2017 09 – Editorial – Brexit Blues

Brexit Blues

As each day passes, Theresa May’s gamble on a landside majority in June’s general election looks more and more like a Titanic disaster. She failed to get the mandate she wanted to strengthen her hand in the Brexit negotiations. She even lost the pre-election majority she had. Consequently, May and her Brexit ministers, shocked by the election result, are floundering like fish out of water. It is fourteen months since the June 2016 referendum resulted in an unexpected vote to leave the EU. Yet no progress has been made with the EU’s three pre-trade negotiations demands.

The divorce bill of some £36bn, the reciprocal rights of EU citizens in the UK and Britons living in other EU countries, and the question of a hard or soft border between the north and south of Ireland, have still to be resolved. Without a resolution on these no progress can be made on the UK’s stance on the customs union and the single market. Thus trade deals between the UK and the EU and between the UK and the rest of the world would be dangerously delayed.

Boris Johnson’s riposte to the EU that it can “go whistle” for its money may have gelled with leave voters, but he knows that the bill will have to be paid. And May’s dithering over citizens’ rights has needlessly delayed an acceptable mutual agreement. The question of the border between the north and south of Ireland could have been settled quickly, but May and her government are in a dilemma over a hard or soft border. May is inclined towards a soft border. But once the UK leaves the EU a soft or open border would present  a number of problems for the Irish and UK governments. There would be a real risk of undocumented EU migrants entering the UK and tariff-free goods crossing the border from north to south and exported to other EU countries.

With no progress on these matters it is difficult to see how everything can be wrapped up by the March 2019 deadline. Government ministers have admitted as much. Hence the calls for a transitional deal covering a period of up to four years once the UK leaves the EU. But there is incoherence and a lack of clarity in the government’s position on this, as on other matters. It is acting as if it wants the negotiations to collapse. Playing a political game with the EU, which the government can then blame for its failure to get the “best possible deal” for the UK. Theresa May’s “no deal is better than a bad deal” is an indication that the government is prepared to walk away from the talks. If this happens UK business will be hit badly and a huge hole will appear in May’s plans for “an economy that works for all.”

This can be avoided, but only if the government relents on its hard Brexit stance. There are signs that this happening. Brexit ministers have acknowledged that EU migration, for example, will continue for a further four years once the UK leaves. And Theresa May, in spite of her determination to free the UK from the jurisdiction of the European Court of Justice, has indicated that it will still have a role to play for an interim period post-March 2019. Compromises such as these are the result of the UK’s ill-preparedness and consequent weak position vis-a-vis its EU counterparts.

If it presents a united front, Labour can benefit from the government’s indecisiveness. In a clear break from its previous position of facing both ways, Labour is now committed to the UK remaining a member of the customs union and the single market during the transitional period.  Under a Labour government beyond March 2019 the UK would continue to accept free movement of Labour, remain under the jurisdiction of the European Court of Justice, and pay into the EU budget. This shift in policy is clearly designed to diminish the negative impact on the economy. At the same time it will allow business to adjust to the inevitable changes that will follow the UK’s final departure from the EU.

The government have published a number of position papers on a range of EU related issues. The papers attempt to deal with some of the thorny questions arising from the UK’s exit from the EU.  They are for internal Tory party and UK consumption only and have been heavily criticised for their shallowness and wishful thinking. Consequently, doubt must be cast on whether the government is really softening its stance or simply attempting to wrongfoot Brussels with half-baked suggestions.

One of the position papers outlining the government’s stance on a range of issues proposes a (temporary) customs union allowing the transit of goods across borders during the transitional period. But cracks in the government’s position quickly appeared. In a joint statement Chancellor Philip Hammond and Environment Secretary Liam Fox ruled this out. They argued that the UK will not remain in the customs union or the single market after March 2019.

Shadow Chancellor John McDonnell says the Tories cannot blame Brexit for the state of the economy. He is right. But nor can they blame the EU. Seven years of austerity with low investment and poor productivity have resulted in the UK being at the bottom of the 28-nation EU growth league. Unemployment may have fallen but wages have failed to keep pace with prices. Families are worse off now than they were before the 2008 financial crash. The economy is in a precarious state. If the Brexit talks collapse without a deal, the UK could fall off the proverbial cliff edge.

This dire prospect has led to a chorus of voices for a second referendum. Although some, including the Liberal democrats simply refuse to accept the vote to leave. Now Vernon Bogdanor, professor of government at King’s College, London, and former Labour minister David Miliband have added their support to the second referendum lobby. And there are those within the Labour party who also support a second vote. Corbyn and Labour must stand firm against this. The decision to leave the EU, rightly or wrongly, has been made. A second referendum would be seen as parliament accusing the people of making the wrong decision in June 2016 and asking them to think again. Labour’s support for this would deeply damage its reputation as the party of working people.