The truth that Rishi Sunak dare not speak: Britain still needs the EU
Nearly three years into Britain’s European divorce, the Conservative party is not ready to take custody of the consequences. But the prime minister wants visiting rights.
The phase of slamming doors and empty threats shouted through Brussels letterboxes is over. Rishi Sunak understands that his only hope of political survival lies with economic recovery, to which end he needs a functional relationship with the EU. But compromise in Brussels poisons the mood of Conservative MPs, making political survival harder.
It is an impossible conundrum because the facts about Britain’s dependency on the single market offend the sacred core of Brexit. That is why Eurosceptic hardliners reacted with fury to reports that senior figures in the government were mooting a “Swissstyle” arrangement with the EU.
The terminology is unhelpful. Even the Swiss don’t like having a Swissstyle relationship with the EU. It is a mess of multiple treaties. The core transaction is single market access, in exchange for which Switzerland pays into the European budget, while taking regulatory dictation and accepting free movement of people – the three unforgivable curses of submission to Brussels in Eurosceptic lore.
Sunak’s government wants something more nebulous that might ease friction in trade, but on terms that can’t be portrayed as a betrayal of Brexit. Keir Starmer wants the same thing, not from any ideological conviction but in the belief that the safest profile for Labour to have in any European debate is a low one, on the sidelines of Tory dysfunction.
That might be politically expedient, but it makes the opposition complicit in the most persistent and pernicious Brexit myth – denying the imbalance of power between Britain and a bloc of 27 countries on its doorstep.
Ignorance or wilful misrepresentation of the single market was the binding thread in a triple fallacy in the economic case for leaving the EU. First, Europe was dismissed as the dotard of the global economy, sclerotic and declining. The real prize was therefore trade deals with rising powers further afield. Second, Britain wouldn’t lose the benefits of the single market anyway, because EU businesses would lobby to retain access to UK consumers. Third, the cost of regulatory compliance with EU rules was greater than any benefit of membership.
Sunak cited all three in an article explaining his decision to vote leave in 2016. Europe’s share of the global economy was shrinking relative to other continents, he explained. “Canada, South Korea and South Africa all trade freely with Europe without surrendering their independence. As one of Europe’s largest customers, I see no sensible reason why we could not achieve a similar agreement.” Also, “excessive red tape” stifled every British business, even the ones that don’t export to the continent.
It is clear from those arguments that Sunak’s understanding of the single market was limited to the repertoire of dogmatic ditties that a thrusting young Tory learns to sing if he wants to be selected as the parliamentary candidate in a safe seat. Ministerial colleagues and officials in the Treasury say that his grasp of the issue was later enriched by the experience of serving as chancellor. By then, Brexit was a fait accompli.
As a notorious spreadsheet nerd, Sunak cannot ignore the data showing exclusion from EU markets as a drag on Britain’s economic performance. Since he and his chancellor used Office for Budget Responsibility forecasts as the basis for the fiscal consolidation announced in last week’s autumn statement, it is reasonable to surmise that both men accept also the OBR’s conclusion, published the same day, that Brexit has had “a significant adverse impact on UK trade”. Jeremy Hunt doesn’t admit the connection in public, preferring to blame Russia and the legacy of the pandemic for Britain’s economic woes. Those are factors, but the UK is also forecast by the OECD to have a longer and deeper recession than any other G7 country, none of which has elected to sabotage its own closest trading partnership.
Full-frontal acknowledgment of that fact is taboo, so it leaks out of government sideways. Hence last weekend’s rumour of a Swiss pivot in the direction of travel. But any hint of heresy stirs the inquisitorial zeal of Tory MPs, requiring a public vow of piety. “I believe in Brexit,” Sunak said on Monday, going on to insist that no alignment with EU rules would happen under his leadership. That is because “regulatory freedom” is the key that will unlock benefits of emancipation from Brussels that autonomy in trade deals has mysteriously failed to deliver.
This – the third fallacy – is the sturdiest pillar of Eurosceptic faith, and the one to which Sunak clings tightest. As a candidate for the leadership over the summer, he promised to review or repeal 2,400 legacy EU laws, carried over into British statute post-Brexit, and to do it within 100 days of taking office. (A video promoting the pledge showed Sunak feeding documents into a shredder to the strains of Ode to Joy.) It was a wildly implausible pledge, now sensibly abandoned. The only way to get through the task would be to dedicate most of Whitehall to sifting EU laws full-time, or to scrap them without even trying to understand what they do, and whether they might be useful or popular.
Liz Truss’s version of the same project is a bill already introduced to the Commons, setting a target of December 2023 and including a “sunset clause” to automatically vaporise any EU rules that haven’t been reviewed in time. (There is an option to extend the deadline.) Trade unions and NGOs fear incineration of social and environmental protections in an ideological wildfire. Businesses say they don’t need or want a great regulatory upheaval, which just adds to uncertainty and deters investment. There are hints that the government is heeding that complaint and preparing to dilute the bill.
Monomaniac obsession with purging the legacy of Brussels bureaucracy threatens to suffocate growth more than the regulation itself, much of which existed to harmonise rules so British goods could flow unimpeded around the continent. Replacing EU standards with British ones is neither a domestic liberation nor much of a magnet for international investment, since anyone trading in both jurisdictions would have to comply with
both sets of rules. It hardly matters if the UK regime is notionally more competitive (or just plain lax). There is no escaping the gravitational field of the single market.
The prime minister’s pragmatic side might prompt him to postpone lighting the bonfire of red tape. But he dare not douse the dream. It is what keeps the Brexit believers warm in delusion when cold economic winds blow ever harder in their faces. That is more comfort than the rest of us have.
Nothing remains of the Brexit case that Sunak himself once made. He claims to believe still, although his tone sounds more pleading than passionate – an affirmation of faith by someone who cannot ignore evidence; a leader divorced from any good policy options, trying not to be a total stranger to reality while living apart from the facts.