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Sean Rickard - Independent Economic Analysis
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I fear the Brexit debacle is no nearer its end game or, despite recent resignations, is the hegemony of the two party system?   The only certainty is the government’s continuing chaos and mismanagement of Brexit; a process, even before we leave, that is costing the economy £800m a week.   The Leavers’ claims that Brexit would: mean the UK holding all the cards; be the easiest negotiation in history; and open up a bright future, have been revealed as pure fantasy if not downright lies.  

 

Does Mrs May now regret her impetuous decision to force the resignation of Sir Ivan Rogers our erstwhile Permanent Representative to the EU?   His mistake was to point out the immense challenge of being the first country to attempt to negotiate the erection rather than the removal of trade barriers with similar nations.   Driven by hubris, Mrs May’s negotiating strategy has been a litany of errors and now lies in tatters.   Her tactic now is to delay until the eleventh hour in the hope that the zealots (including the DUP) will vote for her Withdrawal Agreement.   I doubt this tactic will succeed, but even so it will only herald the start of an incredibly complicated, unprecedented trade negotiating, covering everything from fish to financial services.   One can have little hope of a better government performance than heretofore – the more so as the EU will hold all the cards.   Moreover, Mrs May, or more likely her successor, will have to set out a proposed UK-EU relationship.   At that point I doubt the fragile coalition of Leavers will remain united; the Vote Leave campaign assiduously avoided detailing the post Brexit destination.  

 

Mrs May is in denial and foolishly refuses to be open with the population, insisting – despite overwhelming evidence to the contrary – that she can meet all her targets.   Experienced trade negotiators know that free trade deals – particularly complicate ones – take several years to complete and once concluded a UK-EU agreement must be ratified by 27 member states and a number of regional parliaments which will take a further 18 months or more.   This suggests it will take until the mid-2020s before the process of Brexit comes to an end – ten years or more after the referendum.   I know not how any rational politician – the zealots aside – can seriously contemplate ten years of business uncertainty and investment draining out of the country.

 

These realities are now focusing the minds of conscientious parliamentarians.   They know that populism rarely survives reality hence, a ‘no-deal’ outcome must be avoided at all cost.   Moreover, given the paucity within the Political Declaration regarding the future UK-EU relationship their only sensible option is to abandon or delay Article 50.   Abandoning Article 50 is in Parliament’s gift but would, to put it mildly, be controversial without the support of a People’s vote.   Delay however, poses its own problems.   A delay would need the agreement of the EU and while it appears sympathetic, it has indicated that a short delay – say until the end of June – must have a purpose.   For example, putting in place necessary legislation, preparing for no-deal, or holding a people’s vote.   But if the EU judge – as is surely the case – that a delay is necessary because the UK government is mired in chaos and confusion it is likely to want – as appears to have been leaked by Olly Robbins in a Brussel’s bar – a much longer extension, say two years.   This raises difficulties regarding the EU elections, the UK’s budget contribution not to mention the Tory zealots.    

 

Theresa May’s credibility, trust and friendships with EU leaders is spent.   Having urged them to finalise a Withdrawal Agreement with her preferred ‘backstop’ by November because she needed sufficient time to get the legislation through Parliament, she then reneged on holding a meaningful vote in December putting it off for five weeks only to go down to a massive defeat.   She then backed the Brady amendment – in effect seeking a mandate to reopen the Withdrawal Agreement – having previously declared, and urged her fellow EU leaders to declare, this was not possible – she then sought a mandate from Parliament to say the deal she had negotiated was unacceptable.  

 

In keeping with her disingenupus approach, she has acquiesced in Tories chewing-over the so-called Malthouse compromise.   This is just a rehash of the ‘max-fac’ option whereby technology would be used to minimise checks on the Northern Ireland border.   This is an idea previously rejected by the EU as it fails on two grounds: no such systems exists anywhere in the world – even between an EU and an EEA member – and in the absence of regulatory alignment there must exist some facilities to search – albeit randomly – lorries and cars.   It is clear – if not to the zealots – the Malthouse compromise is not now, or for the foreseeable future, a solution the problem of the backstop.   All Mrs May has achieved is to create expectations that she will soon have to disappoint.    

 

Meanwhile we have the irony that the EU has concluded a free trade deal with Japan while our hapless trade minister, Liam Fox, has been rebuffed in his attempt to get Japan to roll-over the agreement for the UK post Brexit.   Mr Fox’s misplaced cockiness is coming up against reality.   In 2016 Mr Fox said he would have the 40 free-trade deals the EU has with third countries ready to roll-over by now.   We now learn that he has concluded just six – mostly with minor countries – reflecting the actuality that the UK is far less powerful that the EU when it comes to negotiating trade deals.   In the case of Japan we have weakened our position by breaking the solemn assurances we gave the Japanese that the UK would remain a perfect location for exporting to the EU.   Donald Tusk was so right.   There should be a ‘special place in hell for those who pushed for Brexit without even a sketch of a plan’.  

 

I N D E N I A L ,  F O O L I S H  A N D  F R I E N D L E S S

26th February 2019

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