MICHAEL WHITE: Whatever happens next week will be dwarfed by what follows
- Credit: Archant
Michael White on the Brexit magic carpet ride with an unknown destination.
Where to start this week when we are once again spoiled for choice in the chaos that is Brexit? With Theresa May's £1.6 billion bung to struggling communities in Brexit-leaning towns? It has managed to offend everybody, including those Labour MPs whose support her second meaningful vote (MV2) needs on March 12. With attorney general Geoffrey 'Duke of Wellington' Cox's shuttle diplomacy in search of an Irish backstop fudge over which the Moggster faction blows frivolously hot and cold? I am very suspicious of the latest rash of 'Mogg to back down' headlines. No one should trust hard Brexit plotters of the European Research Group any more than they should trust Team Corbyn to cleanse anti-Semitic poison from Labour's bloodstream.
Reporting on a third island of zealous intolerance, the Guardian reveals that UKIP's collapse has been reversed, its membership rising by 50% under the Islamophobic leadership of Gerard Batten. These are bad times which may get worse. We must keep our nerve as the resourceful Gina Miller is keeping hers. But back to her later.
What gave me pause for thought as the parliamentary Brexit battle halted for a few days was the opportunity cost of all this effort, the problems across Whitehall and town hall which are neglected, the challenges postponed. Two more innocent teenagers were stabbed to death last weekend – perhaps more by the time you read this. Evidence points to turf wars spread via ever-younger drugs mules from big cities to those small struggling communities May's bung is meant to help (over seven years, mind you).
Brexit-distracted ministers and officials offer a feeble response, the opposition no better. As for key players like London mayor Sadiq Khan and home secretary Sajid 'The Saj' Javid, they put their (doomed) party leadership manoeuvres ahead of good decision-making. Blaming austerity is too simplistic, but austerity doesn't help.
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Health, housing, education, I could go on and so could you. A&E is struggling, despite a scarily mild winter. (Climate change makes other neglected challenges look trivial.) The housing benefit bill has doubled to £22 billion in 15 years of dysfunctional market failure. Schools have just revealed another sharp fall in foreign language uptake among Global Britain's young. Are we downhearted? Yes, but we find comfort where we can. A BBC survey reports a sharp fall in hostile feelings towards immigration – almost 50% now have a positive view, only 25% a negative one. It's come a bit late, but the change that has mostly occurred since the 2016 referendum when home secretary May decided it was all about immigration. Since when, EU immigration has dropped away, but it's still rising from the rest of the world. I hope Brussels-basher (and EU pensioner) Gerard Batten MEP can explain that to his new best friend Tommy Yaxley-Robinson, who may not do detail.
There again, nor does Boris Johnson, the thinking man's Gerard Batten. Yet, as Jane Merrick noted in The New European #132, the former foreign secretary (or was that interlude just a bad dream?) has quietly resurfaced ahead of Dominic 'Dover' Raab as the preferred choice of Tory inactivists to succeed May. It will happen, gossips claim, when the ERG forces her to resign in return for backing her MV2 deal, possibly MV3. Fortunately Boris needs Tory MPs to vote him into the final round, so the country may yet be spared this modern Nero. Anyone who votes for Boris knowing what we all now know deserves to get him. But the rest of us do not.
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That said, few politicians on either side of the Brexit gulf have paid enough serious attention to the economics of leaving the EU and the nuts and bolts of our future trade relationship. It is much more fun to focus on the heady politics – 'sovereignty' over fish and immigration, that silly obsession with tariffs and autonomous law-making – which fires the imagination and/or indignation of so many voters. Their myopia mirrors those business leaders who are happy to blame Whitehall and Westminster (Brussels and Berlin too) for politics' collective failings without getting their own hands very grubby – or even to make prudent preparation for the looming accident of a car crash departure on March 29.
Excited by May's three-day, three-stage offer for votes on March 12th (MV2), 13th (no-deal) and 14th (a brief Article 50 extension), the media barely bothered with the government's assessment of just-in-case 'current state of readiness' for a no-deal departure, slipped out the same evening. Whitehall doesn't come out of it too well, on track with just 60% of the most critical changes needed to keep lorries and planes moving, food and pharmaceuticals arriving at Dover (it's a port, Mr Raab). Liam Fox's trade department has only managed to roll over half a dozen of the EU's 60+ international agreements with third countries. Even the attempt is an implicit admission that much-trumpeted World Trade Organisation (WTO) arrangements are inferior to what we now have as an EU member state. Article XXIV of the GATT trade rules allows for (scary) tariff-free trade, but subject to EU agreement. Nor does it cover much-neglected non-tariff barriers, regulations and standards. Even Fox admits the trite ERG/WTO solution is no magic wand, though he is clearly tempted by it.
But government failings are more than matched by those of businesses and individual citizens, Whitehall's assessment warns. Far too many ignore official information campaigns and blithely assume that their own lives, business or holiday plans will be unaffected. They just don't think no-deal will happen, officials conclude before reminding us all – again – that even a relatively orderly no-deal Brexit might cost the economy between 6.3% and 9% of growth over 15 years. That's on top of 'short-term disruptions' at ports and border choke points for people and goods. 'Many businesses in the food supply industry are unprepared for a no-deal scenario.' Ditto legal services, the car industry, chemicals and financial services, Britain's most successful global industry, strangely neglected by Team May. Vital to us all, the avalanche of 24/7 flows of cross-border data on our phones and laptops are also still at risk.
I wish I could assure you that MPs are looking to future trading arrangements. The sheer complexity of these negotiations with Brussels will rapidly explode the 'let's get Brexit over with' school of wishful thinking. But when backbenchers finally got to debate future free trade agreements (FTAs) last month half a dozen Conservative MPs briefly turned up. That was far fewer than among Labour and SNP critics, fuelling the suspicion that the toxic illusions of 'immigration' and 'sovereignty' matter more to some people than trading realities.
The opposition had demanded a full debate on the need for greater transparency and accountability to parliament and people during inter-state negotiations, now that terms of trade have become a much bigger, more controversial part of our globalised world economy. They matter in ways that threaten environmental, health and other standards, including workers rights.
The US Congress and European parliament are increasingly flexing their muscles. Devolved Cardiff, Edinburgh and (if anyone is awake at Stormont) Belfast would like to have a say too. It dovetails with the global campaign for greater tax transparency to stem evasion and hot money flows in our foot-loose world.
The UK had been a leader of reform until its Brexit-focused attention wandered and suddenly it had to pull a bill on Monday because a cross-party alliance of MPs were using it to shine more light on shady corners of offshore Channel Islands. No.10 panicked.
In their February trade debate MPs were fobbed off with vague platitudes from Fox and bland reassurances that US health care giants which he so admires will not get their wicked way with the NHS. He also professed faux outrage that anyone dare suggest that a solo UK will be a 'dwarf' in trade talks with the US, China, the EU and major emerging economies, India and Indonesia, Brazil and Mexico, Turkey and even clapped-out Russia.
Fearless Fox wants to maintain current trade levels with the EU while getting more trade with fast-growing everyone else. He even wants to join the new 11-nation Pacific partnership from which Trump's US withdrew, though some dwarfists suspect the Pacific 11 may prioritise talks with applicant states which are actually in Asia. To my pleasant surprise, Labour's trade spokesman, bearded Barry Gardiner, was much more probing and specific, as were the SNP's Stewart Hosie and Angus MacNeil. None of Fox's still-unsigned deals can remotely fill the 20%+ gap that could arise from loss of EU trade, they all agreed.
Regular readers know I am constantly in search of pro-Brexit speeches or articles that might persuade me it may not be so bad on the night. No, not from you, Boris. So it was with anticipation that I read Peter Lilley's piece on BrexitCentral, the blue collar website. In it the Thatcherite former trade secretary argued that self-inflicted EU policy errors have cost Britain £82 billion in lost trade since 1997. This is chiefly down to the ill-designed euro currency zone which has damaged eurozone economies even more, he says.
Since I shared many of his (and Gordon Brown's) prophetic warnings about the emerging single currency 20 years ago and think him smarter than the average Brexiteer, I wouldn't quarrel with his critique. Economic stagnation, high jobless rates and gilets jaunes social tensions are not getting better on the zone's Mediterranean flank. He's right to warn the looming recessionary problems are structural, not merely cyclical. Whatever president Macron angrily says about Brexit 'anger mongers backed by fake news', Europe's troubles aren't just about us.
As so often with the Brexit debate what depressed me here was Lilley's cherry-picked arguments for his alternative strategy. In the mid-1990s the future eurozone and US economies were roughly the same size: but now the US is 30% bigger, largely thanks to 'laggard' EU economic policies, while the rest of the world has boomed, he says.
Strange then that, despite dragging chains from the EU's single market and customs union rule book, Britain has managed to grow by 19% since the financial crisis of 2008, more than Germany and above the zone's average (13%). It has famously been a jobs magnet for 3.5 million EU citizens. Britain's trade with non-EU countries has been growing at a much faster rate too, Lilley says.
But hang on, Peter, if the economy has done well despite Europe, it again highlights the essentially political character of the Brexit project. There are further sleights of hand. There is much to admire in the restless, innovative US economic model, but it comes with a price tag which British – and European – voters usually reject: its deregulated labour markets, its doubtful food and environmental safety standards, its vestigial welfare safety net, its shocking poverty, violence and ill-health.
Europeans have explicitly rejected them in favour of greater social solidarity. What's more, America's 20 years of growth (ours too?) has been fuelled by soaring inequality and by – the Brexit bugbear – huge migrant inflows. Not to mention huge capital outflows to fund manufacturing in cheap labour countries, ravishing the Rust Belt states.
The backlash against it all arrived in the shape of Trump's election and his phoney MAGA rhetoric – Make America Great Again, or More Are Getting Arrested if you prefer. The populist and protectionist revolt is also visible across Europe. Over the long-term it will favour the left, Alexandria Ocasio-Cortez, the fireball New York congresswoman (or even Labour?), rather than the right, the contrarian Irish economist, David McWilliams, argued this week. Why? Because millennial voters favour strong state solutions over vapid MAGA slogans that disguise policy failure – and worse.
Yet Lilley and – in his trade debate speech – Liam Fox still seem drawn to the American route. Nothing wrong with chlorinated chicken, Doc Fox said on Sunday sofa television. This despite an explicit warning 24 hours earlier from Robert Lighthizer, Trump's hawkish trade rep, that Washington's opening bid will include an end to old-fashioned European food standards, access to NHS supply, hostility to parallel trade deals with 'non-market economies'(ie China) and menacing talk about exchange rates. Canada can tell Lilley about its brutal trade arbitration battles with its giant neighbour. In fairness, Germany is now being bullied in similar ways over access for Huawei, its suspect tech giant. Moral: it's tough out there. Did anyone mention 'dwarfs'?
If Geoffrey Cox can fudge the Irish backstop nonsense well enough to persuade Bill Cash's 'star chamber' committee of eight Brexit lawyers – a grim thought in itself – May's Withdrawal Agreement may get through on March 12. Then we will begin a crash course in these harsh negotiating realities, about which the likes of Peter Mandelson and ex-EU ambassador Ivan 'The Expert' Rogers have been warning us all since referendum day. May's ex-guru, ex-bearded Nick Timothy, complains that his former boss sees Brexit as 'a problem to be solved' – not an opportunity. It's not hard to see why.
So we should all remember that speculation about what the Moggsters, vain and treacherous, will do in next week's votes, or whether Labour's pro-Brexit Caroline Flint will defy whatever whip Team Corbyn-McDonnell dares to impose, is important, but is still detail in the bigger picture: where are we heading – how are we getting there and why?
With Tony Blair and Brexit Flip Flop, Dan Hannan MEP, both urging rejection of May's 'dreadful' terms – for opposing reasons – almost anything could still happen. Corbyn's grudging support for Refo 2 may swing events behind a May vs Remain ballot as the price for passing her terms. Conversely, the very thought may be enough to frighten the ERG into May's lobby. European heads of state, who have delegated most of the thinking to their negotiator, Michel Barnier, must think more imaginatively too if we are all to stay friends. That's what the tireless Gina Miller thinks too.
Her version of Bill Cash's legal committee has re-read Article 50 and interpreted clause 50(3) as obliging the EU Council of Ministers to extend Britain's withdrawal timetable beyond March 29 without waiting for a reluctant May to ask for it. Why? Because EU states are required 'in full mutual respect to assist each other' against harm and self-harm like a chaotic Brexit. That must mean a longer extension than June, nine months or enough for a new public debate and even Refo 2. Far-fetched, but worth a try? Gina Miller thinks so.
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