New leader unlikely to break this impasse

With the collapse of Theresa May’s deal, and now her premiership, the odds on a no-deal Brexit are judged to have narrowed, or that at least is how markets see it.

Perhaps they are right, but to me it is still quite hard to see why the prospect of a new prime minister, even one who has said they are willing to contemplate a no-deal exit, changes matters very much. Whoever it is still faces the same parliamentary arithmetic, and will be hemmed in just as much as May by the divisions within their own party.

The idea that having a committed Brexiteer such as Boris Johnson in charge will of itself naturally galvanise support behind a go-for-it clean break is complete fantasy, as is the notion that more overt “strong man” brinkmanship is capable of winning a more palatable deal from the European Commission.

As someone who is far more relaxed about free movement than May, my guess is that Johnson will go for a prolonged transition, during which though technically the UK will have left the EU, not much will change, including contributions to the EU budget, membership of the customs union and much else. The transition would provide space for negotiation of a Canadian-style freetrade agreement, which would take many years.

But even this approach would struggle, because the EC would regard the published Withdrawal Agreement as the starting point for any negotiation on trade. The money, the Irish backstop and citizens rights would all have to be guaranteed. This would also be the case if Britain withdrew without a deal and then tried to negotiate a new accommodation. For the EC, the base line would still be the main pillars of May’s Withdrawal Agreement.

The idea that no-deal would in practice not be no deal, because there would be a series of miniagreements to ensure the planes keep flying, cross border data keeps flowing and so on, is also of little comfort. A train system that keeps operating, but on a much reduced service, is still a big step down.

Sorry to disappoint, but the departure of May solves nothing. The underlying challenge remains the same.