19 October 2017
A Hard Brexit
Why we need the figures.
By John Watson
It was always inevitable that at some stage we would have to make preparations for a “no deal” Brexit, and at long last the Government seems to be focusing on the possibility. And so they should, you might think. What is more, you might think it where ever you stand on the long spectrum which runs from the hard Brexiteers of UKIP at one end and, having wended its way through all the political colours, ends up with the Remainers of the Liberal Democrats at the other.
It really isn’t anything to do with wanting a no-deal exit. Few in the UK or indeed the EU believe that that is a sensible outcome, although it has to be acknowledged that if the EU will not play ball it is where we could end up. The reason why the no deal option has to be developed is not one of preference but one of negotiation.
Take John McDonnell’s comment that the House of Commons would block a no deal Brexit. It is hard to see how that would play out since, if the House forced a domestic volte face at the very last moment, there is no reason to think that Europe would accept a withdrawal of the article 50 notice without exacting a price. Why would they? They would be in an excellent position to reassert their control over the UK on whatever terms they chose and it is hard to imagine them not exploiting that power. Bye,bye, Gibraltar. Bye, bye, the pound. Claims for large contributions to the latest pet EU projects would be unanswerable. Britain to bear the burden of the latest influx of refugees? Of course, gentlemen, if that is the price of getting back in.
From our point of view it is not a pleasant prospect, but one can see how attractive it might seem to France and Germany. And if Mr McDonnell is right they can have it for the asking. All they need to do is to obstruct the negotiations, knowing that if they fail Britain will come back in on whatever terms they choose to dictate.
There is only one way in which we can prevent the EU achieving this outcome. That is by demonstrating that if no deal has been done by March 2019 we will walk away, leaving a huge hole in their budget, despite the doubtlessly unpleasant consequences for ourselves. For that to be a realistic course it needs to be properly costed and planned. That means that the government needs to publish its figures for a no deal Brexit and also to indicate any concessions which we would make unilaterally. For example, so much is said about allowing EU citizens already resident in the UK to remain here that it is no longer a significant bargaining point. As Britain would presumably give them a right to remain even if no deal was done, there seems little harm in announcing it now and giving comfort to both the individuals concerned and their employers.
The Brexit negotiations are going through a low point at the moment as Davis and Barnier struggle to get things moving forward. That is hardly a surprise. Any commercial negotiator will tell you that deals are not normally done until the last moment and that brinkmanship generally runs up to any deadline. Whether Mrs May’s visit to Brussels will help to un-jam things or not remains to be seen, but do not expect real progress to be made for some months to come. It is better, of course, if a deal is not left so late that it is impossible to implement it in time, but that is unlikely to be a real problem. Once there is the will for a deal there will be the will to do whatever is necessary to make it work – be that transitional arrangements or whatever. Long nights for the civil servants but that is what they are there for.
In the financial markets the traditional advice is to ““Sell in May and go away, don’t come back till St Leger day”. That was probably never intended as a stock market tip but rather a reflection that between May and September the City would be a dead place because everyone would have gone off to the country. The rhythm of those times dictated that nothing would be going on. Well, deals have rhythms too and the guiding principle is that nothing much happens until everyone is pushed against the deadline. That deadline is still almost 18 months away. Perhaps, then, the best thing would be for all the negotiators to go away for a long holiday and come back again in the autumn of next year. Then it may be possible for them to do something useful on their return. Before they go, though, they should publish the Government’s projections on the no deal scenario.
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