Brexit buccaneers are facing prospect of no deal
Britain increasingly looks like a nation of lemmings sprinting towards a cliff, beyond which lies certain doom. The cliff is seven months away – the date of March 29 when Britain leaves the European Union and by which time some intractable problems must be resolved.
If those problems prove too knotty, Britain will crash out of the bloc which has been the focus of its economic life for 45 years, with the possibility of huge disruption to industry, food supplies and healthcare.
The government is reassuring the population that it will stockpile medicines. Plans are in hand to turn southeast England into a huge truck park to accommodate the commercial vehicles that used to pass seamlessly across the Channel to France but will soon be subject to customs checks and reams of paperwork.
Prime Minister Theresa May has dismissed the prospect of a no-deal Brexit as “not the end of the world”. That’s true but hardly reassuring. Her chancellor, Phillip Hammond, estimates that the cost of a no-deal Brexit would be an 8.8 per cent decline in national income.
At the same time, the fabric of national life seems to be tearing. Hospitals are overwhelmed. Visitors to Mayfair have to step over rough sleepers. A prison in Birmingham, run by a private company which allowed the inmates to indulge in drugs and violence, has been brought back under state control.
Hidden behind these apocalyptic headlines, there is another story. Britain’s public finances, stretched to the brink by the 2008 financial crisis, are on the mend: public sector borrowing is at its lowest for 11 years.
The connection between these two elements – the decline of public services and the strengthening of public finances – is key to understanding the state that Britain finds itself in after the 2016 referendum vote to leave the EU. This took place against a background of austerity imposed by the government, stagnating wages and rocketing pay for corporate executives.
This austerity-fuelled anger against the metropolitan elite was harvested by the Leave campaign in the referendum. Previously, the Leave camp had been made up of two main strands of opinion. The first believed Britain was different and in many ways superior to continental European because it had “fought alone” against Hitler in the Second World War. This ignored the fact that it took America and Stalin’s Russia to win the war but it provided solid ground from which to attack the EU’s weaknesses – lack of democracy and excessive technocratic control.
The second group were nostalgic for the buccaneering spirit of the builders of empire. Freed from the “shackles of Brussels bureaucracy”, Britain could again become a world-class trading nation, a chillier Singapore. This ignores two salient facts: Britain joined the EU in 1973 because it was broke and being a member of the EU has not stopped the likes of Germany from being hugely successful trading nations.
To these constituencies, the Leave campaign added the idea that quitting Europe would end austerity. This came in the form of a notorious red bus emblazoned with the figure of £350 million (Dh1.7m) – the sum that Britain supposedly sends to Brussels every week and which could be spent on the health service. The figure was wrong and, given the cost of leaving the EU, the claim was a blatant lie. Still, it worked.
These tendencies – the nostalgics, the buccaneers and those who want a comfortable life at the taxpayer’s expense – are incompatible. Even more so, given that members of the Conservative Party which was imposing austerity were fraudulently blaming the EU for the consequences of austerity.
We do not know what Mrs May thinks – except that she, who voted to remain, is charged with implementing the “will of the people” because no one else wants to carry the can.
Last week she was on a tour of African states to promote the dynamic Global Britain that will emerge from the ashes of Brexit. She has set the target of Britain becoming “the G7’s number one investor in Africa” by 2022. The response in Africa has been polite. But African countries know that the only foreign investor which has the cash and the vision to transform their economies is China, not a member of the G7.
So what will happen at the cliff edge in March? There are good reasons to discount some of the apocalyptic headlines. Several constituencies have an interest in raising fears about the prospect of crashing out of the EU with no deal. These include Mrs May herself, who seems to want some sort of “soft Brexit” which would tie Britain to European regulations at least for a period, even if this means a worse deal than Britain already has – following rules without any say in making them.
The hardline Remainers, who hope that there will be time for a second referendum to overturn the result of the 2016 vote, also have a stake in presenting a vision of chaos, as do manufacturers whose just-in-time production processes will be impossible with customs and border checks.
As for Brussels, it is clear that the EU as a whole has no interest in a catastrophic nodeal. But in general Britain tends to overplay its hand in this respect. The unshakeable European consensus is that British demands to cherry-pick the parts of the EU it likes cannot be allowed to undermine the whole edifice.
A further source of uncertainty is the collapse of party discipline: it is quite possible that any deal agreed by Mrs May could fail to pass Parliament, which would provide the ultimate form of uncertainty.
It is said that civil servants charged with preparing Brexit think the most likely outcome is no deal on March 29. When the cherries from Spain, the insulin from Denmark and the car parts from Germany are held up at the border, London might well cave and accept the EU’s terms. That would not be much of a buccaneering result.