Does Brexit end not with a bang but a whimper?

Most media commentary on Brexit makes a huge mistake. It focuses on what the UK government may wish to do or should do. The first stage agreement told us one thing that we should have known the moment Article 50 was triggered: the EU is calling the shots in these negotiations. [1] But the fact that the UK agreed to the text, and particularly the parts on the Irish border, has told the EU something important: the current UK government is not going to walk away with no deal, and even if it did the current parliament would almost certainly stop it.

That in turn tells the EU that it can get, to the first approximation, the agreement it wants. So what we should be asking is not what the UK’s next move will be, but what the preferred outcome for the EU is. My guess would be that their preferred outcome is a formalisation of the transition arrangements. This satisfies their three criteria: it avoids a hard Irish border, it imposes no additional trade restrictions, and the UK is clearly worse off as a result of leaving (because it has no control over the rules it must obey).

As Martin Sandbu points out, the first criteria could be satisfied by a deal that kept the UK in the Customs Union and Single Market for goods, but not for services. As the UK exports more services than it imports to/from the EU, the EU’s second criteria might still be roughly satisfied by such a deal. If the UK avoids accepting free movement as part of the deal, whether the third criteria is satisfied becomes debatable. Still it would be a possibility. Anything beyond this would mean a hard border in Ireland. It is difficult to imagine why the rest of the EU would want to seriously harm relations with Ireland by agreeing to such a thing.

Suppose something between these two alternatives, of staying in the Single Market and staying in it just for goods, does become the final deal. I think the Labour leadership could live with it if they are in government when the deal is done. Perhaps a majority of Conservative MPs could. But it means that dreams of doing trade deals with other countries would no longer be possible, and for that and other reasons a large part of the Conservative party would not be happy. The Conservative’s Europe problem would not be solved.

The fact that the Brexiters will still be agitating for a more pronounced break from Europe will be one reason why the UK will still suffer in economic terms (albeit much less than with No Deal), and this will be increased if we are no longer in the Single Market for services. Firms will always be reluctant to locate in the UK because trade might be disrupted if the Brexiters win again. Less immigration from the EU will also hurt the economy. And of course the Brexiters will remind everyone that the UK is having to accept rules on trade that it plays no part in creating.

All that suggests any deal will not be sustainable in the longer term. Norway and Switzerland may be able to tolerate being out of the club but obeying its rules because they would probably reason their impact within the club would be small, although what Ireland will achieve with the Brexit deal is a counterexample. An economy with the size and more importantly the history of the UK will find that more difficult to accept this. 

Does this mean that any deal will just be the first stage of breaking away from Europe? The Brexiters will agitate for this, but I doubt it will happen. The Brexit is essentially a project of the old. It seems far more likely to me that as time passes a majority for rejoining will emerge, and Brexit will come to an end. This mad period of UK politics, and all the political and economic harm it has done, will be a complete dead end, a colossal and damaging waste of time. 

This is my best guess at how Brexit will end, although I take no pleasure in that. [2] Not with the bang of a second referendum or a parliamentary vote, but slowly over time. The vote that rules them all today will gradually be seen not as the liberation and empowerment that so many now believe, but instead as just the machinations of a small number of hollow men. Hollow men who dream of empire renewed, and as a result are casting their country from the world stage. Hollow men who dream of personal power, and who instead turn out to be powerless. Their day will soon pass, as wind in dry grass.

[1] Here I think informed analysis, from commentators like David Allen Green for example, got it right. As I wrote: "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."

[2] The Brexiters will not let the government propose a second referendum. A majority of MPs will not vote for one unless public opinion becomes much more anti-Brexit. Without something like a major recession, which looks unlikely, I fear a shift in public opinion will not happen in time for 2019. The post-Brexit Remain campaign has not ‘broken through’ because the tabloid press, and broadcasters following the wishes of politicians, will see Brexit through to completion because they made Brexit possible.

Would things be different if Labour campaigned for a second referendum? In terms of public opinion, that would make a difference to how broadcasters treated the issue. But Corbyn will only consider that if he could be sure that enough Conservative would back him, and by making the issue party political he cannot be sure of that. It is the fact that too few Conservative MPs are prepared to stand up against their leadership, and the 'will of the people', that makes leaving inevitable.      

First Stage Reality and Brexiters

Now for the hard part, pronounced various media commentators after the first stage Brexit deal had been signed. The chances of No Deal have diminished, said others. It is strange watching the MSM sometimes. On political issues that involve expertise, like austerity and Brexit, it is generally an expert free zone. With Brexit you have to turn to the Financial Times and Economist who understand what is really going on, or other knowledgeable bloggers like Chris Grey. [1]

It is not difficult to discover how things really work in these strange days. You just need to see what the important facts are, and continue to apply them relentlessly despite what politicians say. The latest important fact that tells you all you need to know is that a Single Market and Customs Union needs a border to, as Martin Sandbu sets out, not just collect tariffs but also check compliance with rules of origin and standards. Therefore to avoid a border in Ireland, you need Northern Ireland to comply with all the tariffs, standards and regulations of the Single Market. The UK has now agreed, as I thought it would, that this must also apply to the UK as a whole.

This logic leads you inevitably to the conclusion that, after Brexit, the UK will to the first approximation [2] continue to obey all the rules of the Single Market and Customs Union. So it will be as if we are still in the EU, with the only difference being that we no longer have any say on what those rules are. Fintan O’Toole quotes Sherlock Holmes: eliminate the impossible and whatever remains, however improbable, must be the solution.

But, you may respond, all the UK have signed up to is that this is a default position, if they fail to find a technological fix for the border, or if they fail to conclude a trade agreement with the EU in stage 2, and what does alignment mean anyway? Here you need a second fact: there are no technological fixes that remove the need for some form of hard border. We also know two things from this first stage agreement: the UK desperately want a trade agreement with the EU and the EU will not allow any agreement that implies a hard border in Ireland. It therefore logically follows that, to a first approximation, any trade agreement will have to involve the UK staying in the Single Market and Customs Union.

Why then are the Brexiters not up in arms? It is partly because the agreement plays on their lack of realism, as I suggested two days ago. The UK government and Brexiters still pretend that they can, through some magical means, avoid a hard border. Given that belief, how can they object to this fall back position? And that will be the line that the UK takes from now into the indefinite future, and because the broadcast media mainly talks to politicians rather than experts that is the line the media will take as well, with some honorable exceptions like those noted above. In may come apart as the cabinet finally discusses what the trade deal might look like, which is why the threat of No Deal has not gone away. Or Brexiters like Gove may decide instead that as May will not be making these trade agreements, it is politically wiser to maintain unity and instead try to win the ultimate prize from Conservative party members.

Why is it important that this deceit continues? Because if everyone was honest, and respected the reality of the border issue, people would rightly ask whether our final destination (obeying the rules but with no say on the rules) is worth having. They would note that being to all intents and purposes part of the Customs Union means Mr. Fox cannot make new trade agreements. People might start asking MPs why are we doing this, and the line that we have to do this because the people voted for it would sound increasingly dumb.

Unless something amazing happens and the MSM do not allow this deceit to continue, we will end up with the softest of soft Brexits. If that is where the UK stays [3] there is a huge irony about all this. The Brexiters’ dream was to rid the UK of the shackles of the EU so it could become great again, but it is a legacy of empire that has brought this dream to an end. All the stuff about bringing back the glory of a once great trading nation will not happen. Instead we will still be acting under the rules of the EU, but because we are not part of it the UK will be largely ignored on the world stage. A rather large country, which nevertheless gets other countries (like Ireland!) to set its trade and associated rules for it, and which it is therefore not worth bothering with in the international arena. A Britain that can no longer pretend to be a world power, not as a result of the actions of some left wing government, but because of the delusions of Brexiters.

[1] To be fair to the broadcast media (as I always am), yesterday I did see interviews with ministers which raised the issue of what the implications of the border agreement are. But for whatever reason these interviewers allowed those ministers to bat away the question with waffle, and I strongly suspect the point will be forgotten in the days ahead.

[2] What do I mean by first approximation? For a start, we will not be part of the Customs Union and Single Market, but instead be part of bespoke versions of both. That may allow wiggle room, which in turn might just possibly allow something that could be called a deal on free movement, although this will probably just mean Free Movement to a first approximation. So a bit like Norway or Switzerland, but with rather less room for maneuver than those countries because both have borders with the EU. For more details see here.

[3] It will not be where it stays. First, there is the question of who May’s successor will be, and what they will do. If a soft Brexit goes ahead, the Brexiters will choose the right time (for them) to cry betrayal. It will only be a matter of time before they make a new attack, arguing that the UK should strike out for true independence. As I argue here, bigger things than just one failure have to happen before the UK rids itself of this particularly British form of plutocracy.