Tuesday, 7 January 2020

We're still left guessing on Brexit

The Tories didn't get to walk away from Article 50 negotiations. Instead they're taking the hit of the withdrawal agreement if only to defuse the situation and remove the immediate peril that generates so much troubling press for them. So now instead of no deal they're going for the next best thing in their book; a rudimentary agreement on tariffs and seemingly not much else. After which they will do everything possible to sabotage the functioning of the Northern Ireland agreement. They have no intention of honouring what they signed up to. That's my gut feeling. We are chucking all the normal rules of play into the bin. It's pure adversarial politics from here on in. 

How much of the hardline bravado is just a negotiating ploy I can't say, but there is a game in play. What's driving this, I reckon, is concerns from the City and its hostility to accepting EU rules and the Tories are prepared to sacrifice a lot to ensure regulatory independence in the financial sector. This is why the EEA was never on the table for consideration. This is the one the EU has reason to fear the UK in that we could create our own regulatory gravity.

The Tories aren't saying it, and they're concealing their true motivations but it smells very much to me like Singapore on Thames is still at the centre of their thinking. A massive gamble. One that could even work too. We're not in the top ten economies because of a Nissan plant in Sunderland and an Airbus factory in the Welsh borders. These regenerative baubles were always designed to make our supply chains dependent on EU integration and to persuade the public that EU membership was indispensable. To an extent, it worked. 

The Tory mind, though, believes that the EU fear a newly competitive UK on its doorstep which is why it's keen to keep the UK inside the EU regulatory orbit, particularly in respect of level playing field provisions. The Tories, not unreasonably, think this is leverage. The extent to which it is depends on how far the EU can flex its own system of rules without compromising other external relationships or even placing internal stresses on itself. One suspects the EU will not deviate from its hard and fast rules on equivalence.

Here's worth reminding ourselves that much of the EU's much vaunted clout is largely contingent on Britain's EU membership. Without the UK, the EU just a Franco-German alliance with Germany carrying most of the financial responsibility for a league of heavily indebted dysfunctional parasite states. Though the impact of Brexit is sure to have a greater impact on the UK, it does leave the EU substantially weakened in terms of its financial clout, meaning smaller EU states who've only ever been in it for the generous development cash can start sabre rattling for more opt outs. There is a lot at stake for the EU.

Meanwhile, we know there is no intellectual force behind the Johnson administration. Johnson is only interested in playing the part. Johnson is just the figure head to spout populist initiatives and slogans. The real agenda is set by forces behind the scenes largely bent on becoming a low tax, light touch regulation state which, theoretically, could see the UK remain an attractive destination for investment. Again that's another huge gamble based on a number of flawed suppositions.

Here we're putting a few critical narratives to the test. The presence of non-tariff barriers is not necessarily terminal to trade and like the black market, legitimate business is just as capable of finding innovative ways around problems. China doesn't seem to have any problem getting its substandard tat into the EU. EU controls as much as anything are a belief system. Its power is derived from the faith put in it by our policy class.

It rather looks like we are going for a massively disruptive Brexit aimed at frustrating and antagonising the EU rather than cooperating with it. Ironically it may precipitate reforms in the EU we could never accomplish as members. Brexit can't be business as usual for the EU and they know it.

As an approach, though, we can at the very least call it reckless. We could also call it needlessly adversarial if not outright hostile. We are gambling a great deal, centring all of our attention on the City when if there are any lessons to be learned from Brexit it is that the regions are in need of economic revival rather than regeneration cash. How then is this Brexit compatible? What is the endgame?

In all this the EU is going to have to think carefully. While it has its own red lines and defensive interests, playing hardball could lead to a more antagonistic and reckless UK which is not without its perils for the EU. A deep and lasting recession for the UK is not limited to the UK and even outside of the EU the UK is a major regional and neighbourhood interest. The danger for us all is that the EU apparatus is just as capable of shortsighted arrogance, clumsily wielding power because it can just to settle a score, but those games can backfire in the long run if they're damaging the interests of member states by souring relations with Britain.

For all that we've gamed Brexit and speculated over outcomes, we have all been working from certain assumptions based on a system of rules inside a particular paradigm, but nobody, least of all me, anticipated the last three years going the way they did and there is nothing to suggest the next three years will be any less turbulent. All we can say is that we're heading for a series of crises all of our own making and sooner or later the Tories will need to come clean on what the plan really is. They can't hide in the shadows forever. 

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