Jane Merrick: Our future… hanging on the line

This week marks six months until UK withdrawal on March 29, 2019. And it is what happens over the next two months that will have the most bearing on the fate of the UK and, in turn, May’s future. EU leaders at a summit in November will likely approve the deal struck between the UK government and Brussels. The agreement could be a version of the PM’s Chequers plan, with some tweaks on the issue of the Irish border and customs union. It could be, as unnamed EU diplomats suggested to the Guardian this week, a deal in which May has caved in to Brussels after going through the UK’s ‘darkest hour’ by countenancing a no-deal. Or it could, in the worst possible scenario for Britain, result in no-deal.

In her Panorama interview, May tried to draw equivalence between her proposed Chequers deal and a no-deal Brexit, as if both were viable options for the destiny of the UK. ‘It’s our job as a government to make sure that we make a success of no-deal just as we make a success of getting a good deal,’ she said, acknowledging only the risk of ‘some short-term disruption’.

Her comment was part of an ultimatum strategy to face down Boris Johnson, Jacob Rees-Mogg and other leading Conservative Brexiteers who are campaigning to ‘chuck Chequers’, by warning that the only options on the table are her plan or no-deal at all.

Yet it is staggeringly bizarre to think a ‘success’ could be made of a no-deal scenario, in which the UK would crash out of Europe on World Trade Organisation terms, and face, according to the International Monetary Fund’s blistering assessment this week, ‘substantial costs’ to its economy, as well as the prospect of tens of thousands of job losses in key industries.

Shortly before the interview was broadcast, Jaguar Land Rover, the UK’s biggest car manufacturer, announced it was putting 2,000 of its staff at its West Midlands plant on a three-day week up until Christmas, because of the anticipated reduced demand ahead of Brexit. On Tuesday, BMW followed suit by announcing that it would shut its main UK factory for a month after Brexit because of the increasing risk of a no-deal.

Inevitably, the response from some arch-Brexiteers was that the car giants were scaremongering about a no-deal. Yet why would major international firms make such commercially significant decisions to scale back production, in moves redolent of the 1970s, if it were merely part of some ruse to put pressure on politicians to water down Brexit? Why would they take such a risk if they were not serious about the prospect of no-deal in just six months’ time, if Britain reaches that cliff edge moment on March 30 and the shutters come down between the UK and Europe?

The chancellor, too, found he was criticised, once again, for forecasting a gloomy outlook if a deal were not secured with Brussels this autumn. Philip Hammond was merely echoing the warnings by the IMF of the damage that could be done to the economy under a no deal. He said even the most stringent of contingency plans would not be enough to avert serious costs to the UK, and that a no deal would ‘put at risk the significant progress made over the past 10 years in repairing the economy’. Downing Street distanced the prime minister from Hammond’s comments, preferring to stick to the strategy of Chequers versus no-deal. Yet the reality is that it would be grossly irresponsible for any chancellor to dismiss warnings from the IMF.

Of course, economists and businesses have been warning about the damaging effects of a hard Brexit for more than two years, since before the referendum vote. But the six-month milestone is sharpening focus in the City, Whitehall and parliament. Bank of England governor Mark Carney’s warning last week that house prices could fall by 35% under the worst case scenario should have been a jolt to everyone in Westminster. But to Eurosceptics, it provided just another excuse to cry ‘project fear’.

Rees-Mogg described Carney as a ‘wailing banshee’. The Conservative MP for North East Somerset similarly dismissed the prime minister’s ultimatum of Chequers versus no-deal as her ‘Dirty Harry moment’ as though May were challenging him and other Eurosceptics to ‘come on punk, make my day’. Boris Johnson, writing in his Daily Telegraph column this week, described the Chequers plan as a ‘spectacular political car crash’. The increasingly colourful language from Brexiteers gives their game away: with a soft Brexit deal within reach, they are becoming increasingly desperate and histrionic in their attempts to thwart it.

Over the summer, Rees-Mogg, Johnson and others used the lukewarm response from Brussels towards Chequers to their advantage, claiming that this proved that the blueprint, involving keeping the UK tied to the EU on goods, was a non-starter. But in early September Michel Barnier, the EU’s chief negotiator, gave a more optimistic than expected assessment of whether a deal could be reached this autumn. He predicted the two sides could find enough common ground for a Brexit deal by early November, suggesting that Chequers, with some tweaks, was a workable proposal.

His comments came at the very moment the more rebellious eurosceptics met to discuss launching a vote of no confidence against May if she didn’t change her plan to a harder Brexit blueprint. Apart from the fact that they don’t yet have the 48 MPs needed for a vote – the current number is believed to be in the mid-30s – there were signs of breaking in the ranks of staunch Brexiteers, with some saying the prime minister should be given the chance to deliver Brexit.

This Brexiteer wobble belied something else: that many of them do in fact fear a no-deal scenario, despite protestations to the contrary. Rees-Mogg, the chairman of the Brexiteer European Research Group of Tory MPs, has claimed that a no-deal Brexit would actually boost the UK economy by £1.1 trillion over 15 years because UK trade with WTO countries is already outpacing those who trade with the EU. Yet some of the more pragmatic Brexiteer MPs are hopeful of a deal which is similar to the one Canada shares with the EU, involving free trade between the two but without the obligations of paying to access the European single market.

There are also fears among eurosceptic MPs that their long-held dream of leaving the EU could be marred by the potentially disruptive consequences of a no-deal. Simply, they want Brexit to work. If a no-deal Brexit is a disaster, they will have to take the blame.

The whole Brexit negotiation process revolves around the seemingly intractable problem of a border for Northern Ireland, as it has done all along. Yet there are now signs that, even on this issue, progress is being made. Brussels diplomats are warming to the idea of frictionless Irish border, enforced by technology to minimise customs checks rather than physical infrastructure, and avoid the need for their previous controversial proposal of a backstop, which would keep Northern Ireland in the EU single market and separate the province from the rest of the UK.

Yet at every turn, progress towards a deal is being stymied by Brexiteers. At the weekend, environment secretary Michael Gove fuelled talk of a ‘blind Brexit’ when he suggested that even if a version of Chequers were agreed this autumn it could be changed by May’s successor – presumably to a harder Brexit deal – further down the line. This suggestion has been rebuffed in Brussels, where diplomats have made it clear that whatever is agreed at the November summit cannot be changed at a later date. EU leaders meeting in Salzburg this week, for the next stage of negotiations, are likely to reject both a no-deal Brexit and a blind Brexit.

As all sides prepare to mark the six-month milestone, there is an air of desperation in Westminster. By delivering an ultimatum on Chequers, the Prime Minister is ignoring suggestions for constructive alternatives, including from the Brexit select committee this week, who argued for a fall-back proposal if Chequers fails. But while her game of chicken with her MPs may make tactical sense in the run-up to the final talks with Brussels negotiators, is it the right strategy for what happens in Westminster after that deal is struck? There is a soft majority for Remain-supporting MPs from all sides of the Commons. Sir Vince Cable, speaking at the Liberal Democrat conference this week, also called for alternatives to Chequers to avoid a no-deal scenario – as well as condemning the ‘erotic spasm’ from eurosceptics that had brought about Brexit.

Labour has already said it will oppose the government’s plan on Brexit, whatever form it takes, and next week Jeremy Corbyn’s party conference will vote on a motion to make it official policy to call for a second referendum, echoing a call made by London mayor Sadiq Khan last weekend. The prime minister was able to get Article 50, the device that triggered the two-year Brexit process, through the Commons easily with Labour support, and since then Corbyn’s party policy on UK withdrawal has been ill-defined and equivocal, meaning the main focus of battle has been between May and her MPs.

If Labour discover they have a more coherent policy on Brexit in Liverpool, it could be a game-changer in terms of the PM’s ability to get her deal through parliament.

A Commons vote on the final deal is due to take place after the November EU summit, likely before the end of that month. The Brexit final deal could be rejected in parliament by the end of November, with just four months left until the departure date. A bad deal – or even a no-deal – will only fuel calls for a People’s Vote on Brexit, which must take place before March 29.

Even if the PM gets her own way in Brussels and in Westminster and she delivers Brexit unimpeded next March, there are signs that her days are already numbered. Prominent Brexiteers like Rees-Mogg and David Davis have been careful to target the policy of the PM’s plan, rather than the person responsible for delivering it – they want to ‘chuck Chequers’, not May personally. But how long will that last? Even May’s old allies, including those on the Remain-supporting left of the party, are starting to talk about her successor. George Freeman, the Tory MP for Mid Norfolk and May’s former Downing Street policy chief, and Tom Tugendhat, the Conservative MP for Tonbridge and Malling and chairman of the foreign affairs select committee, last week openly discussed May passing the leadership baton to the next generation after March 29.

While the threat of a leadership challenge to May is not imminent, she knows there is a high chance she won’t be prime minister by the time of the Conservative party conference next year. Her departure could come even sooner than that. This helps explain why she has issued her warning that the only two choices for the UK are Chequers or no-deal. If she succeeds, she could fend off a springtime leadership challenge.

Yet with opposition from Labour on Brexit effectively non-existent, May has also allowed the debate to be shaped by her toughest opponents – the Brexiteer Conservatives. If Labour can harden its policy on Brexit it will set the stage for a more difficult autumn than the PM expects – and increase the chances of a People’s Vote. She may say the Brexit debate is only about the future of the UK and not her own, but it is impossible not to link the two.