29 May 2018

May’s disastrous handling of Brexit will set us back decades


Theresa May’s premiership, which has been dominated by the process of withdrawal from the EU, can be divided into three periods. Her first five months in power involved a series of catastrophic errors that have coloured everything that came after. The next 11 months were broadly okay on issues relating the leaving the EU. The most recent six months have been hapless, leaving us in a condition where, either through deliberate intent or sheer lack of will, we’re likely to remain de facto members of the EU for at least ten years after the referendum.

That is both undesirable in and of itself, and leaves open the possibility that real Brexit may be delayed almost indefinitely. It now seems likely we will need a whole new political movement, built almost from scratch if we are to leave the EU in any meaningful sense.

May’s initial period in office involved three disastrous errors. First, she refused to unilaterally guarantee the rights of EU citizens living in the UK to live and work here indefinitely post-Brexit. Next, she did not simply say that, after triggering Article 50, we would proceed with trade negotiations with non-EU countries and that any attempt to interfere with that would be regarded as an Unfriendly Act that would mean we would no longer exit via Article 50.  Third, she made the Brexit negotiations the centrepiece of her political programme. This error is so insidious that to many not be immediately obvious why it is a mistake.

The attitude we should have adopted is something like this: “We aren’t leaving the EU in order to do a deal with the EU. There will of course be some kind of deal with the EU over trade and security matters. We can largely leave the details of that to technocrats and off the front pages, since there are a series of sine qua nons for any discussion whatever – e.g. that we will be outside the customs union; outside any non-trivial jurisdiction of the ECJ; outside any of the EU’s criminal justice procedures (such as the European Arrest Warrant and the European Investigative Order.”

Provided all of the absolutely fundamental and non-negotiable aspects of leaving the EU were in place, the rest should have been largely uncontroversial. If the EU didn’t want to do a deal, that was its business – lots of the world gets on fine without any trade or security deal with the EU. Let the technocrats sort it out.

Instead, May made the Brexit negotiations the main political issue. She also made lots of things that should have been simply said once and moved on from into a large political debate. Why on earth are we still debating whether we should leave the EU’s Customs Union? How can we be in a position where the UK government’s stated policy is that it wants to remain in the European Arrest Warrant?

After May’s initial mistakes, things improved. From December 2016 to November 2017, the policy was largely okay, with the Lancaster House speech setting out a series of achievable objectives broadly in line with the concept of leaving the EU.

May started to get the core approach wrong again from November last year. As the initial Phase 1 agreement was coming together, the Government should have announced a series of significant no deal preparations.

There was no guarantee the EU would want to do a final overall Phase Two deal. There remains no such guarantee. The EU is not obliged to do a deal with us. Talk of the EU “bullying” the UK is weak and silly. The EU doesn’t owe us a deal. I don’t believe it would be in any position to “bully” the UK if our side were properly assertive.

But even if it were, the EU’s entitled to play its cards as it judges best, and after all one of the key reasons for leaving is the fear the EU would dominate us. It’s up to the UK to stand up for itself, not to the EU to prop us up.

The EU has done one genuinely bad thing. It has reneged on the December Phase One agreement. The whole point of that agreement was to enable the talks to move on to the future trade and security partnership without first resolving the Irish border “issue” (if there is one) and without legally committing to anything on the money.

The EU subsequently backtracked on this by adding a requirement that the December agreement be written into a “Withdrawal Agreement” and refusing to talk about the future partnership until everything about the money and the Irish border was formally set in stone.

We don’t need a legal “Withdrawal Agreement”, as if somehow we required the EU’s agreement for us to leave. We certainly don’t need a “Withdrawal Agreement” that makes concrete what the December agreement deliberately fudged. That they were left as fudges, only to be resolved in the final trade and security deal, was the point of the December agreement.

Instead of declaring that the EU had reneged and redoubling no deal preparations that should by then have already been well underway, the Government weakly agreed, in March, to set out a formal Withdrawal Agreement in order to “gain” a transition deal – which in truth is not a gain for the UK at all.

Since then we have become ever more bogged down in abstruse technical discussions about customs arrangements and the Irish border. We’re told that the UK customs authorities cannot have any system in place to deal with a post-EU world by the end of 2020. That is more than two years’ away, and so the idea that some sort of solution cannot be found seems hard to believe. For example there would nothing to stop us from saying (unilaterally, if necessary) that during a transitional period whilst we finalised our systems, we would allow anything in from the EU, tariff-free and that any product legally sold in the EU could be legally sold in the UK.

Similarly, there is no genuine “problem” of the Irish border. Again, we could simply let in anything at the border, recognising EU goods and imposing no tariffs on them during a transitional period. Over the longer term, at the Irish border there is nothing to stop us from using surveillance, whistle-blowing or all the many other techniques we use to enforce taxes and regulations domestically (with no new “technology” required). A “soft border” means no stopping of persons or goods at the border.

We can do that without cameras or other such infrastructure. But if we did want to introduce cameras or other infrastructure, that would be entirely our call. There is nothing in the Belfast Agreement to prevent that. And if we did want to stop goods at the border for inspection, with normal customs checks used by countries around the world, there is nothing in the Belfast Agreement to prevent that, either.

Furthermore, it’s up to the Irish and the EU to decide what inspections or other checks it imposes on the border. The Government should never have accepted that was anything to do with us at all. May often talks as if there was an absolute commitment to a seamless Irish border with no infrastructure, and we will need to choose our trading relationship on that basis. Exactly the reverse should be true: we should choose our trading relationship first, and then aim to have as soft an Irish border as feasible, given that trading relationship.

At the same time as all these issues occupy political bandwidth, May has announced a series of proposals on non-economic aspects of our post-Brexit relationship with the EU that are totally unacceptable. For decades, Eurosceptics said we didn’t mind economic collaboration with the EU but felt it went too far in other areas such as criminal justice. What we really objected to were things like the European Arrest Warrant (EAW) or the European Investigative Order (EIO).

Well, May’s policy is for us to stay in the EAW and EIO. I suspect she believes that all the noise about the economic debates means there is no energy to argue with her over security issues, so she can get away with Brexit In Name Only in these areas. I suspect she’s right.

The talk is now that we will extend our period in the customs union, which will only be acceptable to the EU if we also extend our period in the Single Market, under ECJ jurisdiction, with no say in the setting of the rules, and if we make large financial contributions to cover the costs of managing these EU institutions — probably larger than if we had stayed in the EU, since we will lose the rebate. Indeed, the UK has been invited (and agreed!) to participate in the discussions for setting the EU Budget to 2027.

Dominic Cummings, one of the masterminds of the Leave vote, has so despaired of the government that in a recent blog he appeared to call on Conservative donors to fund a new pro-Brexit anti-Corbyn party, presumably hoping for an En Marche-style surge in time for the 2022 General Election. Whilst it may well be necessary to form a new cross-party political movement, a new party is another matter. I don’t believe there’s time for a new party to stop Corbyn even if such a party were a good idea.

May’s team say their problem is a lack of parliamentary numbers. But the reality is deeper. The British political system – the Lords, MPs, even key parts of the Civil Service – are simply unwilling to accept Brexit and its implications. If they couldn’t accept Brexit, they shouldn’t have accepted (and overwhelmingly voted in favour of) a referendum on it.

Having lost, instead of asking “Given staying in the EU is no longer an option, what is it best to do next?”, too much of the Remain-supporting parts of the political and bureaucratic system have sought to answer the question: “Given leaving the EU is a bad idea, how much of staying in the EU can we preserve?”. That will produce a very different answer in the short term.

In the long-term the merits of Brexit don’t depend upon how well the process of leaving is handled. But the mistaken handling of the process of leaving the EU by this government is likely to take us a decade to recover from. By effectively staying in the EU until 2027 or later, as vassals, we will miss an entire generation of opportunities that Brexit would have presented.

It means no trade deal with the US whilst Trump is in charge (and hence a worse deal when it comes). It means the key regulatory developments in AI, driverless cars, green technologies and the commercial exploitation of space will not be made by the UK, but set for us by the EU. It means the most obvious new post-Brexit geopolitical alliance, CANZUK, will pass us by.

We will get over this error in due course. It might take a decade or more, post-2027. By 2040 we might be back to where we should have been. What the opportunities will be by then I have idea. But there will be some. Let’s just hope that by then we have a political class that is willing to take them.

Andrew Lilico is an economist and political writer.