Picking up the Pieces of Post-Brexit Britain
I imagine it won’t be long before the crowing begins. Britain has left the E.U. and yet, contrary to ‘remoaning remoaner’ forecasts of doom and gloom, ‘the sky hasn’t fallen in’, and a ‘new dawn’ has broken.
Of course, like everything to do this deceptive, elitist and beyond-incompetently managed affair, this is nonsense.
The U.K. has entered the ‘transition period’. Lasting until the end of December 2020, we will be a rule taker or ‘vassal state’ in which we have to follow all the rules of E.U. membership whilst having no say in them. The upside, is that at least the sky won’t fall in.
The next cliff edge will be on 31 December 2020 when this transition period is due to conclude. No-one with any ounce of sense believes that the U.K. will have negotiated a comprehensive new trade agreement with the E.U. by then — not to mention agreements on other essential areas ranging from security to aviation.
However, whilst amending the Withdrawal Agreement Bill, which became law on 23rd January, Johnson inserted a clause which made it illegal for the government to seek an extension to the transition period — as permitted under the terms of the Withdrawal Treaty.
This clause can’t be removed quietly by a government minister through secondary legislation. Oh no. It’d require primary legislation — subject to the full law-making machinery of parliament — to avert this cliff-edge scenario.
Why did Johnson do this? It reincarnates the spectre of ‘No-Deal 2.0’ on January 1st 2021. For if no new deal is struck, and if no extension to the transition is requested, then the U.K. will default to trading with the E.U. on World Trade Organisation terms from this point.
A ‘no deal’ exit from the transition phase would be disastrous. To what extent it’d be as bad as a ‘no deal’ departure from the E.U. would depend the status of deals the U.K. has with other trading entities. In eleven months’ time — as with the E.U. — there could still be a long way to go to get these deals finalised. Alternatively, any concluded deals may have been so rushed that they benefit the more powerful party — whoever we are negotiating with — at the expense of the U.K.
And yes — no amount of Union flag waving will change the hard reality that whoever we are negotiating with will pretty much always be the more powerful party, perhaps with the exception of places like the Federated States of Micronesia. I recall a trade expert wearily recalling a rule as if it was plucked from a Dummy’s Guide to Doing Trade Deals: whatever you do, don’t put yourself at the mercy of a self-imposed deadline.
Johnson is many things, but he isn’t stupid. One could argue that the healthy majority he won in the 2019 election means the clause banning an extension to transition was unnecessary. After all, he would no longer be at the mercy of the hard-line caucus of euro-sceptics in his party: the ERG.
But I’m not so sure. At their first meeting after the election, the ERG, who became not so much a thorn, but a flaming arrow in Theresa May’s side, attracted 37 Tory MPs.
Bear in mind, that even with his healthy working majority of over 80, it would only take not-far-north of 40 of them to defy Johnson in order for us to return to scenes reminiscent of the stalemate of the 2017–2019 parliamentary session.
So perhaps he is not as free from the influence of this group as many assume.
There are broadly two scenarios that we could find ourselves in at the end of 2020.
For those who want to maintain a close relationship with Europe, the best-case scenario is that the government blinks, and rushes through amendments to the Withdrawal Bill therefore enabling repeated extensions of the transition period. As destabilising as the inevitable wrath of the ERG would be for Johnson’s administration, it is perfectly possible.
After all, both May and Johnson have given the Conservatives a bit of a reputation for talking tough, only to relent, succumb and submit. Theresa May enacted repeated extensions of Article 50 and despite saying he’d be rather be ‘dead in a ditch’, Boris Johnson did so too. Perhaps the thing history will end up judging him most harshly on was his capitulation on the question of the Northern Ireland, by agreeing to the EU insurance policy for a regulatory border in the Irish Sea. This is something his predecessor said no British Prime Minister would ever accept, but Johnson gave way in a heartbeat, potentially threatening 23 years of relative peace in the province.
Such delays and delays and more delays could mean that by the time the next election comes round, a trade deal with the EU is still not finalised and Johnson is leading a country languishing in a limbo-land of perpetual transition.
The next election is likely to be in just over four years time. Finalising a trade deal with the E.U. could take at least five. A Labour — or more realistically Labour-led — government could take over the ongoing negotiations which one would hope aren’t complicated by regulatory divergence towards U.S. standards. If the U.K. is stuck in regulatory lockstep with the E.U., then this could stall U.S trade negotiations too. This would provide an opportunity for a hand break turn towards a progressive-led treaty with our closest partners that protects manufacturing, worker’s rights, environmental standards and consumer protections.
The alternative scenario is grimmer. In the event that the U.K. leaves transition with a barebones agreement with the EU, or no deal at all, there are numerous questions over the subsequent months and years that will have a huge impact on the long-term future of the country.
Will the oil-tanker of the U.K. economy start veering ever States-wards, thereby putting close economic ties with Europe further and further out of reach? What will ‘the country’ even be, considering the inevitable renewed clamour for Scottish independence and Irish reunification. Could the fallout of a ‘clean break’ Brexit — which could lead to hikes in food prices, the decimation of U.K. manufacturing and threaten peace in Northern Ireland — lead to civil unrest? The unpredictability of such circumstances could be a risk to the Johnson administration — no matter how healthy his majority is.
One thing is clear. Whatever happens and whenever it happens, there will be a lot of pieces to pick up from the rubble of a Conservative-led restructuring of a post-Brexit economy.
Let’s hope, and do what we can, to make our wait as short as possible.
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