Sunday, 15 January 2017

Clean Brexit will be anything but

It would be foolish in the extreme to offer up speculation on what Mrs May will say tomorrow on the basis of a largely bogus report from the Telegraph. Mrs May has been quite diligent in policing her own language and has repeatedly spoken in terms of trading "within the single market". These words are not chosen by accident.

If I had to put money on what May will say it will be that she is prepared to leave the single market if we cannot control our own borders. The media will take this as a given since they have collectively convinced themselves that ending freedom of movement can only happen if we do leave the single market. I would be surprised if May takes the single market off the table though.

In any case, should we not opt for the EEA then what we are looking at is something close with its own system of arbitration and synchronisation. Equivalence created by the great repeal act is largely worthless unless there is a mechanism to ensure synchronisation. Like it or not, if we want to keep trading on the same basis with as few customs interventions as possible then a high degree of regulatory convergence is required.

This is why whatever happens it won't be "hard Brexit". There are only really degrees of single market participation and whatever happens there will be no free hand. Electing not to use the EEA just means we have to decide how much we are willing to give up for the kind of immigration control we want. I fully expect the EU will drive hard bargain and in the longer term I doubt Brexit will have any significant impact on EU immigration.

As to the nature of any transitional arrangements, there are going to be several areas of policy that will necessarily have to remain as they are simply because no thought has been put into what to replace it with and even if it had we wouldn't have the administrative capacity. IT systems have to change, inspection regimes must be updated and the inspectorate must be retrained. Nothing will happen quickly.

The real question is whether the EU realises that reduced market participation also has costs for them. If they have thought this far ahead they may realise that it is well with their interests to give a little of freedom of movement. Since other EU member states want to revise it we could secure a commitment to revisit the whole policy for Europe. In the end I think whatever we give up to get control back I think we will spend the next ten years horse-trading with the EU to get back, hoping that the public won't be paying much attention by then.

We must also be acutely aware that whatever Mrs May's opening gambit is, it will not be the final outcome. Nobody can really say what's going to happen. I took the view during the referendum that leaving the single market entirely was self-evidently stupid and that the penny would eventually drop but the capacity of the Tory party to maintain its own monumental ignorance has confounded even me.

If we do opt for an entirely bespoke Brexit then we are looking at a very messy and time consuming business fraught with risks and we will see panics along the way which definitely will hurt the economy. All of this was avoidable and I won't take any pleasure in saying I told you so. We will have massively increased the risk of accidental Brexit, the consequences of which are far more perilous than many understand.

Whatever decisions are taken this week they are likely to have profound and lasting consequences. Brexiteers stewed with rage over the last three decades and there is no reason not to expect similar from the remainers. It is likely that the vexed issue of our European relations will continue to simmer away for a long time yet. What we can be certain of is that "clean Brexit" will be anything but.

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