Remainers must now accept that the game is now well and truly up
Predictions of a cliff-edge are well wide of the mark and underestimate the strength of the Brexit case
Here we go again! After Boris Johnson’s crushing victory, the Remainerish Tendency hasn’t missed a beat in returning to the fray. The issue that is now causing acute angst is the possibility that we will leave the European Union by the end of next year without a trade deal. According to all the usual suspects, this is set to bring disaster. Does this ring a bell?
The context is the hitherto widespread, lazy assumption in the media and elsewhere that a big Johnson majority would allow the Prime Minister to sideline the serious Eurosceptics in his party and go for a “soft” Brexit, involving an extension to the transition period and as close an association with the EU as possible.
This assumed that Mr Johnson wanted a soft Brexit and/or that achieving this is in his and the country’s interests. But why? It is typical of the Remainer mindset that they cannot get their head around the idea that Brexit is not some disaster whose scope and reach must be minimised, but rather a set of challenges to be met and opportunities to be seized.
Many have argued that trade negotiations with the EU will drag on for years, condemning businesses to an extended period of the very uncertainty that has so bedevilled their planning and reduced their investment. Yet Mr Johnson’s move last week to enshrine the date of the end of the transition period in law has cut through this argument. Unless you believe that this law will be overturned, then we will definitely leave the EU’S Customs Union and
Single Market by the end of next year. The only remaining uncertainty is whether we leave with a trade deal or instead trade with the EU under World Trade Organisation terms.
The latter has been described as a “no-deal” departure from the EU. These two words have acquired talismanic importance. “No deal” is widely regarded as “crashing out”. The “cliff-edge” is apparently back.
If nothing else, you have to hand it to the wordsmiths in the Remainer camp. For “no deal” was originally used to describe the situation where we left the EU without any sort of agreement on anything. Even Mrs May’s ill-fated “deal” did not include a trade agreement. That was left to be negotiated later.
The truth is that, given that Mr Johnson has struck a departure deal with the EU and that it will be enacted by Parliament, there is no way that the UK will be leaving “without a deal” in the original meaning of the expression. And there have been lots of miniagreements on the likes of aircraft landing rights.
Of course, we could still leave without a trade deal. Indeed, the usual gloomsters argue that getting a trade agreement with the EU by the end of next year is impossible. This is defeatist nonsense. It is eminently feasible given the political will. Unlike in most trade negotiations, in this case both partners begin from a situation of zero trade barriers and regulatory alignment. Moreover, there is the deal with Canada to use as a template. Nor is it absolutely necessary to have every aspect of our future relationship with the EU covered in a single deal. It might well be possible to secure an agreement by the end of next year on some aspects while continuing negotiations on others.
Regulation is going to be the sticking point. Supposedly, the European Commission wants to insist that the UK accepts pretty much full regulatory alignment with the EU and only in return for this will it concede full access to its markets, including in financial services. It would be madness for the UK to agree to any such thing.
The essential economic case for Brexit has still not sunk in among the commentariat. To listen to Remainers bemoaning our looming fate outside the EU, you would think that the union is a zone of stonking economic
‘Gloomsters argue that getting a trade agreement with the EU by the end of next year is impossible. This is nonsense’
success. But it isn’t. It is mired in comparative economic failure. And the regulatory regime is one of the factors responsible. What’s more, the EU’S shortcomings are likely to intensify as it moves on to yet closer integration. Even if it means leaving without a trade deal, this is a bloc whose regulatory regime we should be itching to detach ourselves from, not aligning ourselves with.
Over the coming year, the Government will be simultaneously trying to do trade deals with other countries, in particular the US. If it secures such deals but does not reach a trade agreement on tariff-free trade with the EU, then EU producers will suffer massive price competition in the UK market. While the price of goods imported into the UK from the rest of the world will fall, as tariffs on these goods are cut, the price of Euproduced goods imported into the UK will rise as tariffs are imposed. The consequence is that Continental producers of everything from cars to cheeses would be hit very hard. Perceiving this threat ahead of them, they are going to be putting huge pressure on their governments to do a deal with the UK.
All along, Remainers have underestimated the strength of the Brexit case. Their thinking has been dominated by a perception of British weakness. In reality, the only weak thing about Britain’s position has been her government. Now the election has transformed the political situation.
Remainers have undergone several shocks over the last few years, starting with the Brexit vote in 2016. I believe that they are soon going to experience another one. The Government is going to succeed in doing trade deals with the EU and several other countries, and without preserving close regulatory alignment with the EU. And, what’s more, the UK economy is going to do exceedingly well. Happy Christmas.
Roger Bootle is chairman of Capital Economics. His latest book, The AI Economy – Work, Wealth and Welfare in the Robot Age, has recently been published by Nicholas Brealey. roger.bootle@capitaleconomics.com