Thursday, 5 October 2017

Brexit: contemplating the unthinkable

As each day passes there are fewer reasons to believe that Article 50 talks will be successfully concluded. It really does look like the government is planing on a walkout. Should that happen then we are in uncharted waters. If they do this then there is no telling how the politics unfolds but if there is a formal termination of talks then arguably the treaties cease to apply immediately.

Whether there is a period of grace, we do not know, but it will be short and as soon as member states are notified, the UK is subject to third country customs protocols and the UK has no formal external trade relations.

Do not make the mistake of thinking I am overreacting. The EU is a creature of law and it is also bound by WTO rules. It has no choice but to treat the UK as a third country - and when we have just walked away without settling accounts and making alternative provisions, it will do so with glee.

The UK walking out of the EU unilaterally is as close as you get to a hostile act without actually declaring war. It throws a lot of EU administration into chaos, forces them to take remedial action and hits all EU budgets pretty hard. And if it hurts them it will hurt us a magnitude more.

The moment the penny drops we will start to see panic buying so sanitary products and foodstuffs will rapidly disappear off the shelves. The resultant gridlock will take haulage assets out of circulation so replenishment may take several days. Think back to the fuel strike of 07.

I cannot say how long it will take for our third country trade agreements to be patched up so that means imports from the rest of the world could be sat in a container ship off Southampton waiting for permission to dock.

We can expect wholesale dumping of export stock on to the domestic market almost immediately so UK produce will temporarily collapse in price but then shortly after UK businesses start to fold and those supplies dry up and food prices go through the roof.

Expanding on this a little, though the risk is less severe, there are some circumstances where this could trigger a cascade failure where the interruption of one system affects all of them up to and including energy supply. If it is cold and we run short on diesel stocks the the rail network will be shut down. Large industrial energy users will also be told to go on lockdown. Effectively we initiate civil contingency measures so don't be surprised if you see army logistics everywhere.

My generation has been quite lucky in that we have seen relatively few disruptions to supply chains so my generation and younger find it harder to believe, but anyone older can tell you that things can degenerate pretty quickly. It only takes an equipment malfunction at an airport for flights to be delayed more than a day. This is that same disruption multiplier only on a massive scale.

I've kicked these thoughts around with trade and law boffins and they don't seem to disagree. There is a seriously high risk of this. The only people saying otherwise are Toryboy twerps none of whom have any track record in trade or treaty law. As much as these people do not think a train-wreck is possible, behind closed doors, they secretly don't care either way. They are fanatics. It could happen a month from now or a year from now. While we have an unstable and dysfunctional government, I put the chances of failure at about 75%.

Make no mistake, people. Because we are a member of the EU all of our trade deals are between the EU and third countries. We have no formal trade agreements with any countries. If the Tories pull the plug at the wall then the UK simply is not a recognised trading entity. There may be some fudges and workarounds and loopholes but I certainly wouldn't bet the farm on it. The EU will enforce its own rules and Britain will experience the consequences.

No comments:

Post a Comment