If you enjoyed the last two years and want more of the same, vote for May’s deal

Trade negotiations happen after the Withdrawal Agreement (WA) is signed, so why don’t those wanting a softer Brexit just vote for the WA and argue about trade later? The Political Declaration which does talk about trade is vague and non-binding. The reason is straightforward. Parliament will get very little say on the framework for those trade talks. The only real chance most MPs will get to influence the type of trade relationship the UK has with the EU is by directing the government now, as the price of passing the WA.

However so far parliament has largely failed to do that, largely because Conservative MPs have put party unity above the future health of the country. So what will happen to politics and the economy if parliament votes to pass May’s deal, either today or in a few months time? The first and well known point to make is that nothing would immediately change as far as UK firms and citizens are concerned, because we would start a transition period where we remain inside the Customs Union (CU) and Single Market (but no longer have any say on the rules of either). There will be little economic bounce from ending No Deal uncertainty, for reasons outlined below. So the immediate action will be about the politics of negotiating what happens after the transition period ends.

If you want to know what that would be like, just look at the last year or two. Most of the arguments within the Conservative party over the last year or so have been about trade, and not the content of the WA. So signing the WA settles very little. It does mean that we have signed up to the backstop, but May still pretends that this backstop means we can still stay outside the CU. I cannot see Brexiters meekly accepting that the UK should join the CU either. We will continue to have endless discussion of unicorn ‘alternative arrangements’ for the Irish border designed only to avoid us being up to a CU. The inevitable truth of course is that the backstop implies some part of the UK has to be in the CU, but as the last two years have shown large parts of the Conservative Party refuse to accept reality when they don’t like it.

At some point during the transition period Theresa May could be replaced as Prime Minister. It seems very likely, given the views of Conservative Party members on Brexit, that a Brexiter will be elected in her place. The likely outcome of that, as far as Brexit is concerned, is either that nothing changes, or that the government attempts to persuade the EU to do the impossible.

For example Theresa May is determined that we should leave the Single Market (SM) because her primary aim is to end Freedom of Movement (FM). Any successor is likely to want to leave the SM because they do not want to be bound by EU regulations on minimum workers rights or the environment. Because of the economic damage that will cause (see below) the government will attempt to get a trade agreement with the EU that mitigates that harm. They will find out, yet again, that it is impossible to get anything close to the benefits of the SM without being in the SM. And because the UK will not want to accept that, the negotiations will go on and on.

But at least No Deal will be off the table? Unfortunately just as you think you have avoided one cliff edge, another appears. If no trade deal is done during the transition period, we crash out much like we would with No Deal now. And the Brexiters in government will be saying not to worry the EU always cave at the last minute. They will fight extending the transition period from 21 months, even though it is impossible to negotiate a trade agreement in that time, because the ERG wants to fall off a cliff.

In short, if May’s deal is approved we can look forward to a politics dominated by internal squabbles within the Conservative Party, and the absence of constructive negotiations with Brussels, for perhaps the next four or more years. Much as we have seen for the past two years. This is because the WA does nothing to resolve internal Conservative conflicts, and more fundamentally conflicts inherent with Brexit itself.

If, despite it all, the government manages to negotiate a trade agreement with the EU, what will be the economic and political consequences for the UK? Will it all be worthwhile in the end? A good guide to the economics is the study involving a collaboration between the Centre of Economic Performance and The UK in a Changing Europe, which is both authoritative and representative of similar work. They believe that from 2030 onwards UK GDP per capita will be lower by between 1.9% and 5.5% as a consequence of leaving the Single Market. The midpoint of that range represents lost resources for each household of about £3,000 each year. There will of course be a large hit to the public finances, implying higher taxes or less public spending, even after allowing for an end to contributions to the EU.

Why such a large range? The 1.9% mostly comes from the direct effects of lower and more costly trade, using standard trade modelling techniques together with reasonable estimates of the barriers created by leaving the SM. The government using a similar model get similar numbers. The higher figure in the study’s range is based on empirical evidence for the impact of trade on productivity, which captures other effects such as lower foreign direct investment or reduced competition. Because the empirical evidence captures many more effects than the model, we would expect it to be larger. Those who dispute numbers of this scale in this range have to explain not only why the models, including those used by the government, are wrong but also why the simple correlations between trade and prosperity more than back the models up.

Our best guess is that we have already lost over 2% of GDP as a result of stagnant investment and sterling’s depreciation. As a result, most people will probably not notice the economic impact of ending the transition period, because most of the firms that were going to leave will have already left as a result of cliff edge uncertainty. Instead Brexit will be a gradual decline in the UK relative to the remaining EU.

What about Global Britain? Most trade agreements involve tariff reduction, so being in the CU largely limits the scope for Mr. Fox to do new trade deals. In addition, who would want to harmonise their regulations with the UK, when the gains from doing the same for the EU are much greater. A more likely outcome is that we harmonise our regulations with the US.

The government will be desperate to sign a trade deal with the US to show that ‘global Britain’ is more than a slogan, and that means the US will largely get their way in terms of regulations (including food standards) and participation in the NHS. Thus the longer term political consequence of parliament agreeing to May’s deal is the gradual transition of the UK into a US style economy.

In an age where the regulations governing trade in goods and services are increasingly decided by large regional blocks, the only rationalisation of Brexit that makes any kind of sense is that we move from the EU block to the US block. That is what a lot of the Brexiters want, which is why they resist the backstop so much, because that ties our tariffs to the EU. But the political consequences of tariffs are less important in shaping an economy than regulations on things like working conditions and the environment. That is why, even with the backstop, Brexit will mean we will become more like the US economy. Whatever the merits or otherwise of that, a big difference is that we had a say in how the EU is run but we will have none in what the US does. A 51st state without representation if you like. Taking back control it is not.

Parliament’s Brexit Game: has anything changed?

The PM’s only chance of getting her deal through by the end of March was to have No Deal as the inevitable and only alternative. Parliament has finally prevented that, for the moment. The threat of cabinet resignations (to allow voting for the Cooper bill that would delay Brexit in order to prevent No Deal) has forced May to propose the same. Parliament will now, in sequence, vote against May's deal, against No Deal and for a short delay. Voting against No Deal is just symbolic: only voting for a delay can prevent No Deal.

A delay will require agreement from the EU, but all the signs are that they will grant it. Macron understandably wants a good reason, but at the end of the day I suspect the prospect of a No Deal that would damage the EU as well as the UK (just less so) will mean they will grant what the UK asks for. Just as No Deal was never a credible threat for May in her negotiations with the EU, neither is refusing a delay a credible threat by the EU. All 27 states have to agree, but they probably will with the help of collective pressure.

But nothing really changes with a short delay. May is not going to suddenly get a major change in the Withdrawal Agreement in two months. It is difficult to see what UK event could change enough minds in any particular direction. Thanks to the ERG, the option of forcing May out is not on the table. Are we going to end up replaying all this drama in two months time?

The hurdle in a few months time to a further delay is a little higher because of elections to the European parliament. May could be hoping that this factor alone would mean there would not be a majority in parliament for a further delay, and she can finally get her Deal or No Deal vote. For the same reason, the ERG can hope that they finally get to the edge of the cliff and beyond. In that sense, the real fight starts later, unless enough MPs have the sense to think ahead.

At this point it is worth reflecting on the dog that did not bark. When I looked at the parliamentary numbers in January I tried to assess whether any coalition of MPs could form to produce an alternative to May’s Deal. The issue is not the Withdrawal Agreement (WA) itself, but the future trade agreement that will be negotiated immediately after the WA is passed. Parliament’s only real lever to set the framework for those negotiations is to give instructions now. (A common myth is that the EU has prevented us negotiating on trade before A50 ends. In reality all they wanted is to set the terms of the WA first. It was Conservative MPs faffing around that prevented us starting trade negotiations before March 2019.) With a Brexiter sure to succeed May, the option of letting the WA pass and hoping for the best is foolish in the extreme.

I saw two main possibilities for any coalition of MPs that could come up with an alternative plan. One possibility was that enough Conservative MPs could join with most Labour MPs to agree a soft Brexit. Another is that the People’s Vote and soft Brexit groups could combine forces by offering a referendum on Remain versus a softer Brexit.

In fact something close to both of those things happened. At the end of January Labour put forward their soft Brexit proposal together with a public vote on that proposal. Voting was pretty well along tribal lines, with no Tory members voting for (including those now in the IG!), and a number of Labour MPs abstaining. The inability of Tory MPs to vote against their own party, even when in three cases they must have known they might well leave that party, effectively killed off this attempt at agreeing an alternative to May’s bill.

Sensible Tories could have tried to break down their own tribalism by doing something similar themselves, but instead they tried to compromise with the ERG, which is a sure path to nowhere. The only way any deal can be approved by a majority in the House is with cross party cooperation, and neither May nor her backbenchers seem willing to do that. Whether this is a generic problem, or a result of an impending election for party leader (and therefore PM) that will be decided by a very Brexiter party membership, is not clear. But it reminds me, not for the first time, of US Republicans, who voted to oppose anything Obama put before them just because he had put it forward.

So we not only have the ERG who think a referendum where No Deal was hardly mentioned by the Leave side is a mandate for No Deal, or a Prime Minister who has produced a deal that fails to unite the country but instead just panders to her pathological dislike of immigrants, but we also have Conservative moderates who refuse to cross party lines to get a less damaging and more realistic soft Brexit. This shows us how much the Brexit crisis is a problem the Conservative party has inflicted, and continues to inflict, on us. 

If parliament continues like this it makes May’s deal inevitable

So yesterday most of the Conservative party found unity, by once again believing in a unicorn. The unicorn that the EU would allow the UK to unilaterally end the backstop. Of course a backstop that one side can end without that side being in the Customs Union and Single Market for goods is not a backstop at all. Alternative arrangements to avoid a hard border in Ireland did not exist when the UK was negotiating with the EU and they still do not exist. If you wanted an illustration of how stupid this country looks to those overseas here it is. If you want to see how implicated the right wing press is in this stupidity look at the headlines today: Mail - “Theresa’s Triumph”, Express - “She’s Done It”.

Why did the Prime Minister and her party indulge in this fantasy? Because it runs down the clock. May wants to run down the clock because she thinks, with good reason, that in the end parliament will vote for her deal. The ERG wants to run down the clock because it wants No Deal. What we saw yesterday was the willingness of the Prime Minister to look completely stupid over the next week or so banging her head against an EU brick wall just to avoid compromising on her red lines.

What was new and much more worrying about last night is that we learnt there was a new block in parliament. This block will vote to stop parliament doing anything to try and find an alternative to May’s deal. We already knew that the ERG and May’s block would do that, but they were short of a majority. They got a majority last night thanks to 14Labour MPs. If this continues, it will prevent parliament coming up with any alternative to May’s deal that can command a majority. That just leaves May’s deal and No Deal left as we approach 29th March.

But surely, you may be asking, how can May’s deal win when it was so decisively rejected last time? The ERG will continue to vote against it, because they want No Deal. But will Labour MPs and Tory rebels still vote against it if that inevitably means No Deal? I doubt it. Anyone voting against May’s Deal when it is the only alternative to No Deal would get blamed for the chaos of No Deal. Instead Labour will choose abstention, allowing May’s block to beat the ERG block and May’s deal to pass.

If this happens, no one comes out of this well. The ERG really do hate an all UK backstop. May will have her negotiating credibility torn to pieces before she has to do a trade deal with the EU, in a situation where the UK is once again fighting against the clock (the end of transition). Labour will have not voted against the deal they committed to voting against. But the institution that would lose most with this outcome is parliament itself. It had an opportunity to take control from a bankrupt government and it failed. While it is tempting to blame the 14 Labour MPs, the real problem is that the majority of Conservative MPs are prepared to seriously damage the economy, make the UK an international laughing stock and risk the chaos of No Deal just to preserve the unity of their deeply flawed party.  

Is Norway+ the way forward?

A number of MPs seem to think so. Their argument goes as follows. Although the Withdrawal Agreement (WA) is not about trade (beyond the backstop), and trade is dealt with in the Political Declaration that is not legally binding, a vote for Theresa May’s deal will be taken by her as endorsing her wish for a hard Brexit. In that case parliament should instruct the government to pursue a much softer Brexit now, because it is better to do that now than later (especially if later never happens).

Indeed it is plausible to argue that the current impasse in parliament would not have happened if May had gone for a soft Brexit (something close to BINO: staying in the Customs Union (CU) and Single Market (SM)) from the start. That, it could be argued, was the appropriate thing to do when the vote was so close. Another way of putting the same point is that there may not have been a majority for Leave at all if it had been clear that this involved leaving the CU or SM.

The narrow vote for the Welsh Assembly in 1997 is an interesting example in this context. It was even more narrow (it was won by 50.3%). As a result, according to this thread from Richard Wyn Jones, the winners went out of their way to involve some of the losers in the discussions about how the Welsh Assembly would work. [1] So if May had thought about uniting the country after the 2016 referendum she would have proposed some form of soft Brexit. Instead she tried to unify her party rather than her country, and the rest is history.

Although trying to unite the country would have been the right thing for any good Prime Minister to do (as May will probably find out today), I think the implication that subsequently a soft Brexit would have passed a vote in parliament is less clear. We return again to the critical point that a soft Brexit is not a compromise between a hard Brexit and Remain. Something like BINO is, for Leave voters, worse than Remain, because it gives away sovereignty compared to Remain with nothing gained in return.

Soft Brexit is Brexit in name only, and assuming Article 50 would still have been triggered there would have been two years during which Brexiters would have kept telling us that a soft Brexit is pay and obey with no say. And for once they would have been largely right. For a country as large as the UK, having an external body choose your regulations and trade deals when you have no say in that external body is a big deal. It is the opposite of taking back control. I do not think soft Brexit could have survived public scrutiny over two years.

This has important implications for attempts in parliament to modify the Political Declaration to commit to a soft Brexit before passing the WA. I can see the attraction for many MPs: it would be the same attraction it would have had to a statesmanlike PM after the 2016 vote. But there is a distinct danger that the public will end up hating it. Remainers obviously, but also most Leavers who will feel that they have been cheated by parliament.

If you are one of the MP’s going for this option and think I am wrong, there is an obvious way forward that could get us out of our current impasse. (I first heard this idea from @SimeOnStylites.) Combine your forces with those going for a second referendum in the following way. Propose a referendum between some form of soft Brexit (softer than May’s deal) and Remain. That proposal could command a majority in the house, and would still give people the option of throwing out the idea if they preferred staying in the EU. [2]

[1] This all came to light in a rather amusing way. May included this vote as part of her speech yesterday on why parliament should support her deal. She ‘forgot’ that despite the referendum result the Conservative party - including herself - voted against the Assembly being adopted after the vote! This illustrates why all the talk of the democratic need to respect the 2016 referendum by May and the Brexiters is just an excuse to enact a policy they want. Full story here.

[2] Of course Brexiters will complain, but they will complain just as much if the soft Brexit option is passed in parliament anyway.

What does the ‘Stupid Woman’ saga tell us about the media

It was the middle of December 2018, with 100 days to go before the UK was due to leave the EU. Parliament was supposed to have had a ‘meaningful vote’ on the Withdrawal Agreement (WA) negotiated by the EU and Theresa May. If parliament failed to approve the WA and nothing else happened, the UK would exit with No Deal (ND) and economic and social chaos would follow. It was therefore vital that this vote took place to move things forward, but after days of debate the government ‘pulled’ the vote, which simply meant it didn’t happen. May now says it will happen in the second half of January.

There was no good reason to delay the vote. It was done because the government was certain it would lose. Much better, the executive decided, to play for time and hope that in January the prospect of ND would scare a few more MPs into voting for the WA. Few politicians have risked the future of their country in such a major way just to try and win a vote, but that was not all. The government also approved billions in spending to prepare for ND. Billions that might not have needed spending if the government had allowed a vote, and MPs had subsequently agreed some way through this impasse.

The leader of the opposition was understandably furious about this delay. Corbyn accused Theresa May of "running down the clock" on alternatives to her Brexit deal by seeking assurances from the EU that she knew she would not get. He attacked May for a criminal waste of money simply designed to "make her own bad deal look like the lesser of two evils". The government and Theresa May were on the ropes.

But then Conservative MPs suddenly found something they could unite about. One of them had thought they had seen Corbyn mouth the words ‘stupid woman’ after one of Theresa May’s replies. Conservative MPs implored the Speaker to do something about this ‘gross insult’ (see picture above). Corbyn was forced to return to the house, and claimed he had said ‘stupid people’.

If this sounds trivial to you relative to the state the country finds itself in as a result of the Prime Minister’s actions, you would of course be correct. But as far as most of the UK media were concerned, what Corbyn had actually said became the lead story of the day. Just try typing ‘stupid woman’ into Google. They employed lip readers to speculate on what he had said, or rather what he had said under his breath. Was Corbyn lying about what he had mouthed or not? It made great TV and great copy. Everyone could watch the video and make their mind up (although of course once you have a phrase in your head it is easy to see what you want to see).

I could not help being reminded of the US presidential elections and Clinton’s emails. The US broadcast media hardly talked about policy, or character, but mostly talked about Hillary Clinton using her personal email to do business while Secretary of State. As an issue it was trivial compared to the obvious flaws in Trump as a person, but it allowed Trump to repeat endlessly his phrase ‘crooked woman’. Perhaps if he had said ‘stupid woman’ things might have been different!

The eagerness of Conservative MPs to focus on what Corbyn didn’t say, which is clear in this wonderful photograph, reflects that they desperately wanted to change the subject away from what May had done. The UK broadcast media, with perhaps a single exception [1], took the bait. I think this tells us three interesting things about the values of political journalists in the broadcast media.

The first, and in some ways least interesting, is that this media is bias against Labour, and Jeremy Corbyn in particular. Least interesting because it is something academic studies have already shown pretty clearly. The second is that the media appear to have no sense of what is actually important. What Corbyn mouthed in parliament is totally trivial. May spending billions just because she was going to lose a vote is right at the top of things that are important.

How can the media focus on the trivial when there is something really important to talk about instead? This I think is the third point about what all this tells us about the values of political journalists in the broadcast media, and it in some way goes to explain the other two. UK political journalism is obsessed by parliament. So when lots of Conservative MPs get excited about something, it has to be the main story, even though it is obvious that the media is being played.

This third explains the first two to some extent [2]. The media is anti-Corbyn because most MPs are anti-Corbyn: many Labour MPs would rather have a different leader. The media’s sense of what is important is governed by what parliament thinks is important. So, for example, because neither of the main parties seem to care about scandals involving the Vote Leave campaign (too much spending, where the money came from), the BBC largely ignores it. Worse still, because key MPs are implicated in this scandal, the BBC in particular appears to take their side, as this piece by Peter Jukes sets out clearly. In many ways, therefore, the BBC in particular has become Parliament's Broadcasting Corporation.

[1] Channel 4 led with the real crisis, and discussed the incident about half way through their hour long 7pm bulletin.

[2] I emphasise the some. The research I linked to above suggested little bias in who appeared in the media at the end of the Labour government, but a clear Conservative bias subsequently. In other words the anti-Labour bias at the BBC is not just because the Conservatives have more MPs.

How Brexit circumvented democracy

It is difficult to overstate the mess that UK politics is in, and the harm that is doing to many of its citizens. MPs have accepted a mandate from the people that Brexit should go ahead, but cannot agree on what form Brexit should take. With the possibility of leaving with No Deal a 100 days away, firms are having to make decisions to move jobs abroad to avoid the impact of that outcome. That in turn reduces the living standards of everyone in the UK. Rather than trying to convince them to stay, the government is actually urging firms and citizens tio plan for No Deal, as if No Deal was some kind of natural disaster. Billions of our money is being spent to plan for a disaster that the government can stop in an instant by revoking Article 50.

Let me put this another way. Theresa May and her government are spending our money to plan for a disaster that they might allow to be inflicted on the country they govern. It is the ultimate blackmail by the executive against parliament: vote as we wish or we will allow this disaster to occur. I cannot think of anything like it in my lifetime.  

It is worth taking a step back to see how politicians have got themselves, and us, into such a damaging mess. It results from one huge mistake, and that was the decision to allow a referendum in the first place. Even if you like the idea of referendums in a representative democracy, 2016 had two fundamental flaws. First, how we left (the form of Brexit) was allowed to be unspecified. That was a mistake Cameron made. The second, which he could not avoid, is that any Brexit plan required assumptions about how the EU would negotiate, and that again allowed wishful thinking on a colossal scale.

It was like offering to sell people fruit without specifying the type of fruit or its price. There is a great danger that people would say yes to fruit, and then be presented with rotting bananas that they didn’t like at an exorbitant cost. But when people say they don’t like bananas and these were too old and the price was unacceptable, they are told they had agreed to buy fruit so there is nothing they can do but pay up. You can see this problem in the polls: where Remain currently has a modest majority over Leave in a rerun of 2016, but it has a much bigger majority against the deal negotiated by May, with Remain versus No Deal somewhere in the middle (the last is probably flattered by many thinking No Deal means nothing happens). Therefore a consequence of both flaws in the 2016 referendum was that a second referendum, where both the form of Brexit and what the EU would allow were clear, became a democratic necessity.

But despite all they say, neither May nor the Brexiters are democrats in this sense. All the talk of will of the people is entirely bogus. They want their form of deal, however unpopular it is. We can pinpoint exactly when this anti-democratic move began. It was triggering Article 50 without any agreement from parliament about the trade deal that should be negotiated. All A50 requires is a withdrawal agreement before a country leaves, with trade arrangements to be decided later. Most MPs were foolish enough to fall for this trap. They couldn’t see the difference between a request for fruit and the delivery of a particular kind of fruit with a price attached. So although the Brexiters and May’s intentions in triggering Article 50 were undemocratic (remember she didn’t want MPs to vote), MPs made it democratic through their own folly. They signed the country up for whatever rotten fruit May produced.

May and the Brexiters’ plan would have worked if it hadn’t been for the Irish border, which the EU decided quite rightly should be part of the withdrawal agreement. They insisted that in any deal Northern Ireland would have to remain in the Customs Union and Single Market for goods to prevent a hard border on the island of Ireland whatever the rest of the UK agreed on trade (the backstop). The withdrawal agreement was now in part about trade. The fact that the Irish border was hardly discussed in the 2016 referendum campaign illustrates how that referendum cannot be a mandate for a particular deal.

The Brexiters did not want the UK to be part of the Customs Union or Single Market, and were quite happy to see a hard border in Ireland. But as the EU had ruled out doing any trade deal on these terms, that logically meant that the Brexiters required just one type of Brexit: leaving with no trade deal with the EU at all. This was certainly not what Leavers had talked about in 2016. May and the rest of her party were not prepared to suffer the economic consequences of this form of leaving, and so the actual Withdrawal Agreement (WA) May negotiated with the EU involved the UK staying in the Customs Union.

For Brexiters, this type of leaving was in many ways worse than being in the EU, so they refused to vote for the WA. Because most of Labour’s members want a second referendum the opposition dare not vote for the WA. We are therefore stuck. Stuck because of a badly conceived and poorly thought out referendum, because of May’s undemocratic nature (reflecting the very undemocratic Brexiters), and the EU’s laudable insistence on the backstop.

The curse of Brexit is that while a thin majority of voters wanted to leave in 2016, they cannot agree on how to leave, and many Leavers would prefer to remain in the EU rather than accept a form of leaving that was not their preferred (and often imaginary) option. The WA is much less popular against Remaining compared to the unspecified idea of Leaving. Quite simply allowing a decision to leave based on a thin majority in 2016 based on fantastic notions of what Leaving meant almost guaranteed that any particular realistic form of Leaving could not get a majority over staying in the EU.

This in turn is reflected in parliament, where neither the WA or No Deal can command the support of a majority of MPs. If MPs cannot find a deal that commands a majority (which they may well fail to do [1]), in a democracy that should mean no Brexit, or if MPs are too timid to make that decision themselves it would mean a People’s Vote. This is where the UK has departed from the representative democracy it is supposed to be. May refused to allow a vote on the WA, and therefore denied parliament its ability to work its way out of the impasse we are currently in. They say parliament is sovereign, but it appears this is not the case if the Prime Minister is determined to sideline it and MPs protect their party rather than their constituents.

We are trapped in a poker game between the two forms of Brexit few people want. The Brexiters are happy to continue to oppose May’s deal, because they know we leave with No Deal by default in March 2019. Furthermore huge amounts of money have been spent on preparing for this eventuality, an outcome only a minority of people want. The NHS is spending money on refrigerators rather than training nurses or doctors. May, who is known to be extremely stubborn, is not shifting from wanting parliament to pass her deal (also only wanted by a minority of the UK public), and she hopes as the March deadline approaches she can scare MPs into voting for it.

If either she or the Brexiters win their poker game we will embark on a form of Brexit that most people do not want, achieved by means that no one could call democratic. People do not want the WA or No Deal [2], MPs do not want the WA or No Deal, but we could well get one or other through a process of blackmail. On this issue the UK does not have a representative democracy, which is disastrous when it concerns one of the most important decision in my lifetime. Even if one side folds, we must remember the politicians who wasted so much public money, and squandered many UK jobs, just so they could play their silly poker game.

As this may be my last post before Christmas, have a good Christmas despite it all. 

[1] Corbyn dares not vote for any form of Brexit for the reasons I have given (which is why a government of national unity will not work). The Brexiters only want No Deal. That means a majority is extremely difficult for any form of Brexit without some form of coercion (like a threat to allow No Deal). It seems many Conservative MPs have not understood this.

[2] As the experienced pollster Peter Kellner says: "All the signs are pointing to the public losing faith in Brexit fast. It’s clear we need a People’s Vote." If you do not believe the polls, then lets find out with a real vote. 

The Next Referendum Question

I wrote in January about the “unanswerable case” for a referendum on the Withdrawal Agreement (it is not a second referendum but nor is it a referendum on the final deal), and I have not changed my mind in the slightest. To say such a referendum would not be democratic is self-contradictory. I personally would be happy for parliament alone to call a halt to Brexit, but if MPs believe that to do so would be seen as undemocratic then we have to have a referendum on the Withdrawal Agreement (WA).

Does it bother me that this will not be a referendum on the final deal, because the WA is likely to be vague on the final trade arrangement? No, for two reasons. First a referendum on the final deal will be meaningless because we will have already left (something which I do think is undemocratic). Second, we now have a huge amount of information compared to 2016.

We now know that there are essentially two types of deal with the EU we can do. The first is some kind of FTA (free trade agreement), where Northern Ireland would stay in the Single Market for goods and Customs Union (the Irish backstop). Theresa May says that is something no Prime Minister could agree to, but more worrying from my point of view is that we would be a lot poorer as a result because we would do less trade with the EU and many of the third countries that currently have trade agreements with the EU. Those who tell you that getting our own trade deals with those third countries would be a piece of cake are the same people who told you that we held all the cards with the EU.

The second option is that we stay in the Single Market and Customs Union, but have little say in how those emerge. That avoids the need to implement the Irish backstop, which is why it will be the most likely option that May will agree to in the end. The economic hit from that would be much smaller than the first option, but we end up with substantially less sovereignty than if we stayed in. May would like to persuade the EU to leave open the idea of extending the backstop to the whole of the UK, meaning we stay in the CU and SM for goods only, but I think the chances of the EU agreeing to this at the end of the day are slim, and as geography is as important to services as goods we would be worse off as a result.

This choice was not clear to even experts at the time of the referendum, and it was certainly not clear to voters. The campaign hardly mentioned Ireland (and when it did, it did not imagine a backstop), and voters were told there would be more money for the NHS (there will be less), Turkey was about to join (it is not), EU immigration hurt the public finances (it does the opposite), we held all the cards in any negotiation etc. The Remain side may have exaggerated the immediate economic hit, but two years later GDP is around 2% lower as a result of the uncertainty created by Brexit and the fall in Sterling has in addition cost each household an average of £400 per year. That is fact not Project Fear.

So the case for a referendum on the WA is overwhelming, given all the extra information we have. That nearly all this information has been negative for Brexit is reflected in the polls. So what should the referendum question be? I do not think No Deal should be an option. No one seriously campaigned for No Deal in the first referendum, and only a minority of Conservative MPs (60?) support it. The obvious question to ask is do you want to accept the WA negotiated or do you want to Remain in the EU. This does not disrespect the original referendum vote any more than the 2017 general election disrespected the 2015 one.

John McDonnell on the Today programme yesterday (here, 2:10 hours in) seemed to suggest a question like do you accept the WA, yes or no? Some took the 'no' as implying No Deal, but I doubt that as Labour would be campaigning for no and have already said No Deal is not an option. Instead it would be a suggestion to reopen negotiations. But if Labour cannot force a General Election, and with May saying this is the best deal she can get, what is the point? If you think a no result would put pressure on the EU, see what happened after the Greek referendum in 2015. I think many voters would realise this, and just vote for the WA to speed the end of the paralysis in government that Brexit had created.

Not only does his suggestion make little sense, but it was politically disastrous, given the overwhelming support for a referendum that included the Remain option among Labour voters and members. Just after a composite motion had been agreed which is itself a compromise between Remain members and the leadership, he appears to undercut it at a stroke. The words he should have said came from Starmer later in the day.

So the referendum on the WA should be a simple choice between accepting the WA as negotiated or cancelling Article 50 and remaining in the EU. What about all those working class Labour voters in the towns of England and Wales who will feel betrayed if we stay in the EU? Those people were sold snake-oil, and you do not expose snake-oil by prescribing it on the NHS. Instead you make sure you enact policies that reduce the demand for snake-oil, and hopefully that is what a future Labour government will do.

Are the EU wrong to make things easy for May?

Most experts who follow the Brexit negotiations think the Withdrawal Agreement (WA) will sketch in pretty loose terms what the final relationship between the UK and EU will be, although some EU politicians have indicated a reluctance to do this..A vague WA has been called a ‘Blind Brexit’ (ht Chris Grey). While a blind Brexit might help in May’s efforts to achieve an agreement and (maybe) to get parliamentary approval for it, it remains a very undemocratic way forward [1]. Here is why.

Suppose there are only two types of Brexit possible: a No “not the end of the world” Deal or BINO (staying in the single market and customs union). All the polls suggest No Deal is not the will of the people, and its support is in any case dependent on a false view of its economic consequences. Equally it is difficult to understand why anyone would support BINO compared to EU membership, as the only major difference is that we no longer get a say on how the rules we have to obey are changed.

A result of keeping the WA vague about the final relationship is that this binary choice is not apparent to many voters. In particular the UK government is still peddling various halfway houses that the EU is very unlikely to agree to, but we will not know for sure that they will be rejected until after the WA. If we did know it before the WA the number of people who had changed their mind would be greater than it is now, which in turn might embolden parliament to call the whole thing off.

Thus we will leave under false pretenses, of exactly the kind that led to the narrow vote to Leave in the first place. When it does become clear that there are only these two choices, it will be too late to change our mind without new costs. Re-entry into the EU might require becoming part of the Eurozone for example. So we will could end up with BINO plus face saving details forever, and pretty well everyone (including No Deal advocates) will agree we are worse off than we were before.

A similar problem happens if parliament does not approve the WA and we end up with a second referendum. The logic of a second referendum is clear. In the first in 2016 the promises made about what leaving would mean were various and many were untrue. Now we know what leaving does involve it makes sense to ask the people once again. Except in any referendum held after the WA fails to be approved, we will not know what the final deal will be, and that will give May the chance to spin her deal in any way that gets votes. Rather than a referendum on a final deal, it will in fact be a second referendum with unicorns only slightly less outlandish than in the first referendum.

This is what I mean by a very undemocratic procedure. The fault lies first with David Cameron, who should never have agreed to a referendum where the type of Brexit was unspecified. It then lies with May, who initially prefered Brexit fantasy to reality and despite Chequers still panders to the Brexiters. Above all it is the fault of the Brexiters, who by going back on an agreement made in December wasted precious time so they had more chance of getting No Deal.

The EU cannot really be blamed for going along with a vague WA. They are quite happy with BINO, and it avoids a No Deal accident. For that reason they may feel it makes sense to help May. The alternative of insisting on a detailed WA on future trade is high stakes: it could end Brexit, but could lead to No Deal. It is not surprising that most EU politicians would take the less risky option.

It remains the case, nevertheless, that by allowing May to have a vague WA on trade they are assisting in the deception of UK voters and MPs, who will be leaving the EU without knowing what is going to take its place. I hope that is something the EU recognises if we do leave in March 2019 and subsequently want to return. I suspect, however, that this is a vain hope.

[1] It is also costly in economic terms, because it prolongs uncertainty about what future trade relationships will be. Some of the issues I describe here may also divide those who voted Remain over whether the WA should be passed in parliament or not.