The snap election boosts the odds of a workable Brexitby Wolfgang Munchau / May 16, 2017 / Leave a comment
The leaked dinner conversion between Theresa May and Jean-Claude Juncker, President of the European Commission, was the opening round in what will be a tough fight. Juncker said he had become “10 times more pessimistic” after the dinner, a comment best treated as tactical noise. The European Union is a formidable negotiator. Its members have agreed a common position. The EU and the UK differ on issues like the timing of the trade negotiations and money, of course. There will be no early agreement-—there never is. Both sides will need to compromise.
There is no guarantee of a deal, but the election helps. The point is not that an enhanced majority would give May more authority—nobody in the EU is buying that. Far more important is the timetable. After 8th June, May will have five years until the next election; she will need that time.
Under the previous timetable, elections would have been held in 2020, a year after Brexit formally takes effect. By that point, there is simply no way the EU and the UK would have agreed, let alone ratified, a free trade agreement. But under Britain’s reset political cycle, May will have a full five years—until 2022—to complete Brexit. This is still going to be tight, but doable. By then she will have been able to fix—or at least set the direction on—the big post-Brexit policy issues, such as a new industrial strategy.
The new five-year timetable together with an enlarged majority could also render May’s “no deal is better than a bad deal” threat more credible. Before last year’s referendum David Cameron returned from Brussels with a lousy deal because nobody in Brussels believed that he would ever campaign against EU membership. But for the commitment to be credible, the detail of “no deal” needs to be fleshed out. Will the UK in this case just revert to World Trade Organisation rules, which would include many automatic tariffs? Would the UK opt instead for unilateral free trade—maintaining zero tariffs on imported goods regardless of what others do? Will it have a new business model in place by then? This cannot be the vaunted low-tax “Singapore option”—which works in the very different setting of a tiny capitalist enclave in the South China Sea. It needs to fit plausibly with, and to…