Breaking through the Brexit group think

So it has been a constant joy to watch the talented and iconoclastic Booker falling out with more orthodox allies over Brexit. Eighty this year and (way back in 1961) a founding editor of Private Eye, he has been an articulate critic of the failings of the European Union for longer than it’s been the European Union. But even before the narrow referendum majority to leave on June 23, he was showing signs of alarm about the insouciance of his fellow-campaigners towards the consequences leaving the single market, let alone the customs union. The word ‘insouciant’ should make you think: ‘John Redwood.’ We’ll come back to him too.

Unlike Redwood or Lord Nigel (‘there is no cliff’) Lawson, fellow-journalist Booker can see several looming cliffs. ‘Vacuous wishful thinking’ about relying on World Trade Organisation (WTO) rules if negotiations break down with the EU 27, or even ‘just walking away’ if the talks go badly, is potentially disastrous for Britain, he told Telegraph loyalists. If I remember correctly (the paper has a paywall) Booker thinks the way to avoid disaster – not a car-over-cliff crash, or even train crash, but ‘a whole fleet of jumbos crashing down on the economy’ – is for the UK to stay within the European Economic Area (EEA) like Iceland, Liechtenstein and Norway.

That, of course, is precisely the option rejected by Theresa May (despite having previously backed remaining in the single market) and imposed upon her cabinet – with Labour’s timid acquiescence, but not the Lib Dems or SNP. Why? Because the former home secretary has chosen to interpret the referendum’s micro (52% to 48%) majority as instructing her to prioritise immigration control – at least in theory – over market access. 10,000 Leave voters polled by Lord Ashcroft last week confirm she’s right on the numbers: 42% of Leavers wanted immigration curbed over the 34% of Brexiters who prioritised single market access. Since 17% of respondents said both are equally important, and 85% want to ensure no further payments into EU budgets, it’s a challenging negotiating brief. Norway, as you remember, is small but oil rich. It pays a lot into EU funds, accepts most of its rules and free movement of migrants.

By chance I listened to Peter, Lord Mandelson on this vexed subject at an earnest think tank the other day. I think I can summarize his thoughts as being that May’s red lines have severely restricted her negotiating space, that sooner or later she will face ‘an existential choice’ between a trade deal vital to the UK economy and the right wing of her party, between ‘economic reality and political intransigence.’ It is the duty of cabinet Brexiteers – you too, Boris, though you may hope to enter No 10 through her failure – to support May if she makes the right choice. So must Remain supporters, even though – like Mandelson – they would prefer to stay in the single market.

So the Mandelson Message is: ‘I think you need to be brave, Theresa,’ unless you want to be tormented over Europe like your three predecessors. A breakdown and walk out would indeed lead to those queues of lorries at Dover and much else, including a run on sterling and rising interest rates. ‘Threatening to shoot yourself in both feet is not a credible negotiating position, it is a sign of insanity.’

The brighter news from Castle Mandelson is that the EU’s response to the Article 50 moment was ‘constructive and business-like’ with no surprises apart from Gibraltar. It’s doable if the ‘wild men’ don’t succeed in wrecking it.

You may disagree with Mandelson’s articulate conclusions. You may hiss at mentions of his very name and wish to see him feeding the post Brexit fishes, all of them proud to be British fish again (albeit with free movement). If you are the Sun or fellow knuckle-draggers at the tax-shy end of oligarch Fleet St, you may persuade anti-elitists like ‘Jake’ Rees-Mogg MP to condemn him as a ‘traitor’ for sharing a similar warning with Germany’s Die Zeit newspaper. You can even point to the £35,000 a year EU pension he will one day receive, that is unless May negotiates a personal discount just for him.

But, you can’t deny he’s better qualified than most to offer a robust analysis. As a former department of trade and industry (DTI) official murmured during his speech at the managerially-minded Institute for Government (IfG) Mandelson is a pretty class act. He’s been both a DTI secretary (‘running rings around Leon Brittan’ another DTI witness once told me), albeit only for six months in 1998. For four years (2004-08) he went on to do Brittan’s old job as EU’s trade commissioner. Brussels officials who had low expectations of their latest British exile’s taste for detail soon changed their minds.

Mandelson’s time in Brussels ended when Gordon Brown recalled him from exile to run what was by now the business department and help rescue his flagging government. Since Brown’s crew had engineered his 1998 removal in the first place it was only fitting that they restore it – though it was a measure of desperation rather than remorse.

Listening to Mandelson reminded me of a similar event last winter, staged by Politeia, the free market think tank run by Dr Sheila Lawlor. An American academic turned activist, Sheila tolerates me turning up to browbeat her more free market guests, the kind of people who say ‘there is no such as a free lunch’, but manage to enjoy plenty of them. I do myself, sometimes at the expense of Politeia’s sponsors.

On this occasion the main speaker was John Redwood, also a clever chap. Scholarship boy, Fellow of All Souls, Rothschild banker, a bit of a ‘Vulcan’ in Matthew Parris’s famous comment. His political career peaked as the Welsh secretary who dared resign and challenge John Major for the Tory leadership in 1995 when Michael (‘Who dares wins’) Portillo ventured only to install a few phone lines just in case. No subsequent leader has felt need of the Vulcan’s talent, though he writes a crisp blog and a column in the FT’s weekly Money section.

My notes from the Politeia session recall that his analysis first looked backwards: to the pressure from embattled big business and the CBI in the 80s to join the exchange rate mechanism (ERM) as Major briefly did; later to join the euro – which has proved bad for everyone except the German core, he said (he has a point). Redwood spoke of ‘lax monetary policy on both sides of the Atlantic’ in 2005-08, by which he meant Ayn Rand’s disciple, Alan Greenspan’s at the US Fed and the Brown-reformed Bank of England’s monetary policy committee (MPC) under Mervyn ‘Brexit’ King. It led to the bank crash of 2008 and what Redwood inevitably regards as an over-reaction in the shape of ‘huge regulatory burdens’ on banks and asset price inflation caused by quantitative easing (QE) deployed to get the frozen system moving again.

I get the sense from this that the Redwoodian world view still blames poor state regulation for the bankers’ smash, not investment/casino banking’s own greed and incompetence, the evidence for which is pretty solid, even without assorted frauds lax bank culture was committing (Libor rigging, PPI etc) on the side. It’s the ‘why didn’t the police prevent that burglary?’ school of criminology. Even when caught red-handed with the swag hardly any of them went to jail.

But there is good news for the free (or do I mean ‘still at large’?) marketeers. Since June 23 Britain is now free. ‘We now have our own monetary policy, more or less,’ Redwood affirmed. No ‘Maastricht criteria’ to cramp our fiscal policy, if you can remember it.

What a fuss the Redwoodians made at the time (1993) – which is why, I think, Maastricht is what provoked a young City metal trader called Farage to give up the day job and get into politics. Strange, I can’t recall it preventing British governments from taking their own decisions and making their own mistakes. Maastricht borrowing limits were certainly ignored by France and Germany. ‘I support the government now saying that low interest rates let us borrow to invest in infrastructure,’ Redwood now says. (Since when did the EU, as distinct from market confidence, prevent borrowing? Didn’t Gordon Brown do rather a lot? Oh, never mind).

What of the post-Brexit future? Redwood laid stress on import substitution, diverting UK aid money and EU contributions to be spent on British goods under British aid rules. The trade deficit – in goods, not services – is mainly down to the EU. Why can’t we produce more of our own bricks and tiles for building projects? Why do we have a deficit in fish? He answered that question himself. It’s because we sold our quotas to big foreign trawlers, though he did not explain why that was anyone’s fault but our own. Economic forecasts have been so bad because the EU has been seen as a force for progress, not for regulation, higher taxes and lower growth since the 70s. Single Market? Not free trade at all, but protectionist, beneficial to ‘large oligarchs’ alone, said Redwood.

I could go on, but you get the flavour. Whereas Lord Mandelson regards making trade deals with the US with trepidation – ‘when they say we want regulatory reciprocity they mean ‘you change, we stay as we are’, that’s the American way’ – Redwood is more optimistic. ‘Tell the EU where to get off,’ I record him saying. They need access to our market for their exports – and customs ‘passporting’ too – more than we do; ‘privileged access’ to our market, as he put it. With goodwill it can all be sorted out quite quickly. ‘We cannot stay in the single market.’

Another veteran Eurosceptic, a City Tory in the audience, chuckled when I asked him if it didn’t sound too easy. ‘John’s over optimistic,’ he explained. This is where Christopher Booker’s latest Sunday Telegraph column kicks in. Three years ago, Booker recalls, he cited the work of a Yale psychologist called Irving Janis to complain that too many people succumb to group thinking – whether it’s on climate change (Booker’s pet hobby horse) or EU membership. They resort to abuse like ‘climate change deniers’ and ‘anti science’ – or, in the case of the EU, to charges of racism and xenophobia.

We can all see what he’s driving at. Lots of people resort to abuse and, as I never tire of saying, few if any ardent advocates of British membership of the eurozone – yes, I mean you, Peter Mandelson, Ken Clarke and Lord Hezza – have ever admitted they may have got it wrong. Some even resort to: ‘It would have been different if we’d joined.’ Oh no, it wouldn’t. But that’s precisely the kind of alibi the angry Brexiteers are gearing up to make if Brexit goes wrong, as I fervently hope it won’t, but fear it may. ‘It would have been different if Theresa had taken our advice or Boris wasn’t such a prat,’ you can hear Californian separatist Farage saying on occasional trips back to Blighty. ‘If only Theresa had paid more attention to my advice on monetary policy,’ Redwood will patiently tell the Sun, as disillusioned Brexit voters hunt for scapegoats.

That’s what Booker fears too. Diehard Remain group thinkers ‘are drowned out by the exultant group think of ultra Brexiteers, who are blithely unconcerned by all the boring and complicated details of what would have been required for us to extricate ourselves from the EU in a sensible fashion, to fall back on vacuous wishful thinking’. Vitriolic about anyone concerned about ‘the stark reality roaring down upon us’, they ignore complex technical implications of acquiring ‘third country’ status when trying to sell 40%+ of our exports across the Channel. ‘The wavers of magic wands have taken over the asylum.’

Such hyperbole makes Mandelson’s mild strictures to Die Zeit look highly patriotic and Booker sound like Mandelson, not something either would want. In fairness I checked the Redwood blog and MEP and Brexit guru, Dan Hannan’s utterances too, to see if they have now spotted the Lawson cliff. ‘Pull yourselves together, you wusses. It’s a minor readjustment of our tariff arrangements we’re talking about, not … an asteroid strike,’ he told Spectator readers. Redwood’s very readable blog (it’s called Speak for England) remains loyal to May’s declared position – excellent – but still writes as if the onus is on the EU 27 to accept her ‘very positive and generous set of offers’ or Britain will say ‘no deal is better than a bad deal’ and happily trade with the rest of the world, getting cheaper food in the process too.

Ex-trade commissioner and UK trade secretary Mandelson sees it differently. ‘I wouldn’t wish negotiating with the European Commission on my worst enemy. They’re masters at it. It is what they do every day.’ He still thinks it’s doable. To ensure a constructive atmosphere (clarity, trust and flexibility are the keys to successful trade talks, he says) a deal must be struck first on the Brexit bill. ‘Bite the bullet.’ It will be a large sum (how large, he would not say) but small change when spread over years.

There will have to be transitional arrangements after March 2019 since a trade agreement will take more than two years (three?) to achieve. There will have to be compromises, on the European Court of Justice (its ruling accepted indirectly via the European Free Trade Association court?), on freedom of movement (immigration) whose rules are going to change anyway, on state aid and regulatory standards of many kinds. Trade deals with other countries, Liam Fox please note, will have to wait until it’s sorted. Failure would hurt the EU 27, but hurt the UK much more.

And that’s the point Booker’s ultra Brexit group thinkers fail to grasp. In Regent Street the other day I bumped into a retired Fleet Street doorman I used to know. Ex-Labour, as cheerful and in rude Cockney health as David Davis, he voted for Brexit and is still full of admirable optimism. ‘They need us more than we need them, Mike,’ he explained. Let’s hope he’s right, but what if he isn’t. At least he’s not running government policy.

Michael White is a former political editor of the Guardian