Brexiters are stopping Brexit because they need to believe in the fantasy of Global Britain

It now looks like May will not get a chance to put her deal to parliament for a third time today, thanks to a ruling from Speaker Bercow. Yet while some compare Theresa May’s relentless and humiliating quest to get her deal passed by parliament to the Black Knight from Monty Python’s the Holy Grail, and Bercow believes the deal has to change for it to be voted on again, there would have been a critical difference this time.

Previously rejection has meant nothing except that we get closer to leaving without a deal. No deal is what economists might call the ‘bliss point’ of many Brexiters. The outcome most Brexiters want is what they call a ‘clean break’ with the EU. Before parliament agreed to delay rather than crash out, it was obvious the Brexiters would vote against May’s Withdrawal Agreement.

If the Withdrawal Agreement had been voted on today (and May could well have pulled it herself anyway because she believed she would lose again), rejecting it would have almost certainly meant a long delay to Brexit rather than crashing out. That may be a crucial difference for many Brexiters, including the DUP. A few have already said that they would have supported May’s deal this time, and others appear to be looking for ways to change their minds. So the vote would have been closer than last time it it had been held.

Given this, I have never understood why May kept No Deal on the table for so long. It was obvious that most Brexiters preferred No Deal and would therefore inflict embarrassing defeats on the Prime Minister. In contrast the threat of No Deal does not seem to have kept the few MPs on the opposite wing on board. All I can assume is that she really believed the David Davis mantra that the EU would cave at the last minute for fear of the impact of no deal. If so that was a huge misjudgement, to be added to the already long list of huge misjudgements she has made over Brexit.

Now she has finally said a long delay is the alternative to her deal passing, the Brexiters would have a real dilemma if the deal was voted on again. A long Brexit delay does not take No Deal completely off the table, but it makes it much less likely than before. It also increases the possibility of a second referendum. To understand the dilemma the Brexiters would have if May were allowed to and had put her deal to parliament for a third time, we have to enter the make-believe world of ‘Global Britain’. Of course Global Britain appeals to the English nostalgia for empire that runs deep within Brexit, but to most Brexiters it is much more than that.

Conventional economic analysis tells us that leaving the EU’s Customs Union and Single Market will reduce the amount of trade the UK does with the rest of the world. The reasons are obvious, and I think are privately accepted by most Brexiters. Their main line of defence during the referendum was that the EU would give us all the benefits without the costs, which we now know conclusively is not true. While some Lexiters might be attracted by the idea of a less global UK (because they blame globalisation for deindustrialisation), Brexiters do not want less trade. Their idea of Global Britain was to do more trade with non-EU countries to offset, in the longer term at least, the loss of trade with the EU.

The Irish backstop in the Withdrawal Agreement (WA) effectively rules out Global Britain. Most trade deals involve tariff reductions, and if the UK is in the EU’s Customs Union it cannot unilaterally reduce its tariffs to make new trade deals. Theresa May and Liam Fox may pretend otherwise, but most Brexiters know this to be the case. The more May moves to appease the DUP by promising that EU rules in Northern Ireland will also be adopted by the rest of the UK, she restricts yet further the scope of independent (from the EU) UK trade deals. Without tariff reducing trade deals with emerging countries and the US, Brexiters believe there will be a decline in the amount of trade the UK does with the rest of the world, and that will be harmful to the UK economy.

That is why some Brexiters insist that May’s deal is worse than staying in the EU. But others will point out that the WA does allow the UK to move away from many of the rules of the Single Market, which in their eyes is an important part of Brexit. A few may pretend to themselves that the backstop can still somehow be subverted once we have left, or even that No Deal can still be achieved after approving the Withdrawal Agreement by rejecting enabling legislation. They may say that it would be extremely ironic and embarrassing if Brexiters by their own actions stopped Brexit happening. Those still opposed to May’s deal will respond that those who vote for it own it, and if trade and the economy subsequently decline voters will blame those who voted for May’s deal.

Behind all this is the influence of Conservative members. The departure of Nick Boles, who left his Conservative Association before he was pushed, reflects a new mood of militancy among the Tory grass roots. Boles had voted for May’s deal, and his crime in the eyes of party members was that he also campaigned against no deal. With some of the Brexiters hoping to succeed May, their decision is all about pandering to this electorate.

In truth this debate is upside down compared to the real world. I describe Global Britain as make-believe because all reputable studies suggest new trade deals cannot come close to offsetting lost EU trade. A key reason is what economists call gravity. Gravity is the observation that countries trade more with their neighbours than those far away, a robust finding that appears to hold despite falling transportation costs. That means that even if the UK after Brexit could get lots of tariff reduction deals with countries outside the EU (a big if), this would not come close to making up for the lost trade with the EU. The government’s own analysis comes to the same conclusion. By keeping us in the Customs Union, May’s deal actually helps the economy, although as I outlined last week leaving the Single Market is still very costly.

Brexiters always refer to how much faster countries outside the EU are growing. But this is like giving up your solid 40 hour a week day job to work just one hour a week for a rapidly expanding firm for the same hourly pay. Because the firm is rapidly expanding you could be working 2 hours a week within 10 years! This is something few in their right minds would do in real life, so why should we do the equivalent as a country?

Brexiters prefer to ignore the analysis of the overwhelming majority of economists, and instead look to the tiny group of Economist for Free Trade (EFFT). But as Chris Giles has recently shown, if you look at how the GDP forecasts of various groups just after the referendum have been doing recently, those of EFFT have been wildly optimistic compared to others. As the chart shows, EFFT (then Economists for Brexit) did well in the first few quarters after the referendum because many consumers dipped into their savings, but by the end of 2018 EFFT were doing much worse than the OBR, Bank of England and the consensus of private sector forecasters. Giles sums this up by saying “The lesson is simple: listen to economists, but not to those peddling a political line.”

So the only economists who really believe in Global Britain have already been shown to be far too optimistic about the impact of Brexit. No doubt they would say that is because May’s deal prevents Global Britain, but it is clear from movements in sterling that the foreign exchange markets fear No Deal most of all because of the impact this would have on trade. The Brexiters have a wonderful way of avoiding these facts. As the consensus among economists is that trade will suffer if we leave the EU, economists overwhelmingly favour staying in the EU. The Brexiters then conclude that if they favour Remain they therefore must be biased. Ergo only the predictions of economists who believe in Global Britain can be trusted!

There would be a certain horrible symmetry if May’s Brexit deal had passed this week. It would have been a narrow victory, just as the EU referendum result was narrow. It would be a victory tainted with public money used to bribe Labour MPs and the DUP, while the referendum vote was won by the Leave side spending much more private money than the rules allowed. Both victories would have been won against a weak and divided opposition: Cameron unable to talk about the virtues of immigration and Corbyn unable to campaign against Brexit. Both May’s deal and the referendum victory are based on lies designed only to get them across the line. Both are blind, with no clear idea of the kind of Brexit that will follow. Both therefore fail basic notions of legitimacy.

If Bercow prevents May putting her deal before parliament again in the near future, or if she decides herself she would not win anyway, then her failure to pass her deal on 12^th March involves a delicious irony. Brexit failed to happen because of the actions of Brexiters themselves, because they actually believed one of their own lies: the make-believe of Global Britain.

Why Brexit is a neoliberal project

Neoliberalism is generally associated with extolling the market, encouraging globalisation and generally being on the side of business. As Brexit will reduce the size of markets available to UK firms and therefore reverse globalisation in the UK, and is definitely not what most of UK business wants, how can it be neoliberal?

A good place to start is to go back to a discussion of what free trade means. Most people, and certainly most economists, would think that free trade means free to trade. Following that definition, harmonising regulations across countries which enables firms to trade much more easily in many countries is increasing free trade. The ideal is one single market, which is what the EU has achieved for goods and many services.

Many neoliberals would think that way. But others would see free trade as meaning free from any kind of state interference. The Single Market, with a court to judge whether its rules and regulations have been broken or not, does not sound free in that sense. Their ideal becomes trade that is as free as possible from any kind of state regulation. They do not want harmonised regulations, but the minimum amount of regulations.

If seeing free trade as meaning free from regulations on trade seems strange, it shouldn’t. If you look at how many neoliberals use the term free market that is exactly the what they often mean. If someone says that executive pay is determined by the free market, they do not mean a market free from what economists would call imperfections but just free from government interference. Unlike ordoliberals, neoliberals of this type would call a market with a monopoly producer free but a market where competition policy broke up monopolies as suffering from state meddling.

I had original thought that the Global Britain idea that Brexiters go on about was pure deflection from the awkward fact that Brexit would restrict trade. I think I was being unfair. Being true neoliberals Brexiters do not want to destroy trade, but trade has to be as regulation free as possible. Far better, therefore, for the UK to trade with the US or emerging markets that had weaker regulations than with the Single Market. The problem with the Single Market, from the Brexiters viewpoint, is that it locks in strong regulations of various kinds.

This helps explain why so many Brexiters also appear to be strong neoliberals. Brexit is like striving for a kind of neoliberal utopia, in contrast to other neoliberals like Osborne and Cameron who were prepared to compromise over regulations for the benefit of access to a bigger market. And just as neoliberals have no worries about tricking the public to vote for their utopia by pretending it was something very different, they also have little time for firms that cannot understand that what the Brexiters are doing will ultimately be for their own good. Politics as marketing, better described as deceiving of the public, is a common neoliberal trait.

The Brexiters are just one more group inspired by their own vision of neoliberal Nirvana. While Osborne and Cameron were prepared to settle for a small state, the Brexiters want that along with as few regulations as possible. Both obtain their vision deceitfully, and are prepared to inflict untold damage on the economy to get what they want. Like all good Leninists they believe that in the end (for Rees-Mogg 50 years) it will all be worth it. Which means if they get their way we will endure half a century of economic damage only to demonstrate their vision was just one more neoliberal fantasy,