Economics

No deal may be better than a bad deal—but it has to be a really bad deal

Time to strike a sensible agreement and then at long last we can move on

September 21, 2020
Photo:  WIktor Szymanowicz/NurPhoto/PA Images
Photo: WIktor Szymanowicz/NurPhoto/PA Images

For the third consecutive autumn, Brexit Britain faces deal or no-deal tension. By now it feels more “nation stuck in a never-ending drama” than one engaged in serious discussions about the future. You can feel the public and indeed political classes growing ever-more bored. It is scarcely the light relief we need from the unprecedented challenges faced globally due to the Covid-19 pandemic.

Yet the outcome of talks probably matters even more this year than the last two, because the government has a majority to pursue its chosen course.

While more difficulties in terms of trade and everyday engagement with the EU are inevitable anyway after Brexit, these will be lessened by a deal. For the businesses waiting to hear just how significant the changes could be; the workers at risk—particularly in sectors likely to be most affected, such as the automotive industry; consumers who may see changes in their food choices; and travellers facing greater costs to go to the EU, this decision matters.

Above all, though, a deal would allow us to move on from the debate that has entrapped us for approaching five years. Without a deal there is no stability but more of the same. One big reason why most countries have trade deals is that they help to define your place in the world—definition that in the UK is currently sorely lacking.

We have actually left the EU, but so far not many people appear have noticed. Everything largely appears as before, with perhaps the biggest change being UK ministers not attending summits. Lower investment is the most significant economic change, but even this is still largely invisible to most people. The shock of 1st January might be great, deal or no-deal.

Even with an agreement we face queues at Dover, exponentially more inspections of goods entering and exiting the country, restrictions on individuals working in the EU, the end of free reciprocal health care and more paperwork all round: an end to those things that many have taken for granted, which could make the difference between profit and loss for a business, or affordable and unaffordable holidays for ordinary citizens. We are threatening the UK’s place in global and regional supply chains so important to a modern economy.

Without a deal it becomes worse. The mass production automotive sector, including firms like Nissan and Jaguar Land Rover, has warned about its future if businesses face tariffs on exports to the EU. UK food and drink exports will be similarly hard hit (and unable easily to substitute their trade with the EU for trade with other countries). Without cooperation from customs and passports authorities, those queues will be longer. Reciprocal data transfer, essential for many, will become far more difficult. And the list goes on.

Not that we should fall into the trap of thinking that everything will fail immediately, a temptation you sense in some Remainers who suggest the country will soon come to its senses and want to rejoin the EU. That seems as delusional as suggesting no deal in January will soon force the EU into big concessions.

For me the decisive point about no deal is that it just prolongs the interminable Brexit debate and the uncertainty faced by business and individuals. We see lethargy in the political centre as the extremes float their ever-more unlikely “solutions,” which on the hard-line Brexit side currently include the UK leading a global trade war against the EU. The government’s threat to override the Northern Ireland protocol sent us backwards, forcing another lesson in how borders work. The assertions by prominent US figures that a trade deal is conditional upon protecting the Good Friday Agreement led to the remarkable sight of a UK foreign secretary effectively pleading with the US to put us ahead of the Irish—a forlorn hope when DC turns green every March.

But no deal means more yet arguments about borders, more suggestions that “they need a deal with us more than we need one with them,” more inappropriately martial language, and on the Remain side, more suggestions that Scotland has no place in such a mess. It may mean arguing again about the financial settlement. Meanwhile, we probably return to standard EU deal timescales, so that’s five years. five years more? Is that really what we want?

Brexit has seen the UK become a nation stuck on repeat. We are perhaps approaching the finale of season three of deal or no deal. Let’s make this the final season? The threats to break international law and the surprising cameos by Amal Clooney and Joe Biden show scriptwriters are running out of ideas. We didn’t need them in previous seasons, given the fall, rise and fall again of the May deal, with the ministerial resignations and overwhelming parliamentary defeat ending season one. Or the Johnson threats to the EU and promises to the Democratic Unionists, followed by the about-turn—and cries of anguish from the one-time allies in Northern Ireland—leading to the election victory which ended season two.

While of course no deal is better than a bad deal, it has to be a really bad deal, or subsequently played really badly, to be worse than no deal.

Eventually the UK and our neighbours are going to have a trade agreement, and it is going to look in the first instance quite similar to the one that is mostly on offer now. We can wait, for years, with all the risk that entails for UK businesses, and get no great return. Or we can take it, move on, and decide what sort of country we want to be in the future.

We need normality. Constitutional law, as lawyer and journalist David Allen Green never ceases to remind us, should be boring. And trade nerds don’t want to be in the media; we’d much sooner be working with governments and businesses to grow exports. Time to move on.