The most likely outcome is a “cryonic” Brexit with an endless transitionby David Henig / August 29, 2018 / Leave a comment
Britain will be leaving the European Union in March next year, yet we still don’t have certainty on what happens next. Recent documents issued by the government remind us of the risk that we leave without any deal, with tariffs and numerous other barriers imposed on day one. On the other hand, those campaigning for a “people’s vote” believe momentum is gathering behind their cause.
There are thus numerous dimensions to the question of what happens next. Do we definitely leave, is there another referendum, will there be a withdrawal agreement, and what does the long term economic relationship look like? Each of these questions can affect the others: one could imagine a referendum containing options on the long term economic relationship. It can be clearer to simplify all of the major choices onto one chart.
Now technically, as more than one of these things could happen, it can’t really be a probability chart adding up to 100 per cent. But if for the sake of illustration we ignore this, what do we learn from such an exercise?
My view is that the single most likely outcome is the “Cryonic Brexit.” In this scenario of potentially endless transition, we leave with a Withdrawal Agreement which operates for as long as the UK and EU take to decide precisely how we can avoid a border on the island or Ireland or in the Irish Sea. We remain for all economic purposes in the European Union, though without much influence. Companies don’t have to make any adjustments but also lack certainty about the future.
This may be the single most likely outcome, but it isn’t a particularly high probability. The EU is at the moment resistant to such an outcome, just as the UK is resistant to a Northern Ireland-only backstop, in which the province remains in effect part of the EU indefinitely, while the rest of the UK is free to complete trade deals around the world. It is currently hard to imagine such an outcome passing through parliament, and on this single issue it may be that the EU shows flexibility in extending a UK-wide backstop. This would involve the whole of the UK remaining tightly bound to the EU until a way…