The making of an interminable crisis

The Conservative Party is waking up to what many have warned for a long time: the Chequers compromise leads logically to Britain staying in the customs union, even if Number 10 insists it won’t be a permanent arrangement. The Prime Minister might argue this is necessary to get the country through withdrawal, and maybe Leave MPS calculate that once she’s done that, they can boot her out and negotiate a Canada-style trade deal. Nevertheless, what Theresa May is trying to sell is a short-term fix that creates long-term problems. It could be the making of an interminable crisis.

No one voted for half-in, half-out. Not in the referendum and not in the general election: both party leaders spoke of leaving the single market. What the voters got, however, was a hung Parliament that made it impossible to cut any deal with the EU that compromised Northern Ireland – the Democratic Unionists won’t allow it – and gave groups of Remainers and Leavers the power to leverage concessions. Why didn’t Theresa May just admit this and say: “Sorry, but I can’t deliver what I first promised?” A key political skill is being able to adapt to changing circumstances and bring the people with you, and yet Mrs May stuck publicly to her “red lines” narrative while the EU continued to call the shots.

Britain has essentially met the three conditions important to Brussels: we’ve offered them billions of pounds, guaranteed citizenship and bent over backwards to keep the Irish border soft. The one thing we have not settled, the thing we really need, is an agreed future trading relationship, ending up instead with the likelihood of continued customs union membership. The dangers inherent in this are real. The EU gets to set the rules without our say; if we attempt to diverge from the rules, we crash out, effectively revive the border issue and even precipitate a breach in the union. And to say “Let’s leave now but diverge fully later to reduce economic turbulence” actually leaves a lot to chance. What if the Conservative coalition fractures and Labour wins the next election? How would business fare under a mix of European rules and Jeremy Corbyn’s socialism?

The only person who looks excited by all this is Philip Hammond, who spoke of a “deal dividend” while attending a meeting in Bali. The Treasury has got what it wants. In the weeks after the 2017 election, Mr Hammond talked about a Brexit in which “many arrangements [stay] very similar to how they were the day before we left the European Union” with divergence taking place “over time”. Sympathisers would call this sensible recognition of how long it takes to negotiate a trade deal – but how long are we talking, exactly, and will the public be given a timetable? Or at least some sense of the sunnier possibilities ahead? All we hear from the Treasury is, frankly, a lot of what we get from Remainers: talk of risk and potential economic damage, framing Brexit as a leap in the dark. The Treasury, just as much as Labour’s Europhiles, has relentlessly pushed the case for remaining as closely tied to the European bloc as possible.

The proximate challenge of Brexit is leaving, the greater issue is what kind of country we become afterwards. The whole point of this process was to restore sovereignty and cut out Brussels from our decision-making. It was also to get rid of petty rules and regulations, to free up the economy, save some cash, and redirect our energies towards global trade with those parts of the world economy that are actually innovating and growing. The Treasury’s view is that it’s better to preserve as much of what we have in the present as possible, an approach that, in an unexpected way, has received support from Mrs May’s use of “red line” language because it has disguised the very real compromises made with the EU.

Britain has approached this whole enterprise not as a master of its own destiny but as a supplicant, and the consequence might be a Brexit deal that isn’t nearly as clever as some seem to think, which offers a very modest answer to enormous problems.

Mrs May is trying to sell us a short-term fix that creates long-term problems. No one voted for half-in, half-out