Brexit Myths Still Obscuring Harsh Realities

The long-awaited ‘negotiations between the UK and the other 27 countries of the European Union have more or less ground to a halt.

The saga continues, but let’s cut to the chase: A hard Brexit (meaning no deal at all) has been inevitable right from the beginning There won’t be any ‘special deal’, there won’t even be any ‘Transitional Arrangement’. Just a very hard, and brutal Brexit, together with an unpleasant lesson for the UK in the dangers of hubris – as well as of letting English nationalism off the leash.

The reasons for all this are not hard to sum up. Indeed, they often have been – but such is the swirl of ill-informed opinion and self-serving lies that even the most simple, uncontroversial Brexit truths are often lost.

Six months on, the limitations of the UK government’s Brexit policy White Paper (other than its purely political purpose of providing cover for politicians to vote through Article 50 and launch the Brexit process without actually considering what they were voting for) are all too apparent.

Even if the media still haven’t realised it, Prime Minster Theresa May’s red lines left no other outcome possible. These were all set out in the UK government’s sole policy White Paper on this mammoth constitutional change:

• No freedom of movement. (This presented as ‘protecting British jobs’ and preventing benefit tourism.)
• No jurisdiction of the European Court of Justice. (This presented as necessary for the recovery of British sovereignty.)
• No Common Commercial Policy. (This additional and previously unannounced policy being necessary to allow for the hoped for new trade deals around the world.)
• No contributions to the EU budget. (Although payments for certain ‘programmes’ that the government opts into is allowed and imagined.)

The government’s only real strategy is to prepare for a future trading under WTO rules – the default arrangement essentially for trading around the world. Section 9.18 of the White Paper states firmly that ‘work is already underway on this’ specifically work preparing the detailed ‘schedules’ that are used by the WTO to determine each country’s status and trading arrangements. (That these schedules have to be agreed and can take many years to finalise is passed over by the breezy mention in the White Paper.)

And if nearly all economists – bar ideological free-marketeers on one hand and neo-Trotsykists on the other – see the WTO option as a disaster, potentially wiping out half the UK’s exports at a stroke, in Mrs. May’s White Paper everything is win-win. Section 12.3 asserts:

‘We are confident that the UK and the EU can reach a positive deal on our future partnership, as this would be to the mutual benefit of both the UK and the EU, and we will approach the negotiations in this spirit. However, the Government is clear that no deal for the UK is better than a bad deal for the UK. In any eventuality we will ensure that our economic and other functions can continue, including by passing legislation as necessary to mitigate the effects of failing to reach a deal.’

That this is empty talk is revealed by the absence of any specifics. Indeed the details that there are – confined to appendices – actually cast further doubt on the policies. Appendix B, dealing with Northern Ireland says that

‘The Government recognises that Northern Ireland’s particular circumstances present a range of particular challenges to be taken into account when preparing for our exit from the EU. We are committed to making a success of exit for the whole of the UK, including Northern Ireland, and to working with the Northern Ireland Executive to ensure that Northern Ireland’s particular circumstances are factored into our wider preparations.’

Ah, so the policy is to be ‘successful’. Thanks for clarifying. No strategy for achieving this is given. Likewise section B.14 says that :

‘…we want to ensure that cross-border trade with the EU – and particularly with Ireland – is as frictionless as possible when we leave the EU. We are committed to negotiating an exit deal that works for the whole of the UK, including Northern Ireland. We will work with the Irish Government and the Northern Ireland Executive to minimise frictions and administrative burdens and to find a practical solution that keeps the border as seamless and frictionless as possible, recognising the unique economic, social and political context of the land border between Northern Ireland and Ireland.’

That’s three mentions of ‘frictionless trade’ in as many lines. It is as if the government’s flagship policy has been dreamt up by spin doctors, like the now disowned and dismissed Nick Timothy and Fiona Hill, the ‘SPADs (Special advisors) who were behind Mrs. May’s mantra about ‘strong and stable’ government in the run up to her disastrous snap-election earlier this year. Unfortunately for UK businesses and workers, quite possibly it has been…

There is at least one chart that says something specific about the Brexit plan. the chart purports to show the UK’s exports booming in recent years. – and thus to auger well for the UK’s future as a ‘free trading nation’ outside the European Union.

Look at that marvelous spike in exports! Yet what are these? Cars? Food exports? Pharmacuticals? But look at where the spike occurs – Liechtenstein. The chart triggered two parliamentary questions, because Liechtenstein is a country the size of a small town. The official responses were as minimalist as possible but what is clear is that ‘exports’ trumpeted in the chart are overwhelmingly of financial services to companies basing themselves in Liechtenstein for tax reasons – tax avoiding reasons to be precise. Companies, perhaps, like those owned by the billionaires who bankrolled the Brexit campaign. Britain’s future in the world is as a country helping companies to avoid paying tax. (And the Labour Party voted for it…)

More generally, as Polly Polak, an academic, has pointed out, the White Paper seeks an impossible Free Trade arrangement and an impracticable customs agreement. Theresa May’s ‘red lines’ are not only incompatible with the EU’s fundamental rules, but actually contradict the rest of UK’s own negotiating strategy

Politically, the White Paper is an attempt to please both the Tory ‘Remainders’ who lost their bid to stay in Europe, and the Tory ‘Ukippers, who, like the right-wing’s pin-up economist, Patrick Minford, want an exit with no deal at all, and John Longworth, sometime President of the British Chamber of Commerce, annoyed his membership with repeated calls to the government to walk away if there is no deal by early 2018.

All of which goes to underline why the EU side keep having to restate that they cannot make progress on any of the issues, because the UK has yet to even engage realistically with them. Why there can’t even be a ‘Transitional Agreement’ if there is no agreement to transition to. And why the EU officials say they prefer the term ‘implementation’ period. The public’s eyes glaze over at such distinctions. Yet they are crucial. Brexit is the child of a lazy, sloppy political class many (like Jeremy Corbyn) elected to ‘safe seats’ for life… It is the result too of politicians and journalists unwilling to distinguish between gross and net payments, rules for goods and services, export tariffs and regulatory harmoonisation. How could politicians be expected to realise that there is no magic ‘Hold the Brexit, while we think about it’ button? To appreciate the significance of the fact that ‘the clock is ticking’ as Monsieur Barnier, Chief EU negotiator, likes to say in his Funny French accent. TICK TICK TICK. It will run out in a little over a year.

Instead, for politicians and media firmly entrenched behind the UK-border, Brexit remains a fact-free zone. That’s why the British government’s position remains firmly that the UK will continue to have full access to the world’s biggest market in goods and services- but will no longer have to pay into the social programs – the so-called structural funds – nor respect any of the rules and regulations (leaving the jurisdiction of the European Court of Justice and instead making itself the ultimate judge of all rules and procedures and will no longer allow European workers the same rights as British workers.

Fact-free thinking sweeps away problems. In an article in the Financial Times on August 6 2017 headed ‘The Article 49 strategy to keep Britain in the EU’, commentator Wolfgang Munchau claims that for both moderate Brexiteers and Remainers the optimal strategy is easy. ‘Simply follow the advice of Philip Hammond, the UK chancellor. A transitional agreement solves almost all of their potential problems — an economic cliff right before the official Brexit date in March 2019; a possible failure of the Article 50 negotiations because of an excessive exit bill — and it gives time to negotiate and implement a trade deal.’

However, as other commentators have pointed out, the possibility of the EU extending the deadline, even slightly is very unlikely. Such an agreement would require unanimity amongst all the other 27 EU members, and secondly, that there are EU parliamentary elections in 2019. No one wants to see UK MEPS continuing to run Europe, even ‘temporarily’.

Another mooted work-around is that the UK might ‘half leave’ – with other arrangements left in place. For example, the UK might become, at least temporarily a member of the European Economic Area. This has been recommended by both the Financial Times and the Daily Express, representing both ends of the Brexit spectrum, as a solution, for example. However, as Diarmuid Scully, a former Mayor of Limerick, Ireland, has pointed out, this might not be legally possible. Article 50 only allows extensions of arrangements between full EU members. ‘Extending privileges to EEA or EEA+CU would likely require a separate agreement. Tricky.’

In any case, if the UK wants to join Norway, Sweden, Liechtenstein (population 38 000) as well as the slightly different case of Switzerland, in the European Economic Area club it has to accept nearly all the EU rules including that one about the free movement of workers. The only ‘freedom’ regained’ is the right to strike its own trade deals – but that too disappears if you also want to become part of the EU Customs Union. Losing that right would unravel the government’s economic strategy for the future which is based on optimistic assessments of striking new deals with er… Liechtenstein and maybe some fast-growing Asian economies (as long as they don’t send their citizens over) – and the US. Not joining, however, wrecks trade with Europe, and likely triggers a complete breakdown of the Northern Ireland peace process – by splitting the two Irish communities apart again.

I say ‘likely’ but it looks almost certain as the UK has no strategy for minimising the disruption to Northern Ireland, where the war between British-oriented Protestants and Dublin-oriented Catholics was only recently suppressed as part of a general peace process in which the UK and Ireland being both members of the EU, sharing common rules and laws and benefiting from free movement was a crucial part.

As I wrote on BrexitShambles back in February, as part of a look at the economics of ‘Brexit’, there is really no way to square this one. Once the North ceases to be part of the European Union’s Single Market, the whole tapestry of Irish trade and co-operation is ripped apart. Last month, the Irish government effectively washed its hands of the (insoluble) problem by saying that it was not changing the situation, the UK was, and it was for the UK to make some effort to find solutions.

Across the Irish Sea, none of the harsh realities seem to have sunk in. instead, as recently as the end of July the UK government line was that:

‘We want a comprehensive free trade agreement and a new customs agreement which allows for trade which is as frictionless as possible – this is in the interests of businesses in the UK and across the EU.’

The ‘Maybot’ speaks from beyond the grave. That the European side have repeatedly said that this is incompatible with access to the Single Market is breezily dismissed as ‘well they would say that, wouldn’t they’ negotiating tactics and Britons are convinced that their enormous wealth will bring the greedy, lazy European countries to heel. That this is really how the government sees things is indicated by tweets sent, back in May 2016, by David Davis, now actually ‘leading’ the ‘process of exiting the EU’ on behalf of the British. He cheerfully tweeted that ‘Post #Brexit a UK-German deal would include free access for their cars and industrial goods, in exchange for a deal on everything else.’ The line doubtless played well to gatherings of grey-haired Tory faithful in constituencies. It’s fallen flat in Brussels.

There’s a touch of racism coupled with the British arrogance that has come increasingly evident to the humiliation of its more-internationally minded citizens and MPS. The reality that the EU is a rules-based organisation in which nations pool sovereignty is replaced by a very British view of the bloc as a kind of old-boys club in which deals are struck behind closed doors.

To recap. There will not be and cannot be any ‘trade deal’. And if there’s no deal, there’s also no ‘transition period’. The UK government has for purely ideological reasons refused to accept the supervision of the ECJ (European Court of Justice) which in itself makes it s legally impossible to reach agreement on these matters. Likewise, the UK refuses to accept the principle of ‘Freedom of Movement’ by which Europeans can travel to the UK to work (but not to claim benefits), and enjoy the same rights as British workers if they do so. The UK still talks about obtaining a ‘special deal’, the details of which it has prepared but must keep secret.

But it is silly talk – from the famous British Ministry of Silly Walks indeed – and a fraud upon the gullible public who allowed the politicians scope to play such games when they voted ‘Leave’ in the referendum.

As former Conservative MP and influential political commentator, Matthew Parris, wrote in the Establishment’s favoured newspaper The Times at the end of July, the Conservatives have conducted the most extraordinarily cynical political manoeuvre by voting for a policy with no idea of where it would lead.

The UK is jumping out of the EU aeroplane at the end of March 2017 without checking to see if it has a parachute. By forcing through Article 50 (starting the legal process for a country to exit the European Union) without knowing what to do afterwards, his own party had not so much gambled with the future of the UK, as cynically destroyed it.

And yet only one Tory MP, Ken Clarke, opposed the policy. Equally shameful though, in the moral sense, is the stance of the so-called opposition Labour party. A strand of left-wing opinion has always opposed the EU, seeing it as a supporter of big business and opponent of state industries. The UK’s only liberal newspaper, The Guardian, earnestly produced (and still produces) arguments in favour of Brexit, under the influence of several of its staff economists, the most senior of whom, Larry Elliott, even wrote a series of books (with Dan Atkinson) campaigning in favour of Brexit. In July 2017, as Britain stumbled confusedly into the unknown, even as the financiers who backed Brexit were drinking toasts to their own cleverness at parties with Rupert Murdoch, Elliott was still trying to persuade his readers that Brexit was a victory of workers against ‘the fat cats’ and that by ‘leaving the EU we can have a radical socialist programme’.

If the Tories are ignorant of the workings of a single Market that they themselves played a key role in developing, the Labour Party are little better. In fact, the EU merely insists state industries do not receive excessive privileges in competing for contracts and business with the private sector, and much of the EU continues to be dominated by cozy relationships between the governments and their favoured sectors – like the incestuous relationship of the French government with Electricité de France, rooted in the government’s need for nuclear plants producing plutonium. The gutting of the British state sector had nothing to do with the EU and everything to do with domestic politics, as the destruction of the national coal industry should have made clear.

But now the British Labour party, under two comfortably bourgeois Public School radicals (who have no interest let alone experience in business matters), Jeremy Corbyn and Seamus Milne, openly advocate a kind of tribalist, racist economic policy where British workers are shielded from ‘unfair’ competition from European workers who they insist – contrary to all the evidence – have lowered wages and ‘swamped’ the jobs market.

David Patrikarakos wrote of Milne, Labour’s secretive policy-maker, that ‘Even by the standards of the hard left, Milne is almost pathologically unwilling to let the tiresome facts of reality intrude upon the certainty of ideology’. It is on public record that Seamus Milne distrusts the EU, which he has complained is ‘where privatisation, deregulation and lack of democratic accountability have been built into successive treaties.’

Thoughtful politicians (and yes, there are still some) today hang their heads in shame when they see both what Britain is doing, and where it is heading. But that, plus maybe a bit of wringing of hands, is all that anyone can do. Despite the chatter, the thing about that Article 50 process is that it is unstoppable – barring of all the other 27 countries agreeing on allowing the UK ‘back in’. Surely such unanimity would only come on terms that the UK would find politically impossible to meet. Similarly, transitional plans and half-way houses are mythical creatures that disappear under closer scrutiny.

The UK walked off the Brexit cliff and is now in a slow-motion fall to the rocks below. There’s nothing to be done except watch the spectacle. Maybe later, it will be necessary to separate this broken nation back into its constituent countries and allow them to rejoin the EU piecemeal. After all, as Nicholas Boyle, a professor of German at Cambridge, has put it

‘Europhobia was shown by the referendum to be a specifically English psychosis, the narcissistic outcome of a specifically English crisis of identity.’

Boyle also revealingly reminds us that in the 2015 general election – the one that encouraged the Conservative Party to take its gamble with a referendum on Europe – the United Kingdom Independent Party (‘UKIP’) won 14% of the vote in England, but only 2.6% in Northern Ireland and 1.6% in Scotland.

Since the vote, only one thing that has become clearer, and that is that the UK’s future will not be painless or easy. Oh yes, and that the clock is ticking!

Martin Cohen is an author, philosopher and social scientist with a particular interest in social justice issues. He was an early commentator on the significance and consequences of the Greek Crisis and his recent book Paradigm Shift: How expert opinions keep changing (Imprint Academic 2015) includes a discussion of the lessons of the financial crisis, 2007–9.