The most important Brexit negotiation will be amongst the British people

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There is very little decent media coverage of Brexit here in Britain. Mainly it is two groups of opinionated people trying to annoy each other, or at least to keep up their own side’s annoyance levels with the other side. Actually I have more time for the British negotiating effort than most Remainers, and more optimism that something sensible will emerge in the immediate aftermath. But Britain’s long-term destination remains unclear. And that is only right in the circumstances.

Right from the start I predicted that the key would be a transitional arrangement whereby elements of the Single Market and the Customs Union (not the same thing) would continue for long after the formal exit date of 29 March 2019. The British government is inching towards this conclusion, as a series of position papers published over the summer makes clear. Over the weekend Labour backed this idea too. The logic is overwhelming.

The British way is often said to favour gradual evolution over revolution. British democracy emerged step by step, without a revolution like France or Russia. Britain’s engagement with the European Union was similarly gradual. So gradual, in fact, that many Britons did not realise how much they had become attached to it until the Brexit referendum was lost. Of course this is exactly what opponents of Britain’s participation had predicted all along – the takeover would be incremental until a federal United States of Europe emerged by stealth. It follows that Britain’s disengagement is going to need to be equally gradual – or else we will have that destructive chaos that revolutions bring with them. The more so as there is no consensus vision on what a disengaged Britain should look like. Democracy takes time.

If Britons are coming to appreciate this, the other EU governments, and EU institutions, are being inscrutable. They insist that the arrangements for separation must be agreed before the terms of any future relationship are even discussed. The British government’s position papers were an attempt to get the conversation about the medium-term moving in spite of this arbitrary approach. They may well have succeeded. EU leaders may dismiss these position papers, and in some cases deride them – but the agenda has moved on. That was all that was intended.

The EU side will never admit it, but this is because logic is overwhelmingly with the British government on this. The exit negotiations are focusing on three critical subjects: financial obligations, EU citizens living in the UK, and the Northern Ireland border. In each of these Britain’s future relationship has an important bearing. This is most obvious in the case of Northern Ireland. This depends heavily on on future customs and migration arrangements. But the rights of EU citizens are tangled with the issue of the future role of the European Court of Justice and future arbitration arrangements. And even the financial obligations (the so-called “divorce bill”) can be finessed if some parts of British membership effectively continue beyond March 2019, along with the sort of financial contributions made by Norway and Switzerland for access to the EU market. The EU negotiators will be forced to talk about these things.

The EU needs a deal on Brexit for at least two reasons. First is that commercial disruption could threaten jobs within member states – thought the Brexiteer claim that the other EU countries need Britain more than the other way round is nonsense. Second is the situation of EU citizens who are living in Britain, and the status of Britons living in other EU countries. A legal limbo would be a major headache for everybody. On the other hand the EU governments do not want Britain to continue with all the rights of EU membership and not the obligations. That will make them wary of a transitional deal. But given the precedents set by Norway (in the Single Market and European Economic area), Switzerland (who have similar rights based on a number of separate agreements) and Turkey (in the Customs Union but not the Single Market), it should not be hard to finesse this. Indeed people may ask what the point of Brexit was, and that will suit the EU governments  – in fact the point of Brexit, if there is one, will take time to emerge.

And meanwhile Britain must slowly decide what it actually wants.  There are three main competing visions, which I will name after their role models: Singapore, Switzerland and Japan.

The Singapore idea is favoured by quite a few of the Brexit-supporting elite – those businessmen who came out in favour of Brexit, supported by a number Conservative MPs, and one or two theoretical economists, like Patrick Minford. This is that Britain becomes a global trading entrepot, with a regulatory light touch, and a strong national focus on competitiveness and low taxes. But this is a fantasy, partly because of Britain’s physical location and industrial hinterland – but mainly because there is no sign of democratic consent for this way forward. It would require an authoritarian state to implement (as it does in Singapore, after all) – and Britons do not like being dictated too – as the Brexit referendum showed very clearly.

Much of the rest of Britain’s elite favour something of a Swiss solution. This combines a strong tradition of independence and democracy with a free trading relationship with the Union, established on an issue by issue basis, and not by a bulk package arrangement like the EEA. The relationship between Switzerland and the EU is not a smooth one, but by and large it works, and Switzerland prospers. But the Swiss do have to abide a whole raft of EU rules, not least over freedom of movement. It would also be a platform from which the UK may re-enter the EU in future – which is why so many Leave supporters dislike it. Personally, this is what I favour.

But most British voters who supported Brexit probably have something in mind that is much more Japanese, as do many Conservatives, probably including the Prime Minister, Theresa May. Japan is fiercely independent and conservative in its outlook. It maintains a strong separation from the countries on its neighbouring continent – China and Korea, in particular, with whom it has tense relations (though Japanese imperial expansion in the 20th Century accounts for much of that). Controls over inward migration are tight, even in the face of challenging demographics, and social cohesion is highly prized. Multiculturalism is not an idea that they take to. Governing institutions are paternalistic, and democracy is flawed, though not as badly as in Singapore. The Japanese may grumble at this, but not enough to change the system. How very British.

Britain is not Japan, and any Japanese path will have to have some very British characteristics. The first is that Britons may grumble about it, but the country has a strong multicultural dimension. This is a legacy of its Empire, much more than the EU. There is no turning back – but immigration can be slowed, and assimilation of minorities might be more muscular – though this will hardly lead to community cohesion. A further issue is economic. Japan has built up national powerhouses of manufacturing industry, notably in cars and electronics. They have levered their way into export surpluses, notwithstanding reluctant attitudes to free trade. This is a very different approach to Britain’s, which has an open economy, even by European standards. Our manufacturing powerhouses have been sold off or run business models that are so globally integrated that the companies can hardly be called British (consider British Aerospace, at once part of European Airbus and trying to persuade the US armed forces that it is really American). Building something more closed and self-sufficient, in the style of Japan, will be slow and painful. Most people would not give much for Britain’s chances – but with technology rapidly changing the way economies work, that may be excessively pessimistic – in the long run anyway.

So should Britain continue to be a part of an integrated European economy, albeit keeping more of it at arms length than now? Or should Britain stand alone and focus more on social cohesion? In London we, by and large, favour the former. In many other parts of England, and Wales, there is strong preference for the latter. That is what we will have to negotiate amongst ourselves, piece by piece. It will be a long journey. Britain’s negotiation with the EU on Brexit is but a small part of it – and its main purpose is to buy us more time.

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5 thoughts on “The most important Brexit negotiation will be amongst the British people”

  1. The defeat of Brexit and remaining in the European Union is not discussed even as a possibility, in this article. Why is that?

    1. I’m being a bit mainstream here. Most people accept the momentum of Brexit, even if some people want to reverse it. The question about actually stopping Brexit is a bit of a different topic, but one I may turn to. For it to happen I think there will have to be a decisive shift in public opinion – but so far there is no sign of that.

  2. I’m not sure this post will seem at all sensible when looked at from a more historical perspective in a few years time. The really important issue is not that Britain “must slowly decide what it actually wants” in relation to the EU. We’re never going get a consensus on that. If there is one point of agreement that might unite both sides of the debate it would be that we’d want to be partners, of some sort, with an EU which is actually works and is successful.

    When it seemed that the EU was going well, when Ireland was the Celtic Tiger, and Greece, Spain, Portugal and others were regularly reporting record growth spurts prior to the GFC there would have been little prospect of a Leave vote. Even the Lib Dems felt sufficiently confident of the success of their beloved project to call for a referendum to put the In/Out debate to bed. The rest of us might have gone along with the idea somewhat reluctantly but we’d have had no pressing arguments for leaving. Many of us would have probably voted to Remain.

    The 2008 GFC changed all that. So we really should be asking what sort of EU the EU27 citizens want. Do they want more of the same for the next decade? I’d say probably not but this, at best, is what they are going to get. I can’t see it ending well.

    What might seem much more sensible to future historians is that Britain’s vote to leave was just the first step in the break up of the EU. Just how that will happen is anyone’s guess. But if Macron fails as I predict he will then France could pull out of the euro. Italy’s banks might be seen to be the zombies that they are and depositors will want their money out causing a bank run. Even German banks are looking ricketty and may not survive another 2008 style global downturn. The system could yet suffer a meltdown.

    1. I’d agree that a consensus is impossible, but I remain hopeful that we can break out of the debilitating 50-50 split we now seem to be stuck in. But I don’t see that happening until more of the consequences of the split start to take effect. Or maybe just changing demographics. I suspect most people are baffled and rather cynical by the claims and counterclaims made by the different sides of this debate. They will need to see what actually happens before changing their views.

      But you may well have a point that when it comes to our relations with Europe (which is only part of the issue – the main issue is our relations with the world at large) how well the other European nations are doing will influence things. That is quite hard to call – the current spurt of optimism in the main EU countries looks as ephemeral as the spate of pessimism that preceded it. Britons always underestimate the EU’s capacity for progress – right from the 1950s. I suspect the union will continue its tortoise-like progress. I don’t share your view that most European problems boil down to poor management of short-term aggregate demand – where admittedly EU systems are weak.

  3. The post seems to me relevant to the current public debate, which is overwhelmingly about the desired type of Brexit on the presupposition that it will happen. On any account, at least contingency planning is needed by Lib Dems against the possibility/prospect that it will occur in a year and a half’s time.

    This being said, I can see two helpful factors as regards public opinion. . One is the trade unions, who want to preserve jobs and living standards, and who have influence with ‘working class’ opinion. The second is that the Conservative party can not absolve themselves from responsibility for Brexit, since they called an unnecessary referendum their leadership failed to win, and are now making heavy weather of negotiating an exit many of their leading lights do not believe in. They do not want to be responsible for a Brexit which looks in retrospect a mistake. But to my mind a Swiss solution will look a mistake to many Conservatives , because we would have done better to remain in the EU to influence EU dispositions which will continue to affect us: while a hard Brexit will also look a mistake because of the difficulty in practice in negotiating alternative trade deals to replace the lost EU market. So may not public opinion be influenced against Brexit by the concerns of the Trade Unions and sections of the Conservative party? I have not yet given up on a change of heart.

    Hugh Brown

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