly route through Welsh ports, especially Holyhead), were already exempted from that date, and checks were due to begin in October 2024. It is that latter date which now looks set to slip.

That these checks serve important purposes is something I’ve written about before, with one of them being to reduce the risk of contaminated foodstuffs entering the country. Without reprising the detail, this risk is increased by Brexit not because EU goods have ‘suddenly become dangerous’ (as Brexiters invariably sneer when these risks are mentioned) but because the UK no longer has full access to the EU databases that help to track criminal and accidental dangers, and relies on a rather patchy, understaffed and underfunded system of its own. The importance of this increased risk is shown by this week’s reports of soaring hospital admissions for food poisoning, some of which is attributable to Brexit.

Exactly how much is down to Brexit is difficult, probably impossible, to know. There are certainly cases, such as a major salmonella outbreak last year linked to Polish poultry, where EU imports are to blame. But of course it cannot be proved definitively that this would not have happened without Brexit, for the simple reason that the risks were not, and never could be, completely eliminated by EU membership and nor can they be by import checks. The point is that, in the absence of EU membership and of import controls, these risks are increased, in principle, and so it is hardly unreasonable to think that the observed increase of cases, in practice, is linked to this. It is just one of many ways in which, with almost no public recognition of the reason, Brexit makes our lives a little bit worse, contributing to an aggregate which degrades our overall quality of life, with everything becoming more grubby and more ramshackle as the damage accumulates.

Waiting for god knows what

So, yes, there is some Brexit news, as always. But the reality is that the entire British polity is now on hold, waiting for an election with an almost palpable impatience. Even Tory MPs, leaving aside the many, currently numbering sixty-two, who have announced they won’t be standing again, seem to be gagging for the orgy of blood-letting that will follow. We have a rotting, maggoty sack of a government which is clearly bereft of any kind of policy agenda whatsoever, and certainly of any Brexit agenda. It's true that many of its backbenchers still harbour fantasies of massive regulatory divergence, but the government knows that they are totally impractical and would be heavily resisted by business organizations.

In fact, this government has no purpose at all other than to cling on to the trappings of power, and persists simply in the hope that the opinion polls may improve if it does so for long enough, a hope which rests primarily not upon anything which it may do, but upon the Labour Party committing some kind of massive error. Conversely, this means that the Labour Party are now animated solely by the desire to ensure that they commit no such error before the election. As regards Brexit, that means saying as little as possible, and promising as little as possible.

Notably, in the main political and economic event of the week, the Budget, Brexit was not mentioned once in either Jeremy Hunt’s speech or Keir Starmer’s response (even though the OBR forecasts that accompanied it stuck to their estimate that the evidence continues to support their original calculation that GDP will be 4% lower in the long-term than it would otherwise have been). If this silence persists – and, frankly, there’s no doubt that it will – then the Tories will go into the election saying almost nothing about Brexit, their defining policy since 2016 and their flagship policy at the last election, for the simple reason there is nothing to boast about and the people who still support it mostly think that the government made a mess of it. And Labour will do the same due to the (not unreasonable) fear that to do otherwise might give the Tories a chance to re-group around a ‘save Brexit’ slogan, perhaps even to the extent of spiking the cannibalization of their vote by the Reform Party.

That we have arrived at this situation is actually quite remarkable, and the more so since, as I recorded at the time, the details of Brexit barely featured in either the 2017 election or the 2019 election. So this great ‘national liberation’, this economic and geo-political reset will, once again, and despite all we now know about its consequences, be left as something virtually undiscussed, in substantive terms, since the short and stupid referendum campaign of 2016.

Labour in power?

Assuming Labour win the election, whenever it comes, it’s at least possible that Brexit, or, rather, the UK’s relationship with the EU will become discussable again. That’s partly for the reasons of security and defence which I’ve discussed in recent posts, as these are the areas where the Labour leadership is already indicating it is keen to deepen the relationship. But the economic issues won’t go away. It’s difficult to exaggerate the scale of the mess Labour are going to inherit, not least because, to the extent that the current government has any policy at all, it is to deliberately ensure that the mess be as bad as possible.

The political comparisons with the 1997 election may have some validity, but the economic outlook will be totally different, and more like that (or those) of 1974, in the era of stagflation. The elections that year, it bears recalling, occurred when the Tories had just implemented a European policy about which the Labour Party was deeply split, and entertained reversing by holding the 1975 referendum. I’m not suggesting that is a direct parallel, but Labour will have to fix the economy they inherit, and especially its impact on public services, and do so very quickly if they are to avoid voter disillusionment. For such disillusionment is likely to set in rapidly given that the main thing propelling Starmer to power is disaffection with the Tories rather than enthusiasm for Labour.

That will make the ongoing negative impact of Brexit more difficult to avoid than it has been in Opposition. The 4% drag anchor on growth that the OBR estimate (and other credible estimates are even higher) is a big elephant to ignore, especially given Starmer’s pledge to make the UK the fastest-growing economy in the G7. Attention will quickly focus on what, realistically, might be achieved via the 2026 review of the Trade and Cooperation Agreement (TCA), with some recent signs that, from an EU perspective, there may be more scope than was once thought. That isn’t altogether unrelated to the security situation and certainly isn’t unrelated to whatever the outcome of the US Presidential election turns out to be.

But even the most maximal refinements possible within the TCA framework won’t do much for economic growth. This week the former MEP Andrew Duff has published a detailed, gradual plan for a bolder approach that Labour could take, and, for all the red lines that Starmer has drawn, it’s not hard to see this plan, or something like it, gaining a lot of support within his party, much of which is far less reconciled to Brexit than is its leadership. Even Duff’s first step, a UK-EU customs treaty, would have a strong economic rationale in terms of reducing some border frictions, and therefore compliance costs. Brexiters would screech about the loss of an ‘independent trade policy’ (even though the loss would be purely symbolic), but they will do that about anything Labour do, no matter how unambitious, that they could portray as a ‘betrayal of Brexit’ (as Suella Braverman already started to do during the Budget debate).

How loud would those screeches be, and how much political cut-through would they have? There are two, related, factors here. One is that it shouldn’t be under-estimated how much a change of government will change the dynamics of the right-wing media, which will become more compliant and much less influential overnight, as will the numerous thinktanks that have thrived on Tory patronage. That would be especially true if there was a huge wipe-out of the Tories. The scale of their defeat, and of a Labour victory, is the second factor. Whatever its size, the Tories look set to fall into vicious in-fighting which will consume most of their energy. And if it is as large as the largest current predictions, Labour’s freedom of action would be very considerable, at least initially. The question, however, remains the extent to which they would use it.

There is also, as ever, the question of whether the EU would enter into a significant change in the relationship. It can’t be assumed that even a total Tory meltdown would, in and of itself, make much difference to this. After all, the much-cited parallel of the 1993 Canadian election, which saw the near-extinction of the Progressive Conservative Party, ultimately led to a realignment of the right which brought the populist Stephen Harper to power in 2006.

The death row government

All of this is for the future. For now, Sunak will hold on, conceivably only until May but more likely until the autumn, especially as this week’s budget doesn’t seem to have ‘landed’ especially well. That means it is quite likely that we will have to endure another ‘fiscal event’, as well as whatever other nonsense they come up with, before the election. It’s a ludicrous and abhorrent situation, for all sorts of reasons, not limited to Brexit; the political equivalent of those ghastly death row stories where, long-ago convicted of some squalidly bestial crime, the inmate rots for years waiting to be strapped into the electric chair.

But, as the cliché has it, ‘we are where we are’. There will probably be many more weeks to come when there is little to say about politics, and even less about Brexit other than to record the endless drip of damage it is doing, and the endless drip of evidence that the promises made for it were false.

The charge sheet against Brexit’s guilty men just keeps growing

The long-awaited Budget – in all but name – has now arrived, but the public could be forgiven for not realising the extent to which it is a Brexit budget, given the near taboo in the Conservative and Labour parties on mentioning the economic consequences of Brexit. I discussed that silence in a Byline Times article this week, describing it as being ‘Lady Chatterley’s Brexit’, and won’t labour the general point here (the article is free to read). In any case, I’m hardly the only person making the same observation, both in the UK and abroad.

Suffice to say, it was a silence barely broken in yesterday’s announcement. Jeremy Hunt spoke vaguely of making use of “Brexit benefits” whilst Rachel Reeves’ response, although in other ways robust, merely mentioned in passing Labour's intention of “fixing the holes in the government’s Brexit deal”. Yet in the accompanying OBR report it was once again laid out what Brexit meant for the economy. It was left to smaller parties, most notably the Green’s indefatigable Caroline Lucas, to point this out, and also to point out that his silence about it made a mockery of the Chancellor’s claims to ‘honesty’ about the country’s financial situation. As Paul Johnson of the IFS said earlier this week, Brexit “has had a substantially negative effect on the UK economy”.

There’s really no room for serious doubt about that anymore and, in a sense, this Budget is the latest instalment of the so-called ‘punishment budget’, much mocked by Brexiters as ‘hysterical’ and ‘Project Fear’, that George Osborne warned would be necessary if the UK voted to leave the EU. That ‘punishment budget’ would have involved £30 billion of measures, half tax increases and half spending cuts. It didn’t happen in the immediate way Osborne had threatened, but has developed more gradually, and actually we can now see how modest his proposals were compared with the scale of damage Brexit has done. For, even before these latest announcements, Sunak’s March 2021 budget had already introduced record tax increases of £29 billion to (almost) cover the costs of Brexit at that point.

It's a Brexit Budget in another sense, too, arising as it does from the catastrophic failure of the Truss mini-budget, that ended her premiership. For that was explicitly hailed by Brexiters (£) as being the budget that would finally begin to deliver true Brexit, and was drawn up by pro-Brexit politicians, surrounded by pro-Brexit ideologues in explicit rejection of the supposedly anti-Brexit Establishment in the form of civil servants, the OBR, the Bank of England (BoE) and all the other bugbears of Brexit’s gimcrack revolutionaries. It left a £55 billion ‘black hole’ to fill, and massive reputational damage.

The Observer columnist Sonia Sodha is certainly right to argue that the concept of a ‘fiscal blackhole’ is misleading, and that there were different and better ways to respond to this mess. But that the mess had to be responded to isn’t in doubt, and this Budget is the government’s way of doing so. So, during an interview with Bloomberg’s Lizzy Burden (whose coverage of Brexit has been consistently excellent), former member of the BoE monetary committee Michael Saunders was equally right to say “without Brexit, we wouldn’t be talking about austerity this week”.

That is damning, but we could also turn all this round on its head. The post-Brexit economic debate has been almost entirely one where both remainers and independent economists point to the damage that has been done, whilst Brexiters and pro-Brexit economists deny it. It’s as if the important question were: was ‘Project Fear’ right? But Brexit was sold on the basis that it would positive for the country. In that sense, the clearest indictment of its failure is that literally no-one is suggesting that Britain’s fiscal position is better as a result of Brexit. 

Failure: conformity assessment

If the Budget is the most high-profile, even if under-acknowledged, example of Brexit’s mounting failure, others are, more or less quietly, gradually being admitted. At the quieter end of the spectrum, this week Business Secretary Grant Shapps announced another extension to the introduction of compulsory UKCA marking, and to the end to the validity of CE marking, on goods sold in the UK. Originally due to come into force in January 2022, the deadline had already been extended to January 1 2023 but, as I remarked a couple of weeks ago, it was all but impossible that firms would be ready to meet this.

This week’s statement extended the deadline to the end of 2024. But it would not be at all surprising, and the latest announcement hints at this, if these extensions go on and on being made until, eventually, the entire UKCA idea is dropped. It’s also by no means unlikely that the same will end up being true of the now four times delayed introduction of import controls on EU goods, currently postponed until the end of 2023.

This whole saga of conformity assessment marking, which I’ve been discussing on and off since March 2021, is a microcosm of Brexit folly, imposing a double regulatory burden on manufacturing firms which sell in both the UK and the EU. It arises solely from a theocratic, ‘sovereignty at all costs’ approach to Brexit. It had no economic or business rationale, and indeed Shapps’ announcement implicitly acknowledges that UKCA marking constitutes a cost for businesses and a distraction from their priorities. Also implicit is that those businesses which have begun to comply have already incurred costs, and if the whole scheme ends up being abandoned then those costs will be a total waste of money. For that matter, what are firms who are not currently ready to comply meant to do now? Continue to prepare for something that may never happen? Or take a bet that there is no need to do so?

As well as being a stupid idea, UKCA marking was stupidly done. The original timescales were always unrealistic, and, like many other aspects of Brexit, it would have been far better to have created a genuine – and long – transition period. The issue wasn’t just business preparedness but, again as with many aspects of Brexit, the time needed to prepare the regulatory infrastructure to register and certify the new markings (even though, just to hammer home the full nonsense of the idea, the actual product standards need not change at all). But the Brexiters have always been not just unrealistic but totally reckless in pushing for an early and quick Brexit, starting with the massive pressure they put on Theresa May to trigger Article 50. If there is a rational explanation for that, it is the wholly disreputable one that they knew how slender and flawed a mandate they had for Brexit, and were determined to ram it through whilst they had a chance.

The decision to postpone UKCA is, in one sense, a sensible one, in that at least it is better than insisting on the previous unworkable deadline. What would be far more sensible, of course, would be to abandon it completely, now, rather than defer it. But that, presumably, is still in the realm of the politically impossible, for fear that the Brexit Ultras will erupt in fury.

Failure: independent trade policy

Some aspects of the UKCA fiasco are present in one of this week’s louder admissions of Brexit failure, the wholesale denunciation of the UK’s trade deals with Australia and New Zealand by George Eustice. There are multiple important aspects of this. One is that Eustice, formerly DEFRA Secretary, was closely and directly involved in the negotiation of those deals. Another is that he is a long-standing Brexiter, originally a European parliamentary candidate UKIP (in that respect his intervention has some parallels with that of Theresa Villiers over the scrapping of EU retained law, discussed in last week’s post). So although none of his criticisms are new, having been made extensively by commentators, including me, for years, they are significant in showing how they are starting to be admitted by Brexiters themselves.

That’s particularly so given that the UK’s capacity to make its own free trade agreements is not just any old aspect of Brexit. It is repeatedly and vociferously claimed by Brexiters to be amongst the most crucial of Brexit dividends, and these two trade deals are so far the entirety of that dividend. Moreover, it was repeatedly claimed by the government that these deals were good for British farmers. Now, Eustice reveals in public that the critics were right, and that both the Australia and New Zealand deals conceded British interests, especially farming interests, with no compensating return. The reason, as again all informed observers have repeatedly said, was because the deals were rushed (£), giving the other countries anything they wanted, solely in order to ‘prove’ to the public that Brexit had benefits.

At the same time, Eustice made an astonishing attack on the competence of Crawford Falconer, now the most senior civil servant in the Department of International Trade. But, unlike other Brexiter attacks on the civil service, this was made against someone originally brought into the Civil Service, by Liam Fox, precisely as an antidote to the supposedly obstructive remainer ethos of the career civil service. He came from the infamous pro-Brexit thinktank the Legatum Institute, having been, along with Shanker Singham, one of the hard Brexiters’ go-to trade experts.

So, again, this is revealing of much about the entire Brexit process: its unnecessary haste, its emphasis on the symbolism of sovereignty, its disdain for established expertise in favour of ideological fervour, and, of course, the ever-present Brexiter dishonesty in the lies told about how wonderful these deals were for Britain and for British farmers. Not only that, but the government, and specifically Liz Truss when Trade Secretary, were warned at the time of the dangers but pressed on regardless. And to all that can be added the side-lining of parliamentary scrutiny of the deals, ironically one of the things claimed to be of value in being able to make them independently of the EU (a claim itself based on another lie, since, whilst still a member, the UK had chosen to exempt itself from holding parliamentary votes on the ratification of EU trade deals).

Whilst it is revealing, and to that extent welcome, that Eustice has now confirmed what so many had said all along, it is hardly to his credit that he did not have the spine to do so whilst still in government, when he described the Australia deal as “a good agreement”. Even more disgraceful is the fact that Rishi Sunak implicitly agrees – calling the Australia deal “one-sided” and saying that future trade deals will “not sacrifice quality for speed” – and yet intends to push on to the final ratification of both deals by passing the Trade (Australia and New Zealand) Bill. Again, the reason is presumably fear of how his Brexiter MPs would react if he did otherwise.

It’s difficult to over-state how despicable and just plain absurd this situation is: that in the name of sovereignty, and for fear of those who proclaim sovereignty’s benefits, the British government is going to make international agreements which are damaging to the national interest and to a strategically, historically and culturally key sector of the economy.

Two kinds of failure

It's important to differentiate two aspects of the damage Brexit is doing, albeit that they interact. One, encapsulated by the budget, and shown almost daily by the growing economic evidence, is to do with what has been lost – especially in trade, investment, and labour market flexibility – by virtue of leaving the EU, and particularly the single market and customs union. The other is to do with the abject failure and utter incompetence of what is being created as an alternative to EU membership. That includes the stupidity and waste of UKCA and other regulatory duplications, as well as the creation of duff trade deals. But it goes much wider than that.

No realistic strategy

In a sense, the issue is that there is simply no post-Brexit economic strategy at all or, to the extent that there is, it is wholly unrealistic. The most obvious idea, that leaving the EU enables greater gains through globalizing trade was always nonsense, partly because of the constraints of geography but also because it was based on the falsehood of there being an either/or choice between EU trade and world trade as an EU member. In fact, being in the EU facilitated both, whereas being out significantly impairs EU trade whilst barely, if at all, shifting the dial on trade with the rest of world.

That aside, such strategy as there is has been based on boosterism and hubris about Britain as a world-leading innovation hub, but it is all talk and very little walk. The historian David Edgerton gives a defining example in the sorry story of the Britishvolt gigafactory, concluding that “Brexit Britain has faked it but not made it”. Another case is the replacement for the Galileo Project, which is still in limbo, a situation arising from a complicated chain of events but ultimately rooting back to Theresa May’s refusal to accept the EU’s terms for continued participation in the EU’s system (at the time, she said that “as a global player we are not short of options”). And the post-Galileo situation is part of the wider issue of the UK’s Space policy, where, as Peggy Hollinger of the Financial Times put it this week (£), “the government’s ambition in the sector is at odds with its strategy”, an ambition she goes on to criticise for its “incoherence”.

This hubris, boosterism and lack of realism shares, along with the ideas of the UK being able to dictate global terms of trade and of being able to act as a global regulator, the common root of a fantasy about Britain’s global significance, perhaps encapsulated in the endless invocation during the referendum and afterwards of the power that being “the world’s fifth largest economy” bestowed. It was based on an illusion: there are three economic superpowers and they are the US, the EU and China. After that, being fifth, tenth or even fiftieth comes to much the same thing in terms of setting terms.

Dither and uncertainty

But the situation it is worse than that. Even at the domestic level, there has been no coherence in what the government has tried to do with its post-Brexit ‘freedoms’. Farming policy is a prime example where, leaving aside the issue of trade deal impacts, the Environmental Land Management System (ELMS), set out in March 2021 as the post-CAP system for England is already mired in uncertainty. Under Truss, it seemed that it would be reviewed and replaced, then that was called into doubt when Sunak came to power, but now it appears that it will indeed be scrapped. There are related doubts about whether the post-Brexit ban on the export of live animals will be reversed.

This is just one part of a wider picture in which, according to the Social Market Foundation, uncertainty about regulatory policy across the economy is inhibiting growth. It is an uncertainty which is massively enhanced by the EU Retained Law Bill which, despite noises to the contrary, is still in process, with the potential for as yet unspecified regulations to be changed or scrapped as early as next year. That uncertainty is not helped by the almost daily drip of articles from influential Brexiters proposing all sorts of regulatory changes which are either not specified or which airily suggest things like departing from the GDPR framework with no apparent understanding of how this would poleaxe UK businesses and other organizations. And there is also the ongoing uncertainty of which Brexit faction will win out over whether there is a maximalist or a minimalist immigration policy, a question about which the Budget statement remained resolutely agnostic.

All of this is without even discussing the continuing uncertainties over the Northern Ireland Protocol. These bear heavily on the people of Northern Ireland, and especially on the fragile politics of the post-GFA devolved institutions. At the same time, they mean a continuing cloud over the UK’s international reputation, with its threat to break international law still present, if perhaps more muted than it has been. And, again, there is still no clear strategy about this, any more than there has ever been. Instead, there has been denial, dishonesty or – which is most apparent now – drift. Certainly there is no sign that Sunak’s government have any idea how to proceed except for promising to resolve matters in time for the anniversary of the GFA, apparently under US pressure (as I suggested would happen in last week’s post). Exactly how that is supposed to happen no one knows, least of all, it would seem, Sunak himself.

The guilty men (and, yes, they are mainly men)

None of this uncertainty has been helped by the massive churn of ministers in many departments, itself an artefact of the post-Brexit political instability that has seen five Prime Ministers and two General Elections since the referendum. However, it goes much deeper than that. Both the damage done ‘by Brexit’ and the damage created by what is being done ‘with Brexit’ can be traced back to the total ignorance, wilful dishonesty, and reckless irresponsibility of those who proposed and campaigned for Brexit without the tiniest understanding of how to do it – something we have seen play out since 2016 – and without any understanding of what to do with it, something which is now playing out ever more clearly.

We know who they are*, these latter-day guilty men, from Farage through Johnson, Gove, Hannan, Paterson, Rees-Mogg, Francois, Duncan Smith, Baker, Cash and any number more, right through to Sunak (and, yes, women, too, like Stuart and Hoey). We know who their henchmen in the media are, the Hartley-Brewers and the Heaths and their innumerable clones. We know who gave them their tiny shred of intellectual ballast, the Minfords and the Littlewoods and the Howes, or their skin-deep patina of business credibility, the Martins and the Longworths and the Dysons. We saw their promises, their falsehoods, their evasions, and their lies, and they are all on record. On record, too, is all the spite and ridicule and bile they threw at those who warned them, who pleaded with them, not to inflict this on our country.

And as I’ve suggested in this post, their guilt is not just for having campaigned for Brexit but for all they have done since. I don’t usually quote Tweets unless they are posted by public figures, but this, from Dr Simon Ubsdell this week, is a perfect summary: “The worst crime of Brexit is not the dark skulduggery that secured it in the first place. It is the relentless mendacity, the shameless fraud, the arrogant deception, the unremitting shiftiness that has driven it ever since”.

It would be comforting to think that they will pay a price, these guilty men, if not through public arraignment then by dint of private remorse. They will not. That falls to the rest of us. We’re paying, literally, in literally devalued pounds and pence, as in this week’s budget, and the bill will go on rising. We’re paying, too, in the more intangible currency of a country whose reputation is sullied abroad and which is shabbier and meaner for those who live in it. A diminished and dolorous land whose only route to salvation lies in the honesty stolen by its guilty men and which, even now, or at least for now, eludes us.

 

 
*Others who have drawn this comparison, such as ‘Cato the Younger’, Anthony Seldon and, most recently, Tom McTague configure the list of names differently, but the charge sheet is much the same.

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.