Friday, January 04, 2019

The Brexit Mess

The Brexit clock is ticking. In less than 85 days, Britain will leave the EU with or without a negotiated departure at 11pm GMT on 29th March. At this moment, a negotiated deal looks unlikely – so a no-deal exit is the likely outcome. This would save £35 billion in payments to the EU but would also create a degree of chaos.

Some are still hoping for a second referendum in the belief that a vote held now would lead to the end of Brexit and for Britain to stay in the EU but this cannot be held within the timeline available, unless moves to leave the EU are stopped in their tracks (which, the European Court, ruled was possible). Others are looking for some movement from the EU members on the terms of the deal, especially as they relate to the Northern Ireland – Irish border, something which the EU has repeatedly said it is unwilling to do. Yet others are just wishing for this whole thing to be finished, one way or another, so that the country could get back to focusing on the issues that matter – jobs, healthcare, education, community development, and housing.

Let us just play out the scene. Britain walks away from the EU with no deal. It then has to deal with the “mess” that this creates – legal issues will dominate together with economic logistics, especially in terms of the movement of goods across borders and the movement of people. It is also widely thought that there would be a run on the pound – essentially a devaluation, which would make UK exports more attractive. Here is a list of the reported consequences:

  • ·          Goods crossing EU borders would be subject to WTO rules, would take longer   to cross and would become more expensive.
  •        EU citizens living and working in the UK would be in a legal limbo, though the   UK government has offered reassurance that nothing would happen “immediately” – there are some 4 million EU citizens living in the UK.
  •       UK citizens living in the EU (like my brother and sister) would also be in a position of significant uncertainty, though much depends on the attitudes of national governments, many of whom would not want to lose the revenues which such residents bring. Some countries, like Germany, have already offered a time-limited offer to Brit’s so that they can continue their residency.
  •       In Ireland, the Irish government would be under EU pressure to exert EU authority at the border in terms of the movement of people, goods and services. The Irish government, not wanting a return to the “troubles” would be reluctant to do so.
  •       The EU would experience a significant and substantial budget problem, having lost a major contributor and the £35 billion the UK promised in a divorce settlement.
  •       UK laws, currently intertwined with EU laws, would need to be repealed and rewritten quickly – nothing much has happened here. For example, the recognition of professional credentials earned in an EU member country may by subject to dispute. The current plan is simply to incorporate all existing laws in force from the EU into UK law.

The EU has already issued a plan for a no-deal, which would permit flights originating in the UK to land in the EU. But other consequences are being looked at, for example for ease of access to drugs manufactured in Europe, the movement of funds between banks around the world and the continuation of EU funded research in British universities. Britain would, however, lose some EU subsidies – for example the £3 billion paid annually to farmers in the UK.

This covers the immediate EU-UK logistics, but what about the politics of this? Can Theresa May survive the failure of her negotiated settlement if this is what occurs? If she cannot, who will replace her from within the Tory party? If the Tories lose the confidence of the house, given that they are a minority government, will there be a snap election and if so, who would win? What difference would a new government make to the situation?

It is these last questions that create the sense of uncertainty and chaos in UK politics. It is a real crisis – worse than 1956 Suez crisis, worse than Edward Heath’s 3 day week and worse than the Miners strike. What is quite remarkable about the predictability of it all. There are no surprises here. The EU was never that interested in negotiating anything that favoured the UK or dealt with the real challenges of this – just read the book by Yanis Varoufakis (former Greek finance minister) cataloguing his attempts to have a meaningful negotiation with the EU (The Adults in the Room) – and the UK Tory party is so divided over Europe, which is why the referendum was called in the first place.

It is a mess. It is an unholy mess and it will get worse before it gets better. Without divine intervention – or the intervention of The Queen (requiring the formation of a government of national unity) – this mess will play out on March 29th. Mark this date in your diary.

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