Nor­way-plus is du­plic­i­tous and ill-judged

The Sunday Telegraph - Money & Business - - Business - LIAM HALLIGAN Fol­low Liam on Twit­ter @liamhal­li­gan

This With­drawal Agree­ment is less a care­fully crafted diplo­matic com­pro­mise and more the re­sult of in­com­pe­tence of a high or­der,” thun­dered Mervyn King last week, at­tack­ing Theresa May’s Brexit blue­print.

“It beg­gars be­lief a gov­ern­ment could be hell-bent on a deal that hands over £39bn,” the for­mer Bank of Eng­land gover­nor ob­served, “while giv­ing the EU both the right to im­pose laws on the UK in­def­i­nitely and a veto on end­ing this state of fief­dom”.

Since re­tir­ing from the Bank in 2013, Lord King has spo­ken out against some pretty pow­er­ful vested in­ter­ests. His 2016 book, for in­stance, The End of

Alchemy, was an hon­est in­sid­ers’ ac­count of the 2007-08 fi­nan­cial cri­sis.

The City and Wall Street mega­banks were and re­main “the Achilles’ heel of cap­i­tal­ism … driven by hubris and ar­ro­gance that in­flicts suf­fer­ing on the in­no­cent,” wrote King. Re­form­ing them “won’t be easy”, with “most ex­ist­ing fi­nan­cial in­sti­tu­tions, and the political in­ter­ests they sup­port, re­sist­ing strongly”.

The on­go­ing use of quan­ti­ta­tive eas­ing, again beloved by the political-fi­nan­cial nexus, boost­ing shares and other as­set prices, “con­sti­tutes an er­ror as much of the­ory as of prac­tice, and is the cause of weak growth,” King ar­gued. The sin­gle cur­rency, mean­while, is “a tragedy … the most di­vi­sive devel­op­ment in post-war Europe”.

Lord King, then, has made a se­ries of post-re­tire­ment state­ments that have irked the over­whelm­ingly Europhile fi­nan­cial and busi­ness me­dia es­tab­lish­ment. His lat­est mis­sive on May’s EU With­drawal Agree­ment was “dis­grace­ful” ac­cord­ing to sev­eral prom­i­nent com­men­ta­tors, “not wor­thy of a for­mer gover­nor”. Why is it fine for end­less anti-brexit for­mer For­eign Of­fice man­darins re­peat­edly to sound off, but not an ex-bank of Eng­land gover­nor?

In call­ing for MPS to re­ject May’s With­drawal Agree­ment, “a deal that’s the worst of all worlds”, King is, as usual, bang on the money. He’s also right to ar­gue that prepa­ra­tions for a Brexit based on World Trade Or­gan­i­sa­tion (WTO) rules “should have started in 2016, im­me­di­ately af­ter the ref­er­en­dum”.

It’s true that “Bri­tain needed a fall­back po­si­tion – it is fool­ish to ne­go­ti­ate with­out one – and [WTO rules] was the form it should have taken”. It’s also true, as King adds, that the Gov­ern­ment’s as­sump­tion “an imag­i­nary long-term deal could be ne­go­ti­ated” has been “naive at best, and in the event has proven dis­as­trous – in­com­pe­tence on a mon­u­men­tal scale”.

From her Jan­uary 2017 Lan­caster House speech, right up until she un­veiled her supine Che­quers pro­pos­als this July, May in­sisted “no deal was bet­ter than a bad deal”. Back then, she ap­peared to be­lieve in a gen­uine Brexit, with the UK out­side the EU’S sin­gle mar­ket and cus­toms union. That’s what was dis­cussed dur­ing the ref­er­en­dum cam­paign, af­ter all. That’s what was promised by both the Con­ser­va­tive and Labour par­ties in their June 2017 elec­tion man­i­festos.

Che­quers, of course, was a very dif­fer­ent pack­age, one ac­cept­ing EU rules on goods, a mod­i­fied cus­toms union and on­go­ing Brus­sels dik­tat. This to­tally blind­sided not just the then Brexit sec­re­tary, but the wider cabi­net and the coun­try – ev­ery­one, in fact, out­side May’s Down­ing Street in­ner sanc­tum.

Since then, Che­quers has mor­phed into the even more ghastly With­drawal Agree­ment, with Brus­sels im­pos­ing a to­tally un­nec­es­sary “back­stop” that splits Great Bri­tain and North­ern Ire­land, while leav­ing the UK “sub­ject to”, ac­cord­ing to the At­tor­ney Gen­eral, “pro­tracted and re­peat­ing rounds of ne­go­ti­a­tions” that could “en­dure in­def­i­nitely”. There would be “no way out” for the UK, ac­cord­ing to the

Gov­ern­ment’s own le­gal ad­vice, “with­out the EU’S agree­ment”. And, while May’s dis­as­trous deal ap­plies, the UK will keep send­ing ad­di­tional bil­lions to Brus­sels each year, paid by our con­sumers, un­der the com­mon ex­ter­nal tariff – on top of the £39bn divorce bill.

Fi­nally, es­cap­ing the EU’S clutches will no doubt then cost the UK our fish­ing grounds, even more money, con­tin­ued ac­cep­tance of free­dom of move­ment and what­ever other con­di­tions our “EU part­ners” want to im­pose. And to pro­mote this non­sense, Down­ing Street has, in King’s words, “turned Project Fear into Project Im­pos­si­ble” – in­sist­ing that re­ject­ing May’s deal, and trading with the EU un­der WTO rules in­stead, isn’t an op­tion. Six months ago, May thought “no deal was bet­ter than a bad deal”. Now it’s ap­par­ently “dis­as­trous”. An in­sid­i­ous, deeply anti-demo­cratic and pro­foundly dis­hon­est cam­paign against a clean Brexit – leav­ing un­der WTO rules, then strik­ing a Canadastyle free-trade agree­ment – is now in full swing.

Serv­ing privy coun­sel­lors who are MPS, so able to vote in this Tues­day’s par­lia­men­tary show­down, have been called into Down­ing Street to be fed ut­ter rot about “no-deal” dan­gers.

With Parliament al­most cer­tain to re­ject Mrs May’s pro­pos­als, while ma­noeu­vring to block the “no-deal” de­fault, other op­tions are loom­ing. A sec­ond ref­er­en­dum would be dis­as­trously di­vi­sive.

The so-called “Nor­way-plus” plan – ac­cept­ing Mrs May’s deal and hop­ing the EU will let us soften the terms later – strikes me as du­plic­i­tous and ill-judged. It isn’t Brexit, main­tains free­dom of move­ment and re­lies on the EU adopt­ing a flex­i­ble at­ti­tude down the track. My pre­ferred op­tion re­mains the “clean Brexit” I’ve ad­vo­cated since mid-2016.

If Parliament is de­ter­mined to thwart that we should in­stead adopt Lord (David) Owen’s scheme of leav­ing the EU as planned next March, but stay­ing in the Euro­pean Eco­nomic Area (EEA).

EEA mem­ber­ship isn’t ideal but would smooth the tran­si­tion and, cru­cially, it would be tem­po­rary. That’s be­cause the UK can leave the EEA, uni­lat­er­ally, at any time – as long as we give 12 months’ no­tice.

“It could be used on a strictly time-lim­ited ba­sis”, says Owen, pro­vid­ing “a flex­i­ble full exit timetable, un­der UK con­trol”. EEA mem­ber­ship, then, in stark con­trast to May’s dis­as­trous back­stop, leaves the UK’S des­tiny in our own hands. “Bri­tain is not fac­ing an eco­nomic cri­sis,” says King, “but a deep political cri­sis – which Parliament has brought on the coun­try”.

In­deed it has. The prob­lem isn’t, and has never been, Brexit. The prob­lem is that out-of-touch, self-serv­ing MPS are de­ter­mined to thwart the will of the peo­ple.

‘EEA mem­ber­ship isn’t ideal but would smooth the tran­si­tion and, cru­cially, it would be tem­po­rary’

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