Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 16 October 2018

There is a Brexit deal the country can live with, but the government cannot


Brexit logic starts, as it always has, with Ireland. The EU will not do a deal without a permanent backstop, which means Northern Ireland (NI) stays in the Customs Union (CU) and Single Market (SM) for goods. (It could allow for an end to the backstop when both sides agree there is a technological solution that makes it unnecessary, which is another way of saying the backstop will be permanent.)

If the government were prepared for extensive customs checks in NI ports, the UK would still have considerable freedom to choose whatever deal it liked. Some of those arrangements would be very costly in economic terms, but they would be possible. But the DUP, as has been clear from the start, are against any such checks, and they are effectively part of the government because the Conservatives would lose every controversial parliamentary vote if the DUP voted against them.

If there cannot be additional customs checks in NI ports, that implies the whole of the UK has to be part of the CU and SM for goods. While the EU will allow a bespoke deal for NI to preserve the letter and spirit of the Good Friday agreement, it is unlikely to do so for a country that wants out. As a result, the backstop plus no customs checks means the UK has to remain in the full SM, including freedom of movement. In other words BINO (Brexit in name only) or equivalently extended transition: both mean pay, obey but no say. That is the basic logic of Brexit that has been obvious since December 2017 if not before.

A majority of people in this country today want to remain in the EU, but I think they could also live for a time with BINO if it was accompanied by additional controls on EU immigration allowed under EU rules. (These two studies are useful in that respect.) Perhaps the same is true for a majority of Conservative party MPs. But unfortunately a large minority of the Conservative party and the DUP cannot. They are lost to dreams of being free from EU regulations (the SM) and global Britain.

The last nine months have been an attempt by Theresa May to fudge that essential logic. Each time it looks like a fudge might work, she gets pulled back by the Brexiters. Last week was no different..Talks ended up being postponed because five or so cabinet members demanded that an Irish backstop had to be time limited, but there is no way that the EU would agree to that because it negates the whole point of the backstop. And at every stage, except Chequers, May has preferred to kick the can down the road by making impossible demands of the EU to avoid further splits in her government. The clearest example of this is when in December she agreed an Irish backstop only to declare agreeing to it as inconceivable a month or two later. 

At a fundamental level this constant appeasement of the Brexiters does not make sense, because they have nowhere to go except No Deal, and May together with parliament will not allow No Deal. Whatever they may say in public, the Brexiters accept the logic above. They know that any kind of trade deal with the EU has to involve the backstop. They cannot accept the backstop, but are content to see the return of a hard Irish border. Which means No Deal is the only possibility left for them.

So why does May continue to try and keep some of them in government? She cannot do without the DUP of course. But she knows from December that it might be possible, for a short amount of time, to fool enough Brexiters into believing something that is not true.(hence, I suppose, the invention of obscure jargon like a backstop to the backstop). I suspect, however, that the scope for further deception is insufficient for the task in hand. More important is that May probably believes that delay helps her ability to get a deal through parliament, and this is worth any loss of faith in eventually agreeing things that she failed to agree to earlier. 

Finally there are two interesting asides from this basic argument worth making. I talked to a very well known BBC presenter last week who was convinced that Brexit was nothing to do with the BBC. They are wrong on the economic costs, because the BBC did not regularly say that the overwhelming view of academic and business economists was that Brexit would do economic harm. Too often they assumed that this was self evident because all the major institutions (OECD, IMF etc) said this, but the ‘anti elite’ theme of Leave was designed to counter that, and giving equal time to both sides without any context (and of course constant newspaper propaganda) allowed Leavers to believe they would be better off.

But my criticism of the BBC is not just about the economic costs. One of the Leave messages that was attractive to many people was being able to do trade deals with other countries. I do not remember constant reminders from journalists saying that this was incompatible with membership of the SM, and so we had to choose between frictionless trade with the EU or doing these new deals. This statement is not controversial but a simple fact. It is also a fact that anything short of a CU and SM for goods will require a hard Irish border. This was the kind of basic information that the public craved for, and the BBC did not give it because their priority was not to upset either side. It is academic how important this all was to the final vote: the fundamental point is the BBC departed from its mandate to educate and inform at just the point the public needed and wanted it most..

The second aside is about Labour. One of the consequences of a failure by parliament to agree a deal could be a general election. Suppose that resulted in a Labour win. Labour would then have two Brexit options that the current government cannot take. The first is to have a border in the Irish Sea, because they are not beholden to the DUP. Corbyn has said that this would be very difficult, and the reason he gave had nothing to do with some vague idea of sovereignty. The chances are that Labour would end up agreeing something close to BINO. This means that a Labour government can deliver a form of Brexit that the country can live with, while with the current government it is like getting blood out of a stone.




9 comments:

  1. The BBC like the treasury, yourself and the letter writers to the press were discredited by the project fear part 1 projections as to the economic catastrophy that would happen on vote leave. The BBC have been cautious to repeat that debacle although the treasury and remainer econs have no such caution despite their embarrassment.

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  2. On both Brexit and global warming the BBC has failed to inform. However, Brexit is Cameron's baby. After the Brexit vote he should have immediately opted for a Norway style deal. This would have avoided the vacuum of policy that allowed so much nonsense and time wasting. There would have been argument about it, but it would have allowed more focused discussion. I too think that only getting Labour into government can resolve the problem with minimal pain now.

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  3. Well said.

    An additional point is that it is a waste of time for May and Raab trying to schmooze EU governments into disowning Barnier's hard line on NI. The withdrawal agreement will be adopted by the EU institutions, true. But it will have to be followed by a post-Brexit trade agreement: and the Republic of Ireland has to ratify this, along with all the other member states. Dublin has a veto on the UK's economic future, and will use it if a hard border is reimposed in any form. Quite right too IMHO. But the fact is still there for the hardest of Brexiters.

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  4. The great flaw in this is that the Tories would crucify Labour in any GE campaign because they would say (true or not) that Labour would do precisely what you suggest (BINO) and that this is a slap in the face to Leave voters. What do you think Labour Leavers would do in this case - even if they supported Corbyn? Somehow I can't see your scenario happening.

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  5. Would BINO allow full access but restrict migration to people with job offers? I suspect that a majority of population would accept this.
    If so, is it down to politics that this is not being openly discussed?

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  6. Theresa May is living proof of the Peter Principle: "...the tendency in most organizational hierarchies, such as that of a corporation, is for every employee to rise in the hierarchy through promotion until they reach the levels of their respective incompetence."
    Whatever one might think of her politics, she didn't exude incompetence or impotence as Home Sec. As PM, hopeless. The tragedy for the country is that the woman seems incapable of examining herself with any degree of intellectual honesty and recognizing what an abysmal failure she has been as leader. Form of anosognosia, it seems.

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  7. Good article. I would take issue with your assertion that a majority of the country wants to remain in the EU. There is no way to know this is true (including polling, which hasn't served us well in the past).

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  8. As someone who lives on Anglesey close to the A55 or the E22 to give it its European Designation I am very concerned that the concept of a customs border is totally unworkable without long term investment at the port of Holyhead. A great deal of traffic passes from Northern Ireland to Southern Ireland and then across to Holyhead, the shortest crossing on the Irish Sea. How is this going to work?

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  9. I recommend reading 'The Roadmap to a People's Vote', which is available via
    https://www.peoples-vote.uk/how_it_could_happen. There is a one-page summary on page 18.

    The report's authors include Lord Kerr, who played a large part in drafting the Article 50 legal text.

    The report argues that Article 50 can be unilaterally withdrawn by the UK and that there would be 'no problem' in getting an extension to the Article 50 deadline in order to provide time for a People's Vote. It also presents six plausible parliamentary routes to a People's Vote and analyses what the question could/should be.

    On the question, the authors prefer a simple two-option choice:

    'The simplest solution would be a binary choice on the ballot paper, either “no deal versus stay” or “the deal versus stay”. In our view, if there is a deal, the most pressing question for the country would be whether that deal is better than the one we already have inside the EU. And if there is no deal, the country deserves the right to say whether it nevertheless still wants Brexit.'

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