Hard Brexit ideologues threaten the UK's economic future
Nick's article in the Guardian
Do you want it hard or soft? In earlier days such a question at the Conservative party conference would probably have been scandalous. Today it is entirely innocent, the question du jour. Does Britain sever its relationship with Europe with one drop of the guillotine’s blade, the “hard Brexit” favoured by the right? Or does it attempt to negotiate a new deal with the EU to preserve privileged access to the single market?
After the prime minister’s announcements on Sunday no one can be in any doubt that Britain will leave the EU. Most remain campaigners, and a clear majority of the populace, have accepted the public’s verdict. There is no serious “continuity remain” campaign to challenge the referendum result – and nor should there be.
The question is not whether we leave the EU but on what terms. Conservatives must beware Brexit fundamentalism, or giving themselves up to a romanticised 1950s vision of Britain, a country of imperialist chauvinism. We should be talking about financial passporting and the need to prevent a haemorrhage of banking jobs from the City, not fixating on the colour of our passports. We should be discussing how to strike the best deal with our biggest trading partner, not how to relaunch a royal yacht.
The idea of Britain as a global trading nation reborn, turning away from an ailing Europe, may superficially be seductive. But our markets on the continent did not suddenly vanish in an act of democratic will. Our businesses still export there. Inward investors with plants in the UK – major companies such as Nissan – still want to sell there, and they are worried. They might have thought of selling in Brazil, India or China already without the helpful advice of politicians that they should just try harder.
The collective naivety about the ease of doing global trade deals or what they would entail is staggering. One senior minister said there would be a trade deal with New Zealand before Christmas. Another leading Brexit campaigner predicted a deal with India “faster than you can say masala bond”. Those who talk so excitedly do not stop to consider the inevitable first demand of major agricultural exporters, which is that we drop our farm subsidies. And they clearly haven’t understood that even poor deals take years to complete.
A high quality trade deal with Australia would be a great thing – but it would account for under 2% of our trade. A deal with India would be a prize – if ever they would open their markets to us. Yes, let’s try to drive trade deals on the far side of the world. Let’s beat our chief executives with their golf clubs until they sell more in Bangalore and Beijing. But it’s folly to believe that new trade deals are a simple or swift substitute for unhindered access to the world’s largest market of 500 million people on our doorstep, a bloc with which we do half our trade.
In case we don’t notice while we’re “re-joining the world”, to use one particularly glib Brexit slogan, trade deals aren’t exactly flavour of the month with the public. On either side of the Atlantic and the Pacific, big proposed deals are foundering. Voters supported Brexit less in a rush of enthusiasm for free trade than to pull up the drawbridge. Prominent Brexiteers who now preach free trade urged sanctions against imports of Chinese steel during the campaign.
So if part of the seduction of a hard Brexit is that there’ll be comfort for us across warm oceans, we need to wake up quickly. There won’t be. That’s why we must above all drive the most advantageous deal possible with Europe. It’s not just a question of ensuring that tariff barriers remain down. The single market removes non-tariff barriers, too, while being in the customs union makes it far easier for businesses to sell into Europe.
The ideologues may see it as obvious that we abandon these arrangements as we leave the EU, but pragmatists will want to weigh the consequences and the options. During the campaign, many Brexiteers extolled the virtues of Norway or Switzerland, countries which are outside the EU but retain access to the single market. We should at least understand the costs and benefits of these kinds of options – if not the exact models – before peremptorily ruling them out.
If there is an emerging consensus, it is that Britain must now have more control of immigration. It suits hardline Brexiteers and European politicians alike to argue that this means a binary choice for the UK, either in the single market with free movement of labour, or outside with control over migration. But weren’t we told, time and again, that Britain is big enough to drive its own bespoke deal? It’s hard to see why it’s wise or attractive to say that what we want from the outset is the most brutal severance with the least advantage to us and the most potential economic damage.
The jury is out on the new government structure to deliver our departure from the EU. The so-called “three Brexiteers” have so far rather more resembled three blind mice, stumbling around the world’s capitals with inconsistent messages, united only in their assurance that it will be all right on the night.
Business, which above all prizes certainty, is not so sure. Now the politicians who were already inclined to be deaf to business concerns have been emboldened by the apparent resilience of Britain’s economy in the face of a predicted short-term shock. The risk is that important concerns about the long-term impacts of a hard Brexit will be dismissed. We may all be Brexiteers now, but leaving without being able to reassure inward investors or the financial services industry that they will be able do business as usual would be a catastrophe.
The article 50 trigger that will now be pulled within months irreversibly counts down the clock to our departure. That negotiating process, in which we are shut out of the deciding EU council, will disadvantage our country enough as it is. We should not make it even more difficult by allowing the naive ideal of a new Britannia to get the better of us.
Nick's article on the Guardian website, click here