Winner of the New Statesman SPERI Prize in Political Economy 2016

Saturday, 19 November 2016

The folly of triggering Article 50

Immediately after the Brexit vote, all the analysis I saw argued that Article 50 would not be triggered for some time. They all made a simple mistake: they were thinking rationally about what would be best for the UK. Rick has an excellent analogy that elaborates on one that I and others have used, and it really would be best if you read his blog rather than for me just to repeat it. The conclusion, which this earlier analysis I mentioned had also come to, is that triggering Article 50 without any kind of idea about what any agreement would look like puts the UK in a very weak negotiating position.

This is why the EU were pressing for Article 50 to be triggered as soon as possible. Their real fear is that the prospect but not the actuality of the UK leaving would hang over them for years, and that was the UK’s strongest card. Before playing this card the UK could at least get a clear idea of what the EU might be prepared to offer, and possibly get some commitments that sketch the broad outlines of any deal. Once Article 50 is triggered, the UK will be far more desperate for a deal than the EU. It would only be a slight exaggeration to say it allows the EU to dictate terms. Triggering Article 50 was our best card, yet it is a card that Theresa May is determined to throw away.

Just to emphasise the point, this has absolutely nothing to do with whether you voted to Remain or Leave. Anyone who actually wants a good deal from the EU when we leave should realise that the UK’s negotiating position becomes instantly weaker once Article 50 is triggered. I do not know whether those who have successfully pushed for triggering Article 50 so soon simply live in a deluded state where they think that the UK will be in the stronger negotiating position, or whether they are desperately afraid that if it is not done soon people will go off the whole idea of leaving. But whichever it is, it is an act of folly, whether you want to leave or not. It substantially increases the likelihood of getting a bad deal.

As for Labour’s position, I’m afraid all I can say is you were warned. Jolyon Maugham describes Labour’s position as checkmating itself, but I strongly suspect this is a match the Labour leadership do not want to win. The fact that others in the PLP are content to go along with this does not make it any better. As I wrote at the time, all this was one very good reason for voting for Smith rather than Corbyn.

And if Labour wants to position itself as being the party that can make a success of Brexit, that road spells doom. If MPs think they can avoid losing votes to UKIP or the Conservatives in their traditional heartlands by adopting this line (or trying to be all things to everyone and therefore in reality champion of nothing), they will lose many more votes in their new heartlands than they will save in the old. Many voters feel much more attached to Europe than they do to Labour. This is something I have argued for some time, and this poll suggests I am right. If Labour backs Brexit they will get less votes than the Liberal Democrats. As I also wrote during the Labour leadership election, Brexit changes everything.

But I do not want to get distracted by that. The key point is that triggering Article 50 so soon does not make sense even if you voted Leave.

So if MPs, pro or anti leaving, had any sense at all, and any independence at all, they would vote against. Yes the right wing press will scream and brand you an ‘enemy of the people’, but if have the interests of the British people as your priority rather than your short term popularity that is what you will do. You could even get voters on your side if you explain why you are doing it. This is one of those moments, like the Iraq war vote, where it is utterly obvious what should be done. We are not yet a country that is run by the Mail and the Sun, but triggering Article 50 will make it look suspiciously like we are.



43 comments:

  1. I see your logic but it takes two to dance. The EU also has a card. It can say (I believe it HAS said) that there will be no negotiations until A50 is triggered. It's going to be easier for the EU to justify non-negotiation than for the UK to draw out the process very much longer.

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    1. I would call their bluff if they tried to do that. As I said, they want A50 triggered.

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    2. What makes you think they will 'dance' once A50 is triggered? They can wait out the 2-year negotiation window while the UK becomes increasingly desperate to avoid the WTO option.

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    4. Absolutely, withholding triggering A50 is the only real card the UK has. I also agree this is true whether you are a die hard leaver or not. To throw this away is simply madness. If the EU refuses to negotiate they will have the uncertainty to contend with as well.

      However, should the current court case end up showing triggering A50 to be revocable, after a judgement being sought from the ECJ, then by all means trigger A50 with the implicit threat unless a satisfactory deal is made the UK will revoke the triggering of A50.

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    5. Doesn't alter the fact that they've said they won't negotiate before article 50. Delaying triggering it will thus do nothing to increase the negotiating time & hence nothing to strengthen our hand

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    6. "Absolutely, withholding triggering A50 is the only real card the UK has. I also agree this is true whether you are a die hard leaver or not. To throw this away is simply madness. If the EU refuses to negotiate they will have the uncertainty to contend with as well."


      What differential effects does that uncertainty have? I can see various investors deciding that putting new development in the EU would protect them from that uncertainty.

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  2. Many brexiters want to trigger A50 as soon as possible because they fear public support for it evaporating. They don't really care about the contents of any deal with the EU.

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  3. If the UK can't revoke 50, and the EU doesn't commit to anything prior to triggering 50, the UK can't do much to shape negotiations prior to triggering 50. Its bargaining power is pretty weak regardless of when it triggers. Its next best alternative to whatever deal it can achieve with the EU will be a hard brexit with no deal. (And this is regardless of whether parliament gets a say. Parliament can attempt to impose a set of supposed 'conditions' or 'negotiating positions' on the government, but the government can't impose them on the EU! As long as 50 is irrevocable, the UK will only get what its meagre bargaining power after triggering will get it.

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  4. There is also article 7 of the Lisbon Treaty. It says that a member state can be suspended of voting rights if it does not follow the values -like free movement of people- of the union. One principle of the EU, in case of article 50, is "no negotiation without annunciation". In the past the UK had many opt-outs, it is enough when they would start blackmailing, as with treaten to leave the EU. Cameron had the last try, there are 27 more other members that have to agree and the UK is/was only one of them and not more special or more than the other members. By the way I am Dutch.

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    1. I can understand that triggering Art. 50 has to be implemented in a juridical and technical sound way. That can't be done over night. But do the British consider adequately how their course of action is perceived by the continental electorate ? Continental politicians won't be able to ignore that perception. A scapegoat is a scapegoat is scapegoat. I'd really like to see a EU in which every failure and downtime is attributed to the permanently undecided Veto-Brits longing for "the better bargain". I also think a vast majority of the continents people is tired of the special deals for the UK, now after the referendum more than ever. By the way i am German.

      JH

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    2. A couple of questions from a Brit to our Dutch and German contributors:

      - Do you believe the UK has/had a lot of influence in the EU? Whether you think yes or no, please give examples.

      - If by some miracle the UK decides to stay in the EU (which I hope), to what extent has the UK's influence been permanently damaged?

      S

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    3. @S

      Don't get me wrong. I`d like to see the UK stay in the EU. I think that would be in Germanys interest and not mainly because of economic reasons. I`m really amused when i read in comments about the influence of german car manufacturers fearing for their UK sales - no, that is an extremely minor topic at present. It`s never too late for a turnaround, a correction. But how this can be consistently achieved ? Out of my scope.

      I think the UK's influence was according to its represention in the EU institutions and therefore just, but probably limited by the UK's own ostensive tenacious EU sceptisism. To push your issues you have to get qualified people into the EU seats. Imagine what we note in Germany: Martin Schulz, the resigning president of the european parliament, is returning to the Bundestag and they say that he is aiming for the foreign secretary (quite possible) or even the chancellor (not so possible). Hitherto politicians were sent to the EU when their careers sunset approached.

      Permanent damage ? Not really. We are talking about membership in a political union - no more, no less. But hostilities will increase as long as we stay in these undecided doldrums.

      JH

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  5. I think that the eagles said it best - Europe is rather like the Hotel California -

    "You can check out anytime you please - but you can never leave"

    Certainly we can't lose free trade - because turning our ports into a 20 square mile lorry park is the quickest way to bring the UK to its knees

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  6. I don't think that the EU wants A50 triggered, because they don't want the UK to leave. The best solution, from the EU's perspective, is a few years of tension ended by a weak "nevermind" from the UK. The second-best solution from the EU's perspective is probably the Scottish option, with the EU deeming a newly-independent Scotland to be the successor of the UK, and England creeping back through a second Union act a few years later. A quick invocation of A50 is at best a third-best solution.

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  7. Given that Clinton is now over a million votes ahead of Farage's Trump, I'd tell UKIP and the rest they can't have their article 50 as the majority vote means nothing apparently.

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  8. Ane yet framing it as a game of poker is a Conservative misconception.

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  9. I voted remain but I don't see the point in delaying art 50.
    Given the framework of art 50 the two year time limit is not long enough to get anywhere near a comprehensive trade deal therefore the options are surely only some sort of hard brexit to get the UK out within 2 years or some arrangement to stay in the customs union or similar until a comprehensive trade deal is negotiated, but as these negotiations will be more or less indefinite this amounts to no brexit. I don't see any intermediate position. Delaying doesn't change this basic dilemma.

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    1. Delaying allows a chance to think and develop a realistic strategic appreciation of the position. This, of course, is what the Brexiteers fear most, which is why they are demanding a rush for the Brexit cliff by any and all lemmings.

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    2. Kind of agree with this line of thinking. Given the constraints of A 50 the options are.

      1 Hard brexit followed by unending bilateral trade negotiations or;
      2 Unending bilateral trade negotiations followed by brexit but in this scenario brexit won't make much sense and in practice is unlikely to mean brexit.

      If you are a brexiteer the only option is 1. If you are a remainer it's option 2.

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  10. Simon: I think you may be neglecting an important element of Thinking Like An Economist (tm), namely: if you observe people diligently acting against their own best interests, ask yourself whether you have misunderstood their preferences. You are arguing that the UK may be able to obtain a "better" deal by delaying invoking A50. But isn't it fair to say that, by "better," you mean "more like remaining in the EU?"

    Much of the discussion I read about Brexit seems to assume that nobody seriously wanted the UK out of the EU; it was all a kind of ruse to harness anti-immigrant feeling to advance the political fortunes of this or that faction. And, surely, that was a part of the picture.

    But isn't there mounting evidence of the existence of a segment within the political/policy elite that actually *wants* a "hard Brexit?" (That is, a segment that actually wants what you'd score as a "bad" deal?)

    Now, it's perfectly possible that it really is just "befuddlement all the way down." But I'd really like to see some solid "cui bono" thinking on the subject, and I don't know nearly enough about the subject to do it myself. Where should I be looking?

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    1. A good start might be to read Flexcit (just Google search it)

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  11. I struggle to see any advantage for Britain to invoke Article 50 unless the Brexiteers are worried the country will change its mind. Better to just pass a law saying any migrant who becomes a resident after (say) 1 January 2017 will loose residency rights when Brexit actually happens. The rest of Europe can pass a similar rule for British migrants becoming residents of Europe after 1 Jan 2017.

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    1. It surely wouldn't be legal to do that while Britain is still a member of the EU. It's akin to saying Britain won't be making any more EU contributions from 1 Jan 2017.

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  12. "I do not know whether those who have successfully pushed for triggering Article 50 so soon simply live in a deluded state where they think that the UK will be in the stronger negotiating position, or whether they are desperately afraid that if it is not done soon people will go off the whole idea of leaving. But whichever it is, it is an act of folly"

    Some alternatives reasons:

    1) A belief that Hard Brexit (aka Clean Brexit) is best, so we should leave sooner rather than later. I know Simon W-L and others have argued this is economic imprudence, but the reasoning by Gerard Lyons and others in that minority of Economists for Brexit can be seductive, even in the face of critiques by Van Reenen et al and others.

    2) The longer the uncertainty, the longer we risk business investment being dampened.

    3) The longer the delay, the higher the risk we'll see angry protesters claiming they've been betrayed. (No doubt Nigel Farage, the right-wing media and our very own government will egg them on!)

    4) A sense to just "get on with it". Although I agree we should not rush into silly mistakes, I voted Remain and admit a part of me feels this way.

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  13. No, they don't. They want to frighten / bully us into changing our minds.

    May should prepare a white paper outlining as clearly as possible the worst case scenario - that we invoke A50, and leave in two years with the legal minimum deal. The white paper should deal with facts, things we can be reasonably certain of under the terms of the treaties, not scare stories either way about our growth prospects or otherwise. In this way we can offer the British people, British business and our friends, neighbours, allies a clear target / destination. This is where we are headed, if we invoke A50 in March 2017. May then asks the HoC in a free vote to approve or reject A50 on the basis of the white paper. If HoC rejects it, she calls an immediate general election in which all parties lay out clearly their position (ideally each candidate will do this) and the country, hopefully better informed than in the referendum, can make its choice.

    If the HoC votes to approve A50, May's hand is actually strengthened - the leaders of the EU know that the British people through its elected representatives has accepted the worst case and still wants to leave. Now the EU leadership has to decide what is really in their and Europe's best interest (not ours) i.e. to negotiate an exit that does not harm Europe, as arguably the worst case scenario will do. And May can promise Parliament to negotiate for the best possible deal, above the worst case baseline, in all the different areas affected, without being tied down to specific aims. Business and government and individuals can meanwhile plan for the known worst case as outlined in the white paper, while hoping for improvements in some areas.

    I voted Remain, btw, about 6/10.

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    1. I think your course of action only makes sense if
      (a) the election is just about triggering A50
      (b) only 2 candidates (one pro, one anti) fight each seat.
      (c) Whatever the make up of the Ho after the election, MPs should respect the vote of the majority
      This will not happen, so may should just respect the decision of MPs. After all, this is not about whether we leave the EU, but the process by which we do it.
      Incidentally, you already have a Treasury assessment of the worst case scenario.

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  14. You are correct about triggering .

    I think you are giving the hard right wingers who are pushing for an early triggering of Article 50 too much credit. The intellectual leaders of these people have a clear agenda , which of course they try to hide. They want an antagonistic relationship between the UK and Europe so that they can sell an alliance with the USA under Trump.

    This alliance is in effect a take over by Trump Enterprises. It could be achieved through treaties agreed under the Crown prerogative without Parliamentary involvement (familiar , anybody) and if registered in international law would be binding on any future UK Government.

    This prospect may seem fantastical. Trump as US president was fantastical = and now ......

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  15. Surely the key issue is whether triggering Article 50 can be revoked unilaterally, and until we have a legally definitive answer to that, it is hard to say whether triggering should be postponed.

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  16. Most of the population are not as rational as Simon, so there is a grave danger of increasing civil unrest if it looks to them that Article 50 is being indefinitely stalled until opinion changes. If triggering Article 50 now weakens our bargaining position, then our terms of BREXIT will be worse, and so the likelihood of Parliament rescinding Article 50 later will increase not decrease? Lawyers are divided, but it is almost certain that it could be rescinded

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    1. I appreciate your attempts to rationalise Labour's current policy, but should we really let a march led by Nigel Farage determine critical policy like this. You say lawyers are divided, but it is almost certain! Gambling on things turning bad within 2 years so that no one joins the Farage march when it is rescinded also seems folly to me.

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  17. Please, more macroeconomics, less politicking with the only purpose to help Labour - who are just as befuddled as all the rest, even if Mayday
    (i.e. SOS) is a legitimate comment on the Tories.

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    1. Please, I genuinely do not understand. How is this post's only purpose to help Labour? My normal purpose is to use mostly simple economics (in this case game theory) to point out the folly of political actions and positions, which often cause considerable economic harm.

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    2. Mainly Macro21 November 2016 at 03:30

      What a charming lack of self-awareness. Of course, we're used to that from SWL.

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    3. Just because a Tory has a gut feeling does not mean it is right. Similarly, opposing everything every Tory says may also be false.
      Economics is about showing why it is better for all to avoid tragedy of the commons.
      Call out when the Tories do happenchance on good economic practise, and call out the opposite, explaining why.
      I suspect it matters not much to the lily whether red, blue, yellow or green rosettes are worn.

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    4. That is exactly what I do. For example I have often praised Osborne for setting up OBR. I cannot help it if there is so little else to be positive about. Do you have any suggestions?

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  18. Article 50 can probably be revoked by the British Government.

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    1. No - that could only happen with the agreement of member states . There is no provision in Article 50 for a member state to withdraw a notification to leave. The wording suggests that a state would automatically leave after 2 years.

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  19. The point of invoking article 50 is that the Brexiteers don't have anything to offer Britain and they know it. They want to throw the irreversable switch FIRST, so when the magnitude of the error becomes clear it's too late to do anything about it. "Waiting until the UK and EU come to an arrangement that benefits Britain more than the current one" is synomymous with "never leaving the EU at all".

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  20. It's not about whether Labour 'backs' Brexit. We are where we are and have the make the best of it. That may still involve respecting the vote publicly whilst building alliances privately i.e.smart politics.
    You must be one of the very few people still banging the Owen Smith drum: he was and remains a hopeless opportunist and an incompetent campaigner. A second referendum is actually good politics in the mid to long term, it is, however, risible politics in the short term. The US electorate isn't the only one to reject elitist politics. Labour need to play the long game as do Labour supporting commentators.

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  21. Can the UK find a way round the current refusal by the EU-27 to pre-negotiate? This refusal strengthens their bargaining position. So there has to be an inducement, a threat or benefit. The British government has historically been wary of appealing to European publics over the heads of their governments, but there is a first time for everything. The way this could work would be to make a public proffer of ground rules for the Article 50 negotiation. The inducement would have to be on the migration side. The proffer would be conditional: if not accepted, the inducement would be withdrawn, leaving the possibility of a worse outcome for the EU side.

    I am very unsure whether this would work. The EU holds almost all the cards.

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  22. What is with you Brits that don't understand politics in the continent? https://www.theguardian.com/politics/video/2016/nov/18/merkel-brexit-talks-off-table-until-may-triggers-article-50-video

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  23. "If Labour backs Brexit they will get less votes than the Liberal Democrats."
    Big call! Since Labour will back Brexit (with a few dissenters, no doubt), and and the LibDems will be pro-return to the EU, we'll get to find out.
    Personally, I can't see it. You'd have to ignore the Farron's charisma bypass; tribal loyalty; assume the enduring appeal of Brexit issues; forget the Unions etc. Just looking at a single poll really can't tell you much. Put it this way - Labour is still polling 30%ish *with Corbyn*.
    Even Farron & Clegg aren't this optimistic.

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