Euroscepticism remains a powerful force behind all British political life
The British general election has narrowed the range of Brexit outcomes. The next six months will settle the matter, writes Dan O’Brien
BREXIT will happen within seven weeks. Despite this, how Britain interacts with Ireland and the rest of the EU will remain unchanged for 11 months after that, as a ‘transition period’ of de facto continued membership kicks in.
From a short-term Irish perspective, reduced uncertainty around Brexit is the most important outcome of Britain’s general election.
In the longer term, the outcome of the election was not in Ireland’s interests. Any prospect of reversing Brexit is now gone. Not having Britain locked into the European rulesbased system we have shared for half a century will, at the very least, complicate how the two countries interact.
Another downside is that some new barriers to trade across the Irish Sea are now inevitable; the only question is when they come and how big they will be.
But in the short term, the outcome of the British general elections reduces uncertainty going into the New Year. That is likely to have some economic benefit, as discussed below. Whether the period of reduced uncertainty, which began last Thursday night, lasts beyond the first months of the new year depends on how talks go on future EU-UK relations beyond the transition period.
The benign scenario is that Boris Johnson — having been elected prime minister with a large majority — will tack towards a softer Brexit after the formal departure in seven weeks. There is reason to believe he might move in that direction.
Getting a deal done quickly, as he is committed to doing, will only happen if the UK agrees to stay closely aligned with EU. If he chooses greater divergence, matters will become more contentious. Disagreements, even when they can be resolved, take time to work through.
“If you want to build a crowd, start a fight,” said 19th Century impresario PT Barnum. As Johnson has promised to ‘get Brexit done’ so that Britain can move on, he will not want his conflicts with the EU leading the news bulletins, as they have for almost four years. If the only way of doing that is to take whatever the EU offers, then he may go down that route.
Another factor pointing towards a soft Brexit is the influx of new Conservative MPs from long-held Labour seats in areas with higher than average reliance on manufacturing industries.
Cars, chemical and aerospace companies are tightly knit into production chains involving sister companies, suppliers and clients on the continent. The harder the Brexit, the greater the disruption and downsizing there will be in these sectors.
The point has been made repeatedly by British observers since last Thursday’s election that Conservative MPs from constituencies formerly held by the Labour Party for decades, if not generations, could change how the parliamentary party views a hard Brexit.
Recognising all this, Johnson will either agree to a ‘Brino” — Brexit in name only — or, failing that, will go back on his word and seek an extension of the transition period in order to avoid the disruption of a no-deal exit on January 1, 2021. In the latter case, the status quo will be maintained for however long the transition period is extended — and estimates range from a year to indefinitely. In the former case, Britain becomes a permanent satellite of the EU.
What of the Brexiteers who want a different form of Brexit?
If they claim Johnson is condemning them to ‘vassalage’, he may simply counterclaim that black is white (even if it is clearly not) and ram a deal through parliament. With a big majority, an opposition at war with itself, a public sick to death of the issue, and having already formally ‘got Brexit done’ the purists might not hold the sway they once did.
This is a plausible scenario. Another scenario is for continued tumult over Brexit.
The Conservative parliamentary party is now more Eurosceptic than ever.
One of Johnson’s first acts as prime minister was to expel 21 centrist and remain MPs who opposed his Brexit strategy. Not one of these figures who ran independently was re-elected last Thursday. Most people I spoke to last week in and around the Conservative Party said that the selection process for MPs had not been a witch hunt against moderates, but that nearly all of the new intake are strongly Eurosceptic.
Even insiders and close observers of Conservative politics are not certain about the orientation of the new parliamentary party and the degree to which they would oppose an extension or
Brino. But most believe that Euroscepticism remains a very powerful force in the party and that it will not disappear on February 1 next year once the UK formally leaves the EU.
Under the agreed deal with the EU, the UK will remain a de facto member of the bloc for 11 months after the formal departure. In other words, it will be legally obliged to observe all EU laws and rules. The only difference will be that British ministers, MEPs and officials will not be involved in making those laws and rules.
For those who believe that Brexit was about Westminster being the sole source of lawmaking in Britain, the transition period is even worse than being an EU member. They tolerate it only as a means to an end. Extending it would be intolerable. It would, too, mean Johnson going back on his explicit promise not to do so.
Extending the transition period would also involve accepting the continued jurisdiction of the EU courts and paying into the EU budget in 2021 and beyond.
Although net contributions for all countries paying into the EU budget are tiny in the broader scheme of things, Britain’s payments have always been a totemic issue politically — from Margaret Thatcher’s fight for a rebate in the 1980s, to the claim in the 2016 Brexit referendum that huge savings would be made by leaving and the money channelled into the health service.
The decision on requesting an extension has to be made by the middle of next year. How the debate within the Conservative Party evolves up to the time will tell a great deal about where relations are headed, and whether Johnson decides to shift towards a softer Brexit or accepts a very hard exit on World Trade Organisation terms in January 2021.
There is by now a long litany of Tory leaders who have had their premierships blighted by taking on the Eurosceptics in their own party. Johnson may calculate that keeping them happy is the surest route to a long and successful time at the helm.
A former Conservative MP told me that Johnson might also calculate that the economic costs of an exit straight to World Trade Organisation terms in January 2021 would be early enough in the current parliamentary term to recover from before the next general election.
The radical-left historian, Desmond Greaves, once said that all the big policy debates in British politics take place inside the Tory Party, with everyone else having at most bit parts. Greaves was wrong on most things, but he may have been on to something in that observation.
To conclude, what are the economic consequences for Ireland of developments over the past week?
Brexit has had surprisingly little effect on Ireland’s economy to date. Apart from uncertainty dampening corporate investment, something confirmed when third quarter GDP figures were published last Friday, the Irish economy has continued to be among the fastest growing in the developed world since Brexit first loomed on the horizon four years ago.
With the economy running at full tilt, companies would normally be buying new plant and equipment to beat the band. Brexit uncertainty has almost certainly caused a holding back of such purchases. With the reduction in uncertainty as a result of last week’s election outcome, lots of on-hold investment decisions could now be given the green light in companies across the country. If that happens, it will amount to a further stimulus to the economy in the first months of the new year.
Whatever happens further down the line, the start of 2020 looks promising.
‘One of Johnson’s first acts as prime minister was to expel 21 centrist and remain MPs who opposed his Brexit strategy. Not one of these figures who ran independently was re-elected...’