Sooner or later, re-entry to the customs union and single market is inevitable

Three years since we left the EU, Brexit is in intensive care

February 02, 2023
For all Starmer’s talk of “making Brexit work”, some kind of entry into the customs union and single market is inevitable. Photo: GaryRobertsphotography / Alamy Stock Photo
For all Starmer’s talk of “making Brexit work”, some kind of entry into the customs union and single market is inevitable. Photo: GaryRobertsphotography / Alamy Stock Photo

It is just three years since the UK left the EU, and Brexit is already in intensive care. The impact is far worse than the slow puncture many predicted. It is more like a flat tyre, seriously disabling the national economy. So it becomes increasingly likely that a dramatic change of course will be required as soon as there is a change of government—perhaps earlier. 

Economically the Brexit “hit” has been large and palpable: not just the big headline figures for loss of trade, investment and national income, but a dramatic collapse of the UK’s motor manufacturing industry in barely three years, with the abject failure even to get a new UK-owned battery manufacturing plant established for electric vehicles (Germany has three). Our media is increasingly dominated by real-life Brexit stories behind the stats of escalating food prices and the hundreds of thousands of exporters whose businesses have been decimated or eliminated by new EU customs and regulatory requirements. 

Even the BBC, long prevaricating on the issue, has started properly reporting the Brexit catastrophe, particularly its impact on the cost of living, NHS staff shortages and projections of weak future economic growth. It does so with plenty of airtime for Brexiters. But listening to Hannan, Rees-Mogg and Farage in a fantasy land of Brexit benefits which are now clearly non-existent (cheaper food and more money for the NHS), peripheral (Australian and New Zealand trade deals) or positively harmful (“Brexit freedoms” to remove swathes of Britain’s environmental and employment protection), you would think they were witnesses for the prosecution. 

For all Labour’s talk of “making Brexit work”, once a future government starts renegotiating Boris’s Brexit deal, it will be pulling at a ball of wool which quickly unravels. Some kind of re-entry into the customs union and single market is where this will soon end, either in stages or in one leap. Norway and Switzerland offer the models and precedents for this semi-detached status. Thereafter full re-entry will be a constant refrain of pro-Europeans. 

I suspect Rishi Sunak will make the first move on this road, by soon agreeing a revised form of the Northern Ireland protocol to resolve the current impasse. This will do more than just remove the major bone of contention between London and Brussels. It will also—however much Sunak pretends otherwise—provide a template for a wider reform of Brexit for the entire UK.

The problem for Sunak is that he knows he is opening Pandora’s box, but he can’t duck on Northern Ireland because the issue is too urgent and sensitive—not least in Biden’s Washington—to postpone until after the next general election. This year is the 25th anniversary of the Good Friday Agreement, and any weakening of its commitment to a borderless Ireland would be unconscionable. Equally, any deal on the protocol will reinforce what is surely its core purpose of keeping Northern Ireland within the EU single market, precisely to avoid north-south trade and travel barriers. 

The thorny issue is what happens to the regulation of trade east-west between Great Britain and Northern Ireland. Any deal on this, however much ground the EU gives on existing requirement for customs declarations and so forth, must have the effect of securing in perpetuity a completely open north-south border in Ireland, with both sides effectively part of the EU. This is why the extreme unionist DUP is trying to block any deal on the protocol, unless it meets impossible demands for entirely unregulated east-west trade between Ireland and a Great Britain outside the single market. 

Sunak has little choice but to call the DUP’s bluff, unless he intends to start a trade war with Brussels. And that course is simply not viable for him in his current economic and political predicament. At least, not without making it far worse, if that were possible.