The shape of Brexit is becoming clearer. Don’t write Theresa May off.

I’ve given Brexit it a well-earned rest over the last month. It remains Britain’s leading political issue, but the commentary from all sides is completely unedifying. Remainers are mainly just whingeing, angry that we are were we are. I agree, but where next? This lets the Brexiteers off the hook: instead of being forced to be more specific about how to solve the many problems thrown up by Brexit, they can simply moan about the moaning and promote an unconsidered hard Brexit. And this is what most of them are doing, betraying a complete failure to understand the predicament that country finds itself in. Still, a little reflection shows us how things are likely to shape up.

Not that the government is giving us much clue. The Prime Minister, Theresa May is staying tight-lipped, though she has been offering hard-Brexit mood music. This is partly because that is the type of leader she is: she likes to weigh things up in private before committing herself, a characteristic that she shares with the German Chancellor Angela Merkel. That Mrs Merkel is one of the most successful politicians on our continent shows that many commentators are too quick to dismiss Mrs May. I think she could last.

The fact is that the government’s silence is not just a question of Mrs May’s style. There are sound political reasons for it. The Conservatives command but a narrow majority in the House of Commons, and the party is hopelessly muddled on the issue, as are Conservative voters. Any clear declaration of strategy will create a storm. When that time comes the government needs to be ready. Mrs May became prime minister by picking the right moment to attack after years of patient build-up in which her potential opponents each self-destructed. She no doubt hopes for something similar over Brexit.

The eventual strategy will be the product of an alliance of three critical minsters. Mrs May herself, the Brexit minister David Davis, and the Chancellor of the Exchequer Philip Hammond. The alliance between Mrs May and Mr Hammond goes back a long way; they operate in compatible ways. Mr Hammond is putting the soft Brexit side of the argument – about the need to prevent disruption to the economy and to protect inward investment. Mr Davis is an interesting character. He is an ideological Brexiteer, but he possesses an integrity that few of his fellow politicians can match, while remaining an intelligent man. So far these attributes have not helped his political career; he has been too much trouble, and easily outmanoeuvred by smooth operators like Mrs May’s predecessor, David Cameron. Mrs May showed good judgement in picking him as her minister for Brexit. He doesn’t give much away, but from what I have seen, he is steadily working through the different issues and options and weighing the pros and cons. Meanwhile other senior ministers involved with Brexit, the Foreign Secretary Boris Johnson, and the International Trade minister Liam Fox, are showing themselves up to be political lightweights not suited for these difficult times.

Given this background, we can divine what the government’s strategy is likely to be: a soft Brexit leading probably, but not inevitably, to a hard one. First of all the government will push to activate Article 50 of the Lisbon treaty, giving two years notice to formal exit. This needs to be done by March, because that’s what Mrs May has promised. There are sound political reasons for this: first it means that there will be no awkwardness over the European Parliament elections due in 2019; more substantively the formal exit will be completed in plenty of time for the General Election due in 2020. Incidentally, there is no evidence that Mrs May plans to expend precious political capital on trying to get round the Fixed Term Parliaments Act to hold an early election. The Labour Party is stewing nicely in its own juice and this mitigates much of the government’s problem with a small majority. It is highly unlikely that they will stage a recovery by 2020, rather than being completely hollowed out. An election now would be a distraction from the problem at hand.

The problem with an early invocation of Article 50 is that it leaves a cliff face on eventual exit – the so-called train-wreck Brexit. Actually delaying Article 50 may not help by much – the real problem is negotiating alternative trading arrangements, which formally can’t start until after exit. But there is an obvious solution to this: a transitional period after exit. In this period much of the current trading relationship would be preserved, and the UK would continue to make budget contributions. The spectrum of possible solutions runs from full membership of the EEA (European Economic Area – like Norway, Iceland and Liechtenstein) to simply membership of the customs union (like Turkey). The EEA option would be by some distance the simplest solution, but it would involve continued free movement of labour. That is surely a red line for Mrs May (though, I suspect, not for Mr Hammond). She has always taken a hard line on immigration, and seems immune to the economic arguments made for it. The Turkey solution would leave many markets not integrated, with high potential costs to some parts of the economy. She will aim for EEA market access with Turkey levels of free movement. She won’t get it, but that is what negotiation is about.

How long will the transitional period be? My guess is five years (i.e. up to 2024), though her initial bid might be just two. That puts the ball firmly in the court of the next parliament. The government will paint a picture of full exit from the customs union after 2024 in terms that will warm the heart of ideological Brexiteers. In that way Mrs May will paint herself as a hard Brexiteer. But there will be a general election before then, and if public opinion swings away from Brexit, the transitional deal can be made into something more permanent.

That’s what I think. It will remain formidably complicated – but it gives ground to both sides, and she can claim be implementing the mandate from the referendum, while giving everybody more time to think about how a standalone Britain should work. There will be meat for both factions in the Conservative Party – and Mrs May can present herself as a unifying figure. It might even work.

 

Share

One thought on “The shape of Brexit is becoming clearer. Don’t write Theresa May off.”

  1. I’d agree with most of this. It is unfair to criticise Mrs May at the moment. She has everything to lose by revealing her hand and little to gain.

    Anyway, it probably doesn’t much matter whether or not she has a plan, because the 27 won’t want to agree to it whatever it is. Article 50 isn’t a negotiation. The 27 will meet and decide what to offer the UK and, we may have a choice of accepting or rejecting it. Or, it may well be we won’t have any choice at all, because once a “trigger” has been pulled it can’t be unpulled afterwards.

    The Remainers made this argument themselves prior to June 23rd. The counterargument was, as the UK is/was the EU’s best customer, there was no way the big players in the EU would ever let their Golden Goose be killed. We’ll see if that turns out to be right. I suspect it will be.

    We’ve now had our vote and we’ve made our choice. It’s a bit like being in a game of poker. We won’t know just how well it will work out until right at the end. Then we’ll know who was bluffing and who wasn’t.

    Although Mr Trump wouldn’t have been the choice of either of us, we have to accept the reality of his election. This wasn’t, of course, known or even thought likely last June. He was in favour of the UK leaving the EU so he should be much more favourably disposed to helping the UK secure a trading deal with the USA than Mrs Clinton would have been. The USA is potentially a much better trading partner than Germany and the EU. Trade, for Germany, is all about making sure that they sell more to their partners than they buy from their partners.

    That’s really not good for anyone – including Germans themselves. They are artificially and needlessly depressing their own living standards. But try explaining that to them!

Leave a Reply

Your email address will not be published. Required fields are marked *