May’s Brexit Or Forget It

Theresa May bowed to the inevitable today and pulled the vote on the Brexit deal she had spent the last year and a half negotiating with the EU. May was always playing a bad hand and despite playing it poorly she at least deserves a little credit for her stick-to-itness, as opposed to Nigel Farage and Boris Johnson who quickly left the table after lying through their teeth to get the Brexit referendum passed and now just carp from the sidelines, with Johnson in particular angling to capitalize on May’s inevitable failure for which he in large part is responsible.

May’s deal, the so-called Withdrawal Agreement, was basically a plan to kick the can down the road again, creating a transition period that postponed the most vexing decisions until the end of 2020, while depriving Britons of some existing rights. It is, as Jeremy Corbyn has described it, “the worst of both worlds”.

The UK will agree to pay some still unspecified financial settlement, reportedly around 40 billion Euro, during this transition in a yet to be determined installment plan. EU citizens will be entitled to the freedom of movement to live and work in the UK, but Britons may or may not retain that same ability inside Europe, subject to negotiation. In addition, Britons would still be bound by the rulings of the European Court of Justice during this transition period.

But the elephant in the room, which has been there from the beginning, is the status of the Northern Ireland border. The agreement creates what is called a “backstop” plan that will go into effect if no ultimate agreement can be reached that would allow the UK to withdraw from the EU customs union but still keep the Northern Ireland border open before the 2020 deadline. Considering that no such agreement has been reached after 18 months, there is not a lot of confidence that one can be reached in the future.

Under the backstop plan, the UK would still remain as part of a “single customs territory” which would be largely similar to the current EU customs union but there would be some new controls implemented for trade between the UK and Northern Ireland, which, of course, infuriates May’s own supporters in the DUP on whom May relies on for her majority. In addition, remaining in that customs territory still prohibits the UK from pursuing other trade deals outside the EU. Other contentious issues, such as UK fishing rights also remain undecided and up for future negotiation. Lastly, the agreement says that it could be extended again for another one or two years by mutual agreement, increasing the likelihood that the present uncertainty over Brexit continues for the foreseeable future or, worse, the backstop agreement will actually go into force.

Finally, passage of the May’s plan could actually create even more internal problems for the EU, with Scotland challenging in court sections of the Brexit deal that they see as violating its devolved powers. That case will likely be decided in the next few days and, if Westminster wins that legal battle and May’s plan eventually passes, the demands for another Scottish independence referendum will probably have to be met.

Meanwhile, it appears the government has taken very few steps to actually prepare for the nightmare scenario of no deal at all and the UK’s hard break from the EU, potentially just months away. And, according to the Bank of England’s analysis, the UK will be worse off whether May’s plan is accepted or not, but with far greater consequences for the latter. That lack of preparation is probably intentional in order to create the extra pressure required to get May’s deal passed. As of today, that strategy looks to be a failure, although feelings could change the closer we get to the final deadline in March.

May has hinted about going back to the EU for a better deal. Amber Rudd has suggested going back to the EU and seeking a “Norway plus” deal in which Britain would no longer be in the EU but remain in the single market. The EU is unlikely to go along with such a plan. The EU’s view, as it has been from the beginning, is that the UK has largely brought this upon themselves and put their own country in the worst negotiating position possible. Additionally, the EU has little incentive in looking like it will make it easier to countries to abandon the union, which is already under stress as it is.

The other alternative which seems to finally be emerging is abandoning Brexit altogether. Rudd herself has said, “If there was another referendum, I think we’re better off in.” Today the European Court of Justice ruled that the UK could unilaterally withdraw the invocation of Article 50 and stay in the EU. May’s decision to pull the vote scheduled for tomorrow because of what Tories admit would be on overwhelming defeat increases the likelihood that there will be one more national referendum on Brexit. That may come either through a new election which would largely be another referendum on Brexit or, alternatively, a three option referendum that would include a no-deal Brexit, the May plan, and abandoning Brexit. That referendum could be a two-step process where one option is eliminated in the first round and one option is finally selected in the second.

What is becoming increasingly clear is that there is no consensus within Parliament about how to move forward with Brexit. May herself is in an increasingly untenable position as dissatisfaction with her leadership increases both inside and outside the Conservative party. She is largely still in her post because the no one else in the Conservative party probably really wants the job right now and the party itself is afraid of another new election. The majority of the country now wants to have a second referendum on Brexit and now, with the actual implications of and the lies that were used to sell it becoming abundantly clear, a majority would prefer to abandon it.

Increasingly, the options seem to be coming down to May’s Brexit or forget it. But the looming deadline of a hard Brexit in March still remains, largely as a whip to spur a real decision. In many ways, the situation is reminiscent of Obama’s sequestration agreement in 2013 where everyone believed that the need to fund the military would drive a real budget agreement. Instead, no deal was made and the austerity measures created by sequestration inhibited a more robust recovery from the Great Recession. As then, there were obvious and clear solutions that would have avoided the worst outcome but there was strong enough political opposition not to get it done. It would not be surprising to see the same scenario play out with Brexit, with far greater consequences.

Originally published at thesoundings.com on December 10, 2018.

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