Issue 122:2017 09 28;Kicking the can down the street (John Watson)

28 September 2017

Kicking The Can Down The Street

What are the two years for?

By John Watson

Two years more? Just what will it achieve? That is the question which Mrs May will be asked about her proposal in Florence that there should be a two-year transitional period after Brexit in which nothing much changes.  On the face of it, it sounds a good idea.  Everyone has been saying that they cannot get the job done in time, so a little more time will not come amiss.  The question is, of course, whether it will be spent driving forward a practical solution or whether it will simply result in a corresponding delay before the parties begin to negotiate in earnest.  It is a commonplace that real negotiations do not start until the pressure to agree is inescapable; so, if the additional two-year transitional period relaxes that pressure, it might do little more than extend the period for uncertainty and bickering.  Two years more of chaos and self harm.

That would be the argument if this was a normal commercial negotiation.  Nature abhors a vacuum so if you create extra time you can expect it to be filled with extra sitting about and posturing.  But this isn’t a normal negotiation.  Moving the effective deal date by two years means that the parties themselves will have changed their nature.  Neither the UK nor the EU will be the same entities in 2021 as they will be in 2019.  We are aware of the potential changes at the UK end of course – a press anxious to fill the column inches has seen to that.  Before 2021 there may be a general election.  That could produce any number of different outcomes.  Quite apart from the result itself, who knows what the various parties will look like by then.  Labour has not yet settled on its approach to Brexit so there are a number of possibilities there.  They could be a Remainer party headed by Sadiq Khan or Keir Starmer, focussed on participation in the market.  They could follow Corbyn’s inclinations, averse to any participation in the market, concerned lest the state aid rules block their nationalisation program.  The Lib Dems will probably still be all for rerunning the referendum but the trouble with that is that unless the public mood has changed they will get the same answer again.  Perhaps a change of mood to remain will both win the election for Vince Cable and allow him to push forward with a remain agenda.  There is no evidence of it at the moment but the chance of it happening before 2021 must be higher than the chance of it happening before 2019.  The future attitude of the Tories is also hard to predict.  Who will be leading them?  Still Mrs May?  Boris supported by Liam Fox?  Putting back the date for leaving the market gives all these possible changes the opportunity to play out.

Still, this just focuses on the UK.  Three and  half years may be a long time in domestic politics but it is even longer in terms of what is happening in Europe.  There 26 nations are being squeezed into a one size fits all straitjacket and, as it gets tighter, the strains are beginning to show.  Mr Macron’s vision of much closer integration is already being undermined by German domestic politics as the Free Democrats, sceptical of his proposals for a Eurozone budget, become likely coalition partners of the Christian Democrats.  Then there is the worrying increase in nationalism, with 13% of Germans voting for a far right party and the possibility of Spain losing Catalonia, its most prosperous province.  Further east the divisions darken with Hungry rejecting the EU approach to migration.  These are all huge pressures and although the EU may survive them it is unlikely to do so unchanged.  Mr Macron, in setting out his vision, suggested that one day the UK might wish to rejoin.  If that was where we had got to by 2021 it could change the negotiations fundamentally.  On the other hand a strengthening of right-wing movements in Europe and a corresponding disgust in the UK could change the negotiating positions in quite a different way.

That puts the transitional period into its context.  Do we want to wait an extra two years before a decision is actually made?  Of course that has the advantage that by then we will have seen how some of these uncertainties will turn out; but, then again, other uncertainties will inevitably have taken their place.  In the end the position will always be volatile and at some stage we will need to hold our fingers to the wind and commit ourselves.  Perhaps then we should just get on with it, leaving the deadline where it is, accepting that there will be some rough edges and chaos as the civil servants struggle to get the systems in place, and using the increasing time pressure to drive the parties to reach an agreement.


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