UK fac­ing trau­matic ‘no deal’ de­ci­sion soon

The Daily Telegraph - Business - - Front Page - By Am­brose Evan­sPritchard

IF THE Euro­pean Union will not take “yes” for an an­swer on Brexit, this coun­try faces a trau­matic de­ci­sion very soon.

Should the Euro­pean Coun­cil refuse to en­dorse talks on fu­ture ties with Bri­tain next week in Brus­sels, we may in­deed be forced to de­part with­out a deal, on min­i­mal­ist terms and in ac­ri­mony. One loses count of Theresa May’s con­ces­sions, all seem­ingly to no avail. There comes a point in diplo­macy when a sovereign na­tion must stand its ground. This de­ci­sion can­not be put off for much longer.

“Time de­cay” is poi­sonous. It is work­ing re­morse­lessly against Bri­tish eco­nomic in­ter­ests.

The Bank of Eng­land warns that banks and City fi­nance houses will ac­ti­vate their con­tin­gency plans and

start to de­camp en masse by Christmas un­less they know where Brexit is head­ing. Sir Howard Davies, RBS chair­man, said Amer­i­can and Asian banks are all shift­ing parts of their op­er­a­tions out of London. The ques­tion is whether City losses will be in the thou­sands or the tens of thou­sands, and the tim­ing is “very tight in­deed”.

The Ger­man in­dus­try fed­er­a­tion (BDI) said it is work­ing on the as­sump­tion that Brexit talks will break down. Its Brexit “task forces” are tak­ing steps to re­place Bri­tish sub­con­trac­tors and re­or­gan­ise their sup­ply chains. Ev­ery week that goes by in this pur­ga­tory means Bri­tain suf­fers the ir­re­versible ef­fects of a hard Brexit, yet with­out be­ing able to ne­go­ti­ate new trade deals. It is drag­ging out the or­deal. It risks turn­ing into the worst of all worlds: a hard Brexit by de­fault.

The Brexit man­date im­posed on EU ne­go­tia­tors by the EU Coun­cil is legally du­bi­ous. Ar­ti­cle 50 does not stip­u­late that all di­vorce is­sues must be set­tled be­fore there can be any talk about trade ties. It states that the EU should work out the ar­range­ments for with­drawal while “tak­ing ac­count of the frame­work for its fu­ture re­la­tion­ship with the Union”. Bri­tain has gone along with the EU’s se­quenc­ing frame­work nev­er­the­less. It has done so even though the three chap­ters on Ire­land, cit­i­zens’ rights, and the alimony bill can­not log­i­cally be sep­a­rated from longer-term trad­ing and se­cu­rity links.

The Prime Min­is­ter has largely signed off on cit­i­zens’ rights. It is a fudge, of course: a le­gal mech­a­nism will be found to lock in the priv­i­leges of EU na­tion­als in Bri­tain, with UK and EU judges work­ing in con­cert. “The Bri­tish have ba­si­cally given in,” said Charles Grant from the Cen­tre for Euro­pean Re­form. “The Ger­mans are

‘Bluff­ing the EU is a dan­ger­ous gam­ble. Never try to bluff the EU’

block­ing ev­ery­thing un­til they are of­fered more money. But they had bet­ter be care­ful be­cause if this leads to the down­fall of Theresa May, they will come to rue the con­se­quences.”

Bri­tain faces a cor­ro­sive state of af­fairs. The EU pow­ers are “shak­ing the tree”, de­lay­ing talks even as they plot to snatch Bri­tish spoils. Lord Owen, the former for­eign sec­re­tary, says the time has come for a “uni­lat­eral dec­la­ra­tion” stat­ing how the coun­try will pro­ceed.

Brinkman­ship is a part of ev­ery EU sum­mit. Ger­many and France may be play­ing a tac­ti­cal game to wring out a few more con­ces­sions. By the same to­ken, the Bri­tish Govern­ment is hop­ing to con­cen­trate the mind by float­ing con­tin­gency plans for “no deal”.

I have no ob­jec­tion to such plans. What both­ers me is that this is sud­denly com­ing to the fore just days be­fore the sum­mit seem­ingly as a ne­go­ti­at­ing ploy to call Europe’s bluff.

This is a dan­ger­ous gam­ble. Never try to bluff the EU. It is an er­ror to try to play the “no-deal” op­tion as if it were a card, not least be­cause it mis­reads the Euro­pean land­scape. Two years of ul­tra-easy money and fis­cal loos­en­ing have to­gether gen­er­ated a boom. If we are go­ing to talk about a “no-deal” rup­ture, we must be will­ing to see it through. Here we con­front the Orig­i­nal Sin of the Brexit “cake and eat it” move­ment: they never ad­mit­ted that Brexit means blood, toil, sweat and tears. They never told the Bri­tish peo­ple that there might be a stiff price to pay for restor­ing the supremacy of Par­lia­ment, or that it would be a lo­gis­ti­cal nightmare to ex­tract our­selves after over 40 years en­meshed in the EU sys­tem.

They have no po­lit­i­cal man­date for the hair shirt sac­ri­fices that a walk­out may en­tail. It is time to tell the Bri­tish peo­ple now what those sac­ri­fices would be.

‘It is time to tell the Bri­tish peo­ple what the sac­ri­fices of “no deal” would be’

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