Friday, 16 March 2018

Dismal inevitability.

Bored as most of you are with Brexit, I get the distinct impression that the government has also run out of steam and is marking time until the inevitable deadline where it simply signs what is on the table.

We will drift toward the last possible minute, filling up the timetable with distractions in between, doing anything to keep Brexit off the agenda. That therefore leaves only a short window for protest, after which May will flex her minimal authority and sign the deal.

She will then instruct her party apparatus to sell the Northern Ireland arrangement as a "common regulatory area" which in effect will be single market and customs alignment. Since it's that or WTO oblivion, she'll have to put it to the commons an depend on opposition MPs.

That then provides the backstop which can only really be overridden by a new trade agreement, whereupon the framework set out in the negotiating guidelines suggesting a base level FTA will leave the NI arrangement virtually the same.

In other words, the script is already written but she has just enough wiggle room to kick the NI issue into the long grass until after we leave. She will then rely on the flim flam of Brexiters to muddy the water on the matter of customs at Calais.

The writing, however, is on the wall - that if we have a base level FTA with only minimal customs cooperation then we are looking at the carnival of delights with rules of origin and vehicle tariffs - along with BIPs for food exports.

That reality has not dawned on this government which still believes an alternative is possible and that the EU will fold at the last minute. It won't. The EU has designed its framework in accordance with May's red lines and if she won't back down, neither will they.

There is the outside chance that Verhofstadt's association agreement bandwagon will gain traction and there may be a political opportunity for both sides to change tack, but my bet is that Brexiters will choose that ditch to die in.

The impression I get is that the EU parliament's fondness for an association agreement is not shared by the Commission or the Council who will simply be seeking to reward May with the full consequences of her decisions.

Again there won't be much actual negotiation on this. The frameworks for nuclear and aviation cooperation are pretty much settled and we will get no more or less than any other third country. For border inspections we might just be able to leverage a Switzerland solution.

Inevitably that does mean a wet border between us and Northern Ireland but that is the consequence of leaving the single market. That also means the loss of self-authorisation for circulation of goods in the market without inspection which means masses of red tape for UK exporters.

What that means in practice is long tailbacks at the ports whereby it becomes impractical to send driver accompanied loads and we will depend a lot more on container freight and costs of exporting will skyrocket.

I now think we have missed the window for an EEA solution simply because the government hasn't the intelligence to understand why we need it nor the skill to pull it off. It would need entirely fresh thinking.

What we can then expect is a wave of business relocations and considerable job losses. It's difficult to quantify because we don't know how resilient exporters will be to the added costs and red tape. Some will adapt but can expect far fewer continental sales.

Impact assessments tend to be pessimistic and underestimate the resilience of UK businesses but to be clear, this is absolutely not good news for the economy. Exporter of goods and services will take a substantial pruning. I don't see any silver lining.

Many expect fishing will give us some leverage, but its more politically significant than financial so it won;t buy us much - but that does mean we can expect a reciprocal access agreement. The fishing lobby is going to be very disappointed.

From my cursory glance at the negotiating guidelines we can expect that there will be some concessions on ECJ on food safety measures and very possibly aviation, and EU will dictate the ROO framework unless we can buy a workable alternative.

This arrangement will satisfy those who insisted on a "clean Brexit" except for the zealots who demand nothing short of WTO ruin. The rest of us will then have to put up with their mess. It will then be for them to explain why our exports tot he EU are decimated.

Throughout they have insisted, in contradiction to all professional evidence, that this mode of Brexit would retain free movement of goods. The game then will be one of blame deflection - with the narrative of EU "punishment beatings".

Whether they get away with it or not is really down to the gullibility of the public. At that point it won't especially matter. We'll be stuck with it but May will have at least stayed true to her word that Brexit means Brexit.

Shortly afterwards the Brexit recession begins and then we see the real political fallout of our decisions. You can then expect an implosion of the Tory party and extremely sour relations with the EU. One thing I can promise you... it won't be boring.

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