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Debates

The UK and Europe

Is a ‘Brexishambles’ in the making?

Iain Begg / Oct 2016

David Davis, the UK Secretary of State for Exiting the European Union. Photo: Wikimedia Commons

 

What does the UK want from Brexit? Four months on from the referendum, there is still surprisingly little hard information on what to expect. Clearly, it is the subject of sharp disagreements within the British government and, partly as a result, there has been intense, though largely ill-founded speculation. In the process, the atmosphere between the UK and the rest of the EU is becoming increasingly strained, with even presumed friends, such as the Germans, expressing their exasperation.

Theresa May’s announcement at the start of the Conservative Party conference in October that she will trigger Article 50 within six months at least offers some idea of the likely timetable, given the two year period for the ‘divorce’ negotiations prescribed by the Treaty. If (admittedly, a big if) all goes to plan, the UK will leave the EU in the spring of 2019. But the announcement and the various hints from ministers and others say precious little about the government’s aims for the future relationship between the UK and the EU. In what are bound to be tough, complicated and lengthy negotiations, no-one would expect the British government to reveal its hand too soon, but both the British public and the many counterparties across the EU are becoming increasingly impatient with the government’s dilatory approach.

May’s intention to put forward a ‘Great Repeal Bill’, explained as shifting EU law at one stroke into UK law, will be the first step towards deciding which EU laws will be kept or discarded. It will move the UK towards the exit door, but will not, in itself, elucidate what will change. The reasons for this continuing ambiguity are easy to explain. First, the Cameron government, with its misplaced confidence of winning, insisted it would not set out a plan B, so that when the new government took over, the three ‘Brexiteer’ ministers most directly involved had to start virtually from scratch. In particular, they will have to work out what compromises they are prepared to countenance.

Second, the nub of the problem is that the UK referendum, like so many others, really only exposed what Britons were against: the 52% who prevailed rejected the EU, but did not (and, in a binary choice, could not) say what they wanted instead. Euro-sceptics have long railed against loss of identity and the drift towards a European super-state, while complaining about intrusive and misguided regulation from the faceless bureaucrats of Brussels, but it is harder to establish what aspects of EU membership are broadly acceptable to the Brits. Opinion polls conducted after the referendum, such as one by Lord Ashcroft, provide some insights. As has been generally assumed, hostility to EU migrants is a powerful reason for leaving, and much of the UK body politic – the Corbynistas are an exception – now concedes that it is a demand that will have to be respected. Perhaps more surprising is that an even bigger proportion of those surveyed regard UK payments into the EU budget as their main reason for voting leave. Support for the single market, so often in the past considered to be the main attraction to the UK, is more muted.

A third reason is that it is far from obvious what is in the UK’s overall interest, let alone those of specific groups. Business leaders are alarmed about the prospect of being outside the single market, and want Brexit to be as close as possible to membership, but other voices (notably the Secretary of State for International Trade, Liam Fox) argue for a ‘pivot’ away from Europe in British trade. Farmers worry about their subsidies from the EU, while universities want to preserve their research funding from the EU and the flow of students, whatever the new regime for migrants becomes. So far the debate in the UK has been mainly around the post-Brexit model for access to the EU market: remaining fully in the single market; a free trade arrangement akin to the one Canada is close to concluding with the EU; or subject only to standard World Trade Organisation (WTO) rules.

In the emerging, if rather unhelpful, lexicon of Brexit, full access to the single market is deemed to be the ‘soft’ way of leaving, while the WTO outcome is considered ‘hard’. It has also been framed as, essentially, a British choice, with protagonists arguing about whether the benefits of their favoured option outweigh the costs. The result is a curious sort of phoney war in which the crucial question of what is likely to be acceptable to the rest of the EU has been too readily neglected. Will ‘they’, in other words, be receptive to what the UK, when it finally makes up its mind, wants from the negotiations? Are there issues other than those already prominently on the table, such as the rights of people from other EU countries to continue to live and work in the UK, likely to be potential deal-breakers?

In several policy areas, it will unavoidably be messy. For example, the other side to the endlessly repeated (if cynically mendacious) claim during the referendum campaign that leaving the EU would release £350 million per week to spend on the National Health Service (NHS) is that the EU will lose these funds. The UK’s gross contribution to the EU (after deducting the famous rebate) is almost exactly the same as the aggregate of the gross contributions of all twelve countries which joined the EU in 2004 and 2007. Plainly, they will not be asked to double their contributions if the UK stops paying, but they will find other net contributors, such as the Germans and the Dutch, reluctant to make up the difference and wanting, instead, to cut EU spending. The resulting acrimonious disputes will be blamed on the Brits.

A further budgetary dilemma is that some EU programmes are multi-annual, with expenditure allowed to continue well beyond the end of the current budgetary planning period, 2014-20. Big regional development programmes, including in the UK, and the highly prized grants awarded by the European Research Council, which UK academics have been disproportionately successful in securing, could still be active well into the 2020s. The UK could, therefore face a continuing bill long after its probable exit from the Union and if the UK seeks to remain part of some EU programmes, such as the research one, it would be expected to continue to contribute to the budget, despite popular objections. For Norway, Switzerland, Iceland and even tiny Liechtenstein, privileged access to the EU market comes with a price tag, as they contribute to the EU budget. In Norway’s case, the amount is substantial at €870 million per annum from 2014-2020, only €100 million less than Hungary, an EU country with double the population. The upshot is that the promised windfall for the NHS will be a long time coming and is unlikely to materialise before 2020 when the next British general election is due.

The process of disengagement from the EU will, in addition, pose challenges domestically about what happens to current recipients of EU funding. Farmers, researchers and local authorities receiving grants under EU Cohesion Policy have been told informally that they will still be funded up to 2020, but there will be ructions if the support then ends abruptly. Because Brexit will lead to new winners and losers from whatever new trade arrangements are put in place, there may well be new demands for economic development support. This will oblige the government to come up with some sort of national framework for regional and/or industrial policy, two domains largely shaped at present by EU policies. In this, as in many other policy areas, there has been no real public debate about the best approach. The default option would be largely to emulate the EU way of supporting farming or lagging regions, such as Cornwall and the Isles of Scilly or West Wales and the Valleys. The government could, however, propose radically different directions, including abandoning explicit regional eligibility criteria. This will be welcome by likely winners from the change, but condemned by those who lose: guess who will shout loudest?

Aficionados of the satirical comedy about British politics, The Thick of It, will be familiar with the foul-mouthed tirades of one of the leading characters, including his memorable description of a hapless minister as an ‘omni-shambles’ [expletives, to spare the blushes of the more sensitive readers of E!Sharp, deleted]. The phrase was then deployed to describe the 2012 ‘omni-shambles budget’ introduced by George Osborne, since deposed as UK Chancellor of the Exchequer by Theresa May. Among the great controversies he provoked was whether it was reasonable to subject the humble Cornish pasty to value-added tax and outrage at measures which would have led to tax levies on repairing cathedrals.

More and more, it looks as though we are heading towards a Brexishambles comprising opacity of strategic aims, continuing uncertainty about what will happen when, and the prospect of disappointing the expectations of voters and businesses. If so, it is an outcome that will have far more profound effects on the British economy and the national sense of identity than the price of pasties or the condition of churches.

 

Visit also: The UK in a Changing Europe

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Iain Begg

Iain Begg

October 2016

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