Sir Vince Cable, now leader of the Liberal Democrats has acknowledged that ‘Brexit may never happen’. Readers of this blog will know I hold this belief and to ape Donald Tusk, I’m sure I’m not the only one’. Brexit was always going to prove much more costly than the leading Leavers – even those who had some understanding of the complexities – were prepared to admit. One benefit of Theresa May’s badly judged election is that the zealots in her Cabinet have lost traction forcing their acceptance of a transitional period to reduce the costs of Brexit.
But consigning the reckless ‘no-deal-is better-than-a-bad-deal’ to history falls a long way short of a coherent plan. At long last business has found its voice, urging the government to enable the UK to remain in the single market and customs union for the time being. As the negotiations begin and reality dawns, our over confident Secretary of State for Brexit is having to swallow the idea of ‘having his cake and eating it.’ The cocky refrain that the UK’s trade deficit with the EU will ensure Michel Barnier bows to the government’s demands is as worthless as Mrs May’s ‘Brexit means Brexit’ nonsense. As any student of Europe knows, for the EU’s politicians and industrialists preserving the European project and its four freedoms is, as made clear by Dieter Kempf, president of the federation of German industries, the priority. EU industrialists will not risk undermining the world’s richest market in order to avoid losing some exports to Britain?
The UK’s weak negotiating position is daily becoming more apparent. Sometime in the autumn the government will concede an exit payment – albeit spread over several years – of the order of £40-60bn and that negotiations on a preferential trade deal, even if they start before March 2019, will take several years. Moreover, now that Article 50 has been triggered the economy – as predicted by ‘experts’ last year – has started to slow and the outlook is bleak. GDP growth at 0.3 per cent in the second quarter following 0.2 per cent in the first quarter reveals the UK as the slowest growing economy in the EU28 and the G8. And Brexit is the cause, as evidenced by that fact that the EU is now growing more strongly than the UK and according to the IMF global growth has established a robust annual rate of 3.6 per cent.
Growth last quarter was driven almost entirely by services – the sector set to be hardest hit by Brexit – while the much-promised manufacturing boom to compensate for the tumbling pound has not materialised. Real incomes are falling as inflation outstrips wages growth and consumption is being supported by worryingly high levels of household debt. Little wonder that business confidence has fallen to its lowest point for almost six years. But as the economic problems mount all the government’s time and energy is being concentrated on Brexit. It is difficult to conceive of a greater, self-inflicted mess.
Since the referendum, the zealots including Theresa May have argued that to do other than leave the EU would be an affront to democracy. It is time this mantra was challenged. In advanced democracies a majority of around two-thirds would normally be required for a constitutional change and at what point did we switch from a referendum that was ‘advisory’ to being politically binding? Rather than an exercise in democracy the referendum amounted to a manifestation of cynical demagoguery. A democratic vote needs two things that were lacking in the referendum. Firstly, voters must have a clear idea of what they are voting for – even now after a wasted year the government cannot say what it wants or what it might get. Secondly, they must have reasonably accurate information as to the likely costs and benefits of their vote – only now is the government commissioning a study of the benefits and costs of EU migrants to the economy and David Davis has admitted no work has been done to assess the economic assessment of a hard Brexit. The pretence that an issue as complex as Brexit could be reduced to a yes/no question, coupled with the lies and deceptions promulgated by both sides was an affront to democracy. The referendum demonstrated Plato’s dictum that democracy ‘elevates opinion above knowledge’ and I’m sure historians will judge it a shameful event. More immediately I doubt many who voted to leave did so expecting to be poorer.
A first step in avoiding the catastrophe a majority of the public neither understood nor voted for now requires a realistic estimate of the costs and benefits of leaving the EU. The banal phrase, adopted by both the Tory and Labour parties, that while we will be leaving the single market and the customs union we can achieve an agreement that allows for the continuation of frictionless movement for the 60 per cent of our trade that is with the EU or countries with which EU members enjoy preferential access, must be challenged. Similarly, the idea that following a future ‘big and beautiful’ trade deal we will preserve our current trade surplus with the US is laughable. But the costs of Brexit extend beyond trade. For example, companies and individuals will lose legal protection on the continent, a replacement for the European Common Aviation area will need to be negotiated, reciprocal health benefits will cease, roaming charges may be reintroduced for British travellers, and the NHS’s supply of radioactive isotopes is threatened.
If my small sample of leave voters is any guide, people are increasingly confused and shifting their opinion. Mrs May and her Brexiters are a busted flush; after twenty five years of Tory infighting the country desperately needs leadership that puts the national interest first. I believe, that once voters have a realistic understanding of the enormous costs involved democracy dictates that there should be an election or another referendum.
29th July 2017