Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 3 July 2018

Brexit: The Endgame


The logic of the Brexit project’s demise has been there for all to see as soon as it was clear the EU would stand by Ireland’s wish for no border. The need to avoid a hard border in Ireland, now accepted by the UK government, dictates that we stay in the Customs Union (CU) and at least part of the Single Market (SM). That is what the UK government signed up to in December, without apparently realising what it had done. The only alternative, which is to take the deal offered by the EU for Northern Ireland and have a border in the Irish Sea, is not politically acceptable to the Prime Minister and many in parliament.

The EU have now made it clear that the deal offered to Northern Ireland (staying in the SM for goods without Freedom of Movement (FoM)) is not available to the UK as a whole. It is a special deal recognising the unique problems of Northern Ireland, and cannot be something offered to any member state that decides to leave. The political reason is obvious, as such a deal might become attractive to populist politicians in other EU states.

That is the EU’s position, but the UK has not even tried to test it in negotiations, because it has spent all the time since the December agreement arguing with itself. The Brexiters, who include our chief negotiator, have with the help of their Legatum helpers spent their time making various proposals each more fantastic than the last. Their final argument is that we should leave everything to the last minute because only at the last minute will the EU cave and offer us complete access to the Single Market on whatever terms we like.. Perhaps some really believe that, but there is an alternative interpretation of what the Brexiters are doing. They are trying to delay because that way they may get their own favoured outcome of no deal by default. In short, by intent or not, they are trying to sabotage a Brexit deal.

That is not the only reason why Theresa May has to finally stop appeasing the Brexiters and formally make the proposal to the EU of extending the N.I. deal to the rest of the UK. She needs to impress on the EU, face to face, that a border in the Irish Sea is not possible, and that therefore the UK is also special in that particular sense. She also needs to argue that she needs to be able to go back to the people with something better than BINO, because BINO was not what most Leavers voted for. It might lead to, for example, the UK having something like the Swiss option of favouring (in a very small way) local markets for certain types of jobs. The EU of course may not be in any mood to be kind to a government and Prime Minister that has for so long been out of touch with reality, but just in case they are she needs to give them time to be generously creative on her behalf.

To do all this she has to finally break with the Brexiters. I have seen it said that this will bring her down - it will not. As the Brexiters are a minority she would win any vote of no confidence among her party. Would they take the ultimate step of supporting in parliament a vote of no confidence in the government? With many of the Brexiter leaders having ambitions to succeed May, I doubt it. Partly as a result, I suspect all most will do is register their dissent, and say forever more that if only the UK had hung on a bit longer the EU would have caved. It will also be difficult for some Brexiters in the cabinet to stay there, but somehow I don’t think that will worry May too much. The people who will go for her in a big way will be the Brexit press, but right now as far as Brexit is concerned they are paper tigers.

The reason why May needs to dress the deal up as something it is not (or persuade the EU to leave the door open to non-BINO options until after we leave the EU) is that otherwise everyone will ask what is the point of BINO: Brexit in name only. Like transition, it will be pay, obey but no say, and to all intents and purposes freedom of movement will remain. The Brexiters will be the first to make that point until perhaps they realise it might jeopardise Brexit itself. So May has to pretend we got something worth leaving for. As I wrote in January, Brexit will end not with a bang but a whimper.

If she does manage to do all this, Labour will find themselves in a very difficult position. In the days when they were triangulating, I said it was crucial that they always stayed the Remain side of the Conservatives to keep their members and voters on board. But now they have nailed their colours to the wall: stay in the Customs Union but leave the Single Market because of its position on state aid and maybe to avoid freedom of movement. It is a position that they can get away with so long as the Conservatives are still negotiating with themselves. But if May has to agree to stay in the single market to get a deal two problems with Labour’s position become clear.

First, how does Labour’s position prevent a hard border in Ireland? If the EU will not allow the UK to be in a single market for goods only, that means the Irish border dictates BINO. If May has finally recognised reality, why haven’t Labour. An argument that Corbyn could somehow achieve a settlement that May could not is not completely stupid, but I doubt it will play well. Second, they will now be arguing for a harder Brexit than May, which the majority of their members and voters will not like. You could even see the Brexiters joining with Labour in voting against what is essentially a BINO final deal. So if May is forced to accept staying in the complete Single Market as part of the deal, expect Labour to change their position or suffer some serious political damage.

If things go as I outline here, there will be a short period where people who are not Remainers will rightly ask why are we doing this if the only substantial thing we have achieved is to have no say on how the budget we pay into is spent, and how the rules and regulations we have to obey are changed. But our political class will not draw the obvious implications of that. A true statesman of a Prime Minister would say I did the best I could, but for the sake of peace in Ireland and the unity of the UK Brexit cannot happen, and so the best thing for the UK to do is to remain in the EU. And if I then ask why that does not happen in the UK, my best answer is because of an ideologically driven right wing press. Their great achievement will have been to campaign for a Brexit that gives sovereignty back to the people which ends up doing the opposite.




27 comments:

  1. Simon, a bit off-topic but I seem to be late seeing the posts where this comment would be more relevant.

    You have often mentioned (occasionally with supporting charts) that the UK trend rate of growth was remarkably stable from the mid-1950s to the financial crisis of 2007/8. Through "stop-go", monetarism, Deutschmark shadowing, the ERM (and out), the Ken and Eddie show, and "prudence with a purpose", the trend rate of growth of GDP per head remained remarkably stable at just over 2% a year.

    Why, then, did joining the EU apparently have little or no effect on the trend rate of growth ? Presumably, to make the case that EU membership has had significant benefits you would have to argue that the trend rate of growth would have subsequently dropped had we not joined. What factors might have caused this ?

    Comments appreciated !

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  2. No deal brexit might not be so bad. True, there'll be a lot of economic damage. But, the Eurozone governance is pretty bad (look no further than Greece). So, in the medium-to-long term, it might be good to break up and form a new and better union. Painful and unnecessary? Probably, but the UK needs to clean up it's act too. I think BINO will only lead to a perpetual brexit campaign that can do a lot more damage than either being in or out of the EU. If a hard brexit happens, it should become obvious that May and the brexters (including the press) were lying, and the conservative party will either reform itself or be banished into a long period in opposition (or both).

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  3. You seem to be saying you think May is playing for a "Brexit in name only" (BINO). Are you sure about this, given her well-publicised antipathy to the European Court of Justice?

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  4. Gove and Johnson will go because their money is in the press not in politics.

    Fox will go, presumably to sustain that position where he no longer has the epithet 'disgraced ex-minister' put before his name by the media . He's had a good Brexit if this happens.

    As for the Tory Party, it will be doomed if it cannot deliver on the last scam it has left to cover up its elite crashing the world economy in 2008.

    And Labour, get that second referendum on the books, the one that May won't deliver.

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  5. "BINO was not what most Leavers voted for."

    If it satisfies a few percent of the leave voters, together with the remain voters that is a majority.

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  6. Sadly what we are crying out for in the UK are Leaders not followers. A serious Leader would have realised months ago the futility of Bexit and told the nation so. Our leaders are to frightened of loosing power to do this which then leads to the inevitable question. "If you are not prepared to use the power you have been given then why want to cling onto it?"

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  7. The Irish / EU demand for no border between two trading blocks is blatantly absurd. Effectively they're saying "We demand that the UK and EU be part of the same trading block." The UK appears to have swallowed that demand hook line and sinker.

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  8. "For the sake of peace in Ireland"? A far as I know I am the only commenter here who is from NI, and I voted Remain. You have simply not listened. Just because the Remain echo chamber gets it wrong doesn't mean you can't absorb new information surely.

    The Republic doesn't want a sea border anyway because it would damage their trade with GB as well as most of their goods trade with the EU, which uses GB as a land bridge. It isn't about the NI border at all.

    The case that border checks threaten the peace process is laughable, the dissident republicans are weak and unpopular and would be more so if they ever killed a customs officer or indeed the civilians who will be at the border posts, y'know?

    There is no reason we should allow them to dictate the UK's trade policy -- unless you're already a Remainer and an ignorant or disingenuous one.

    Customs declarations cannot be handled on a big enough scale by the UK's system by Article 50 day, but the same applies to trade with the continent. Thus it's fine (as far as the border goes) to leave the CU, but it will have to be suitably long transition period.

    The power Remain and Irish commentators have had to spread this rubbish far and wide is appalling and I almost wish I'd voted Leave.

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  9. "So May has to pretend we got something worth leaving for. As I wrote in January, Brexit will end not with a bang but a whimper."

    This won't fly. Cameron tried it pre-Brexit vote, and it backfired. The Brexit press will go all out if BINO happens. But moreover, people do want change. They have no idea what that change should be, but they want something. And until the point at which they realise that Brexit is not the answer to their problems.. well.. they will think Brexit is the answer.

    The electorate are stupid in some ways, but not stupid in others. BINO cannot happen or Brexit cannot be sustainably averted without a fundamental change in Brexit voters' perceptions. They will know, they will revolt, and in their perceptions (and perhaps mine) quite rightly so.

    Battling to change those perceptions is probably impossible within the time we have left. I cannot overemphasise the psychology at play in the electorate here, which probably has a much larger influence than the press itself. People *want* to continue believing in Brexit. They don't like being wrong. So much of their world view is built around Brexit. And there are social networks within the Brexit community that reinforce those views regardless of the underlying facts. It's the same kind of force that leads generations of voters in Scotland to hate the Tories, or Republicans in the US to brand Democrats Communists. Socially motivated & influenced perceptions do not change quickly.

    Unfortunately, that suggests that the next stage will be can kicking - BINO with a promise for more down the line. But what eventually happens is all about the battle for Brexit ideology. Facts alone have not been enough to dissuade Brexit voters, and they won't do in the future without a more effective means of influencing people's socially generated perceptions about Brexit.

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  10. On the role of social perceptions in moderating behaviour and generating opinions, I really love this study:

    https://arstechnica.com/science/2016/11/twitter-bots-can-reduce-racist-slurs-if-people-think-the-bots-are-white/

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  11. Another reason for Remaining is Gibraltar. Spain, like Ireland, has a veto over the post-Brexit trade deal, and even over the withdrawal act. Luckily for the Gibraltarians, Spain now has a Socialist coalition government, and the left tends to be more reasonable than the right over Gib, but the basic position won't change. Spain may bot insist on cession, but there will be a steep price over Gib's self-government. I see no sign the May government has given any real thought to the problem. Gibraltar's economy depends on a reasonably open border to Spain just as much as NI's does with the Republic.

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  12. Re: Brexit
    Found this on the possible effect of Brexit on the EU default language interesting: https://www.wsj.com/articles/the-ultimate-demarche-france-want-to-oust-english-from-the-eu-1528986165

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  13. So this is where the clever people slap down the stupid little people is it? The stupid little people voted to leave the EU so that the people who govern them are directly accountable to them. Any backsliding now to leave people governed by an authority over whom they have direct control will not go down well.

    I sometimes think you clever folk don't realise what is on the table. This isn't a debate about how to maximise short-term GDP, this is about the soul of the nation, how the people are governed, how best to get a government that fights for the people.

    This is big stuff with big consequences. As a friend said recently, for the first time in my life I understand how civil wars happen. Screw this up and things get very ugly very quickly.

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    1. I tend to agree. The Remainers believe their own propaganda and equate the Brexiteer phenomenon and the Trump phenomenon. But we don't have a Trump figure in this country yet.

      The Remainers should understand what caused Trump to happen in the US and then they should examine their own behaviour over here.

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  14. Nice clear exposition. Thanks for your efforts!

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  15. I wonder if the possibility of recognising that the UK as a whole will need a SM minus FOM deal might actually be the one place where a tougher line might help.

    In the end, the UK is sovereign as a whole and so cannot be forced to place a border in the Irish Sea; no means no.

    On the other hand, if the Irish regard a border between NI and ROI as impossible, it can be up to them (and by extension their partners in the EU) to work that one out. Surely It would mean the ideal deal (the least bad option, at least) as above.

    Of course, the EU may say that it’s childish to simply say we agree there should be no border, but are unwilling to help you create the solution, but isn’t that essentially turning the tables on their digging in over the last 2 years?

    As an aside, it is far from fantastical to suppose that a refreshed, social left government could get a lot more cream out of the cow. The lesson for the populist right would be that you force your way out of the EU literally at your peril.

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    1. The reason the ROI cares so much is that most of their trade is with the EU using GB as a land bridge, or is exports to GB itself. Therefore they want to avoid tariffs or paperwork on all this so they are using the border as an excuse. Funny that, since it raises tensions in NI they pretend to want to avoid.

      The EU Withdrawal Act 2018 says there will be no additional checks unless the EU gives us a deal.

      However, if there was no deal, that would still mean the ROI has to check stuff on its side of the border, and they and those Northern nationalists who said any such thing is "unacceptable" for symbolic nationalist reasons will have some explaining to do as they submit to it being performed by southern Irish customs officers.

      The ROI and EU simply have a common interest in getting a soft Brexit and are using this to shore up liberal Remainer support (like SWL) in GB to try and get it. Former Taoiseach John Bruton has admitted it

      http://www.legislation.gov.uk/ukpga/2018/16/section/10

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    2. While there is a Remainer elite, I'm sure you know there is also a Leaver elite. As in America, as liberals/left have moved right after Reagan and Thatcher, they have left their base among working people open to recruitment by right-wing populists who say they will defend the little guy.

      Not all Leavers are Tory free-market fundamentalists, but they do exist, and they are indeed just in search of deregulation to get higher profits for rich people. They say it'll be good for the economy as a whole, for the little guy.

      The Remainer elite wants free trade for higher profits for rich people and again says it is good for everyone, for the little people.

      Nicholas Kaldor was left-wing but wanted to stay out of the EEC on the grounds that although success in trade is needed for good growth, *free* trade is bad because growth is constrained by the balance of payments.

      Since SW-L is in favour of some kind of Keynesianism for growth and low unemployment, I hope he will look into Kaldor's view.

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  16. "Their great achievement will have been to campaign for a Brexit that gives sovereignty back to the people which ends up doing the opposite."

    Just to point out the obvious, it is the Good Friday Agreement that is taking sovereignty from the British people as that requires us to maintain an open border, which requires aligning customs and regulations etc etc.

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    1. The Good Friday Agreement does not require that. I'm sorry if my fellow Remainers have give you that impression.

      The GFA requires co-operation between northern and southern government ministers. Tariffs, trade, international relations and migration are excluded from that co-operation by the terms of the GFA. Because the co-operation may only cover matters which are devolved to NI, and the things I listed are reserved to Westminster.

      This means that under the GFA the UK can have as hard a border as it likes. E.g. we could check everyone's passport on the border, or prohibit anyone from ever crossing it at all. We can have whatever tariffs we want, or ban Irish imports entirely, we could check every shipment or none. All these options are allowed under the GFA.

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  17. Are we there yet? Experience suggests that May will kick the can down the road. As you say Brexiteers have every incentive to kick the can, doing nothing now is a crash out. Parliament have conceded the right of the government to crash out, if there is no deal there is no vote. This can be delayed until the very last minute; "working furiously to finalise a great deal" thus keeping everyone happy. I feel the EU has made its position clear especially at most recent summit but the BBC, press and parliament are focused on internal disputes within parties not reporting in detail with context the EU position.
    Why might May kick the can, because its her nature. Rees Mogg, Jenkin and their ilk will try their best to bring her down if she "goes soft" and proposes a deal that the EU would accept (please note this critical addition). This is where we disagree, they will try. For as you have said their electorate is the hard Brexit members of the Tory party not the wider country.
    What I see emerge from May is a Rosarch test plan, that kicks the can and keeps her as PM. When the EU reject it, May will have calculated that two things (1) Its the hard BREXIT her key voters (Tory party) want (2) It will giver her the 'line' that is was the EU which sabotaged it will win over or give cover the weak remainers.
    We should all note, that I dont believe the country's fate will feature in any of these calculations. Therefore I am certain we will crash out with no deal.

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  18. Have Rees-Mogg and his allies ever considered the answer to these question: As the economy weakens after Hard Brexit who will the public blame? Surely they will blame the Conservatives?

    The prospect of Hard Brexit cannot, surely, bode well for their chances in a general election. Or are Britain's many anti-EU newspapers confident that they can persuade their readers that the Conservatives are not to blame for the weak economy? It was the fault of the EU? Of Labour? Of anybody but the Conservatives?

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    1. Well they did convince the public to re-elect the Conservatives in 2015 despite the weak economy their austerity caused.

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  19. “ so the best thing for the UK to do is to remain in the EU.”

    I didn’t actually vote to leave the EU, I voted against the bloody stupid alternative that we should commit to the EU for a generation irrespective of what happens. If we remained in the EU now we would be committed forever. That is not acceptable.

    In the 2015 election I voted for Milliband. I thought he was absolutely unsuited to be PM but I saw him as the best opportunity to avoid a referendum. I could see that it was stupid to call a referendum at a time when the country was fairly evenly split on the issue and how right I was. I was happy to remain in the EU on a conditional rolling basis; until and when a clear majority decided that it was time to leave. Given that I was forced to vote on this issue, I cannot accept that we should proceed with the option that the majority of voters rejected.

    You can argue as much as you like that people didn’t know what they voted for, but it is absolutely clear what they knew what they were voting against.

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    1. Surely SW-L's argument is they did not know what they were voting against hence his post about the EU being all about harmonising regulations to enable trade.

      However he left out immigration etc and the open-ended future of integration so ppl voting against that is perhaps understandable

      David Owen made an interesting point that if we had voted Remain then the Eurofederalists would have been emboldened and we would have pushed around more inside the EU in future now that increased integration seemed secure.

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    2. "David Owen made an interesting point that if we had voted Remain then the Eurofederalists would have been emboldened and we would have pushed around more inside the EU in future now that increased integration seemed secure."

      ..and if Brexit gets overturned now we would have to accept absolutely everything that the Eurofederalists would choose to shove down our throat.

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  20. I was wrong, it appears that the great political show down of our time is on. The can will no longer be kicked. May has come out for the single market (Norway option). The magical thinking right Jenkyns, Jenkin, Rees-Mogg etc have nailed their colours to the mast Canada only; I am convinced they will now try to bring May down. It seems likely that Boris thinking of his highest priority, Boris (F Business, F the UK, F the Tory party), has now to go to become Prime Minister.
    Whilst all this drama is interesting, it remains the most likely outcome is now a crash out no deal Brexit. One side (the Brexiteers which includes several in Labour and around 1/3 of the Tory part) just need to keep delaying things. No deal is in fact their preferred option.

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