Economics

You cannot wish away the hard choices inherent in Brexit

A sensible compromise remains the only way forward, despite bluster on both sides

September 10, 2019
Pro- and anti-Brexit activists gathered outside parliament. Photo: SOPA Images/SIPA USA/PA Images
Pro- and anti-Brexit activists gathered outside parliament. Photo: SOPA Images/SIPA USA/PA Images

It turns out that there is a good reason why international economic policy, such as UK relations with the EU, must be forged through consensus. If extreme views dominate instead, including in parliament, you have no idea whether in six months’ time we will still be members or have left with no deal. And that whatever happens in six months’ time may be reversed at the next election. It is of course no basis for business operations and investment, which is why the numbers on the latter continue to disappoint.

The big question is whether there is any current path for a compromise outcome, or whether we are destined to continue the UK version of Groundhog Day for some time to come. The bad news is that more than three years since the referendum and less than two months before the next scheduled departure date, I don’t think we yet understand how we’ll deliver such a compromise. Indeed, since Johnson took office that outcome has seemed further away than ever.

That is not to say nobody is trying. Away from the chaos in No 10, sensible MPs certainly are. Enter the Northern Ireland-only backstop, about which discussion has suddenly spiked, not least in that territory. Reconsider “alternative arrangements” for the Irish border. Enter “MPs for a Deal,” a new group including Stephen Kinnock and Rory Stewart among others. Three potential compromises. Or perhaps similar compromises with different routes.

Yet none of them offer much chance of success. Take the Northern Ireland-only backstop as the first example: the idea is that the territory will in effect continue to apply many EU rules, that any required checks would be undertaken in the Irish Sea, and therefore no land border infrastructure or related checks are needed. To evaluate this we need to recall that peace was brought to the province through the principle of the consent of both communities.

What naturally follows from this is that if there is significant opposition from within one of the communities a Northern Ireland-only backstop is not a feasible outcome. That was in part why Theresa May rejected this option, and persuaded the EU to offer UK-wide elements, and this basic situation has not changed. It is possible that local communities will persuade the Democratic Unionist Party to change tack, but this is unlikely to be a quick process.

The same applies to the plan for “alternative arrangements” for the border, which as proposed by the commission co-chaired by Greg Hands and now Suella Breverman, offers a technological solution but abandons the element of no related border checks contained in May’s deal. It seems almost certain that this is also rejected by one of the Northern Ireland communities, on this occasion the nationalists rejecting a return to those checks. The EU and Northern Ireland business communities also reject this package as a whole.

“MPs for a Deal” seem to support the negotiated Withdrawal Agreement with some tweaks in areas like labour rights. This could be coherent but we run up against a different problem of polarisation. Let us say that their efforts are successful, we enter a limbo relationship with the EU, following rules without a say, and trying to work out what is next. Both Remainers and Brexiteers would continue to argue their case, leaving the matter unresolved as to our long-term relationship.

So where now? We won’t make progress by raking over 2016 motivations. We still don’t know why 52 per cent voted Leave, and how many are happy with no deal, but arguments that nobody voted for no deal are futile, as are similar arguments that nobody voted for a Norway-style model. That a majority of the electorate voted Leave and a large minority according to polls still want to Leave is the main point. We could also ask how many of the 48 per cent voted enthusiastically for EU membership, but this is similarly not particularly useful.

What we can now do is have the debate about the realistic future options open to the UK. Since 2016 our public debate has assumed that we would have the decision of what future relationship to have with the EU. Virtually no politician has been brave enough to admit that this isn’t the case, that in fact the EU has models for relationships and that we will have to fit within these.

These models provide us with choices: to be members of the EU; to be outside the EU politically but closely tied economically, in which case we are rule takers but with a little more freedom than we have as EU members; or to have no deal, with full freedom but a large economic hit, as well as particular difficulties in terms of Northern Ireland. It should be particularly noted that a Free Trade Agreement with the EU without following many of their rules and regulations is very unlikely to be available.

We have never had a debate on the basis of these actual choices. Instead the discussion has been about a second referendum, or the optimistic Remain and reform, which assumes the latter is in our power. On the Brexiteer side the discussions have included nonsense Article 24 trade agreements, including from the prime minister, which again is not an actual choice.

There can be no compromise until we agree on this field of play, that these are the facts. Once the realities are faced we can discuss whether we can live honestly with what no deal means, or being rule takers, or overturning a democratic vote. It won’t be an easy discussion. It might not be quick. But we’ve tried the easy discussions and they have failed.

We can learn from what has failed, and proceed on a new basis of facts and honesty, or we can continue the same sterile debates. The compromises put forward may be the start of the honesty path, but if they are, it is only the very start, with a long way yet to go.