Friday, 14 October 2016

Mrs May's first introduction to Brexit reality

According to the Financial Times, Nissan has been given assurances that the trading conditions for their car plant will not change. Presumably this applies to all other vehicle assembly lines as well. From this we can deduce that Mrs May is seeking an exit from the single market but opting back in sector by sector. This then starts off a round of "but what about me?" among all the other sectors.

Today we get this from the Guardian detailing how the UK is heavily dependent on hosting the European Medicines Agency. As each of these pressing concerns crawl out of the woodwork we will see an increasing list of UK red lines and items for preservation. They will number in the hundreds.

If Mrs May thinks she can cook up a bespoke and simple agreement with special considerations for favoured sectors she is very seriously mistaken. Aside from the fact it means we are now looking at a very long and detailed negotiation, there are now plenty of opportunities for EU member states to leverage concessions from us.

Luckily for us though, this is the à la carte approach that the EU has hinted time and again that it is not in a mind to cooperate with. We had better hope the EU is sincere - otherwise it means Mrs May will be facing a Sophie's choice as to which industry she wants to throw to the wolves. She will have some explaining to do.

If Mrs May is serious about this approach then she is creating multiple opportunities for EU member states to cannibalise the UK economy. That May is intent on following this path is largely down to the domestic political realities and the fact she is taking very poor advice. 

The only way you could think a selective opt in approach could work is if you had a seriously inadequate understanding of the depth and complexity of integration. Whichever she decides, there are hundreds of other areas of concern which will need their own monitoring and surveillance mechanisms, all of which the EU will demand that we pay for - not unreasonably. 

All of this though starts to look very much like a mess of bilateral agreements - half in, half out of the single market - which has never been accomplished in less than eight years. This is exactly where we did not want to be. So it would seem that the government is going to have to learn the hard way that it cannot pick and choose, and that life is more complex than assumed. Mrs May will need to float her fantasy deal for the EU to take a red pen to. She will find she loses more than she expected to. 

If the EU is minded to be churlish then it could very well leave the UK economy a smouldering wreck. This though I believe is in nobody's interests and it is for reasons of self-preservation that the EU will seek maximum business continuity. It may well be the EUs own bureaucratic obstinacy that saves the UK from a disastrous Brexit. A new framework for a bespoke arrangement is the last thing the EU needs when the EEA is entirely sufficient. 

In the end I think Mrs May will have to cave in to the inescapable reality that if she wants a deep and comprehensive continuity agreement then the EEA is her only choice. Even the EEA does not complete the Article 50 agreement and there is enough work to be getting on with just making the transition work. She cannot afford to get bogged down in negotiations that will only see EU member states dividing the spoils between them. It will take a total pig headed refusal to look facts in the face to continue on the present trajectory. 

This though is me at my most optimistic. I am betting that economic realities will trump all other concerns and that Mrs May will eventually see sense. It will cost her politically to do a u-turn but not nearly as much as torching the UK economy. That is still a gamble though. 

MPs and vested interests have the establishment tightly ring-fenced to prevent ideas entering the fray - and the one idea they do not want to confront is that their free-trade, light touch regulation fantasy Brexit exists only in their imagination. If this mentality prevails then the UK will walk away with a particularly miserable Brexit deal leaving the economy in tatters. That will be a consequence of a tightly sealed political bubble which freezes out dissenting voices where only the favoured and the privileged have access to government. 

What we can expect in this eventuality is the mother of all rows and a massive political upheaval. British politics may never be the same again. If that happens then the self-immolation Brexit we end up with will be entirely deserved. A consequence of our ingrained political incompetence and corruption. Perhaps then we might see the opportunity to do something about it. Maybe this is what it takes to fix what's wrong in politics?  

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