EU unlikely to blink first — just ask Greece
Could this go down as the time when the EU’s normally restrained bureaucrats lost their patience with Britain? Since the UK voted to leave the EU in the middle of 2016, the other 27 partners have gone through something akin to the different stages of grief. Though they were never as blasé about it as the former UK prime minister who called the referendum, David Cameron, the decision still came as a shock, and since then they’ve been grappling with how to manage the economic consequences.
Jean-Claude Juncker, the European Commission president that UK tabloids love to vilify, spent much of the past couple of years talking about his sadness about Brexit, emphasising what a monumental loss this would be for the remaining members.
That stance never changed even in the face of provocation from Brexit supporters who have gone as far as comparing the EU, an institution credited with doing much to keep the peace in Europe since World War 2, to Nazis.
No wonder there was more than a bit of a shock when EU President Donald Tusk, in an extraordinary outburst, had some choice words for Brexit supporters. Coming on the eve of British Prime Minister Theresa May’s visit to Brussels, to renegotiate a deal that she had previously signed up to and promoted, it was extra telling.
The EU says no new deal is on offer and it won’t back down on the backstop to ensure there’s no physical border in Ireland if the parties fail to reach a comprehensive agreement.
He wondered, he said, “what a special place in hell looks like for those who promoted Brexit without even a sketch of a plan for how to carry it out.”
Not to be outdone, Guy Verhofstadt, the Belgian politician who leads the European parliament’s Brexit negotiation team, added his bit. “Well, I doubt Lucifer would welcome them, as after what they did to Britain, they would even manage to divide hell.”
The new language suggests they have gone all the way to accepting that a disastrous nodeal outcome is a real probability and there’s little chance of the UK changing its mind.
Hell is supposed to be very hot, if I remember correctly. As I sit here in freezing Edinburgh and follow the local dialogue on the subject, I can safely say Boris Johnson and his gang won’t be ending up in Scotland.
It’s hard to see a happy ending. At the weekend, The Guardian reported that UK exporters sending goods to farflung areas — say New Zealand
— by ship risk being locked out of harbours. Why? Because they could arrive after March 29, when the UK is due to leave the EU, with no clarity on trade rules and whether more tariffs would be due.
It’s hard to imagine even the EFF being so irresponsible.
When I moved to cover financial markets in the UK more than a decade ago, I didn’t imagine there would be many highlights. That was before the financial crisis, and bond yields in the UK and Germany barely moved a basis point on any particular day.
It didn’t last that long.
The exciting events that included all-night coverage would be the Brexit vote, when the pound collapsed so fast we couldn’t keep up long enough to send a headline before the next key level was breached.
The Scottish independence vote in 2014 was another one. And there was that fateful morning in January 2015 when Swiss National Bank gave up on its cap on the franc against the euro. A currency that barely moved in more than three years jumped about 41% in a morning.
With Brexit day fast approaching and no deal in sight, what comes to mind is what turned out to be a less dramatic day, about six months after the Swiss bombshell.
Greece had bankrupted itself and needed loans from the EU. But the terms, mostly in the form of punishing austerity, were unpalatable to its left-wing leaders. It seemed to make sense. At the time, it was presumed that a Greek default would potentially destroy the euro. Surely faced with this possibility, the EU, and especially Germany, cast as the villain in that episode, would blink and agree to Greece’s demands? They never did and one can imagine the German “negotiators” sitting there the whole night and watching the clock. Morning came, and Greek leader Alexis Tsipras eventually signed up to reform measures he had previously denounced. As a commentator put it at the time, the question wasn’t so much about the quality of the deal on offer but whether there was a feasible alternative. And he simply didn’t have one.
Except for the most ardent Brexit disciples, most people agree a no-deal scenario will be a disaster for the UK, Europe and possibly the global economy. And we will definitely feel the effect, with the EU being our biggest trading partner.
It could go to the wire and many will be wondering who will blink first. My money says it won’t be the EU.
THE QUESTION WASN’T SO MUCH ABOUT THE QUALITY OF THE DEAL BUT WHETHER THERE WAS A FEASIBLE ALTERNATIVE. AND TSIPRAS SIMPLY DIDN’T HAVE ONE