Cheerful or fearful: How have the Brexit negotiations been for you?
PUBLISHED: 10:41 30 June 2017
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The Brexit vote has divided us in a new way between the Optimists and the Pessimists. Just to complicate things, both tendencies exist in both Remain and Leave.
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Now that they’ve finally started a year after David Cameron’s ill-fated referendum gamble, how have the Brexit negotiations been for you? I feel strangely relieved, as if the phoney war and rhetorical posturing that accompanied it on all sides is finally over and we are getting down to the nuts, bolts and the difficult trade-offs which a cliff-avoiding deal will necessitate.
Clearly not everyone feels this way. Nor do some of the same people think much of Theresa May’s Belfast Billion Bung to shore up her minority government. Slightly more shamefaced, I’m out of step with them on the DUP deal too. We’ll get over it, as will May and her government’s spatchcocked Queen’s Speech programme. Why? Because no one currently has a better idea.
First the important bit: those Brexit talks. Were you delighted that the Secretary of State for Exiting the European Union abandoned his “row of the summer” pledge to dig in against first tackling the divorce bill and the status of EU residents in Britain? Or were you merely alarmed, humiliated even, that David Davis compromised quite so quickly? Or thrilled that he gave in gracefully in his opening skirmish with Michel Barnier, the European Commission’s point man, but puzzled by the failure of Andrea Leadsom’s “patriotic” tabloids to string up the cowardly ex-SAS man from the nearest headline?
In the virtual reality world that many of us now choose to inhabit – self-sealed social media and television news outlets – it is possible to embrace any or all of the above options, at least for now. The whiskery cliché that Britons still live in Two Nations has again been trotted out again since Grenfell Tower burned within sight of its near-neighbours’ £10 million investment banker homes. But a cliché is none the worse for being one. Actually, we are many more than two nations – there are four national building blocks for starters – though nowadays we lump our lesser tribes together as ‘communities’, Muslim, Gaelic or gay. But June 23’s Brexit vote has divided us in a different way between the Optimists and the Pessimists, the Cheerful and the Fearful. Just to complicate the picture, both tendencies exist in both former referendum camps, Remain and Leave.
Thus evidence of David Davis’s growing pragmatism towards his daunting task in Brussels is seen as grounds for optimism by ex-Remain politicians and voters who have moved on and are now bent on getting the best deal UK ministers can extract from the EU 27. According to YouGov findings, 70% of voters now think that, including 44% who voted for Brexit and 26% who voted Remain. The 21% who are unreconciled Remainers (there is also the usual daffy 9% that Don’t Know) include the kind of people who regularly propose ingenious ways of thwarting Brexit in the columns of The New European. AC Grayling did it last week, still clinging to the hope that some court somewhere will overturn the referendum result and prevent the end of the world, as he sees it. Dream on, AC.
Oddly enough, such misplaced optimism is reflected in the misplaced pessimism detectable in the triumphant Leave camp. For much of the year since it famous victory it has been about as triumphal as a wet Sunday picnic, tetchy and defensive, paranoid about plots, demanding that we all don rose-tinted glasses (now being marketed as “Leadsom spectacles”) before examining the mixed signals emerging from the UK economy. Talking of which, the Mail devoted an entire leader column to telling its readers what great shape the economy is in, reinforced by a Monday column from clever Dominic Lawson, son of ex-chancellor, Nigel (“there is no cliff”) Lawson.
Boom, boom, they went and made some good points. Not least that the pound’s sharp 12% trade-weighted fall (not predicted by Leave campaigners) has boosted exports and flattered the FTSE 100 Index which is mostly expressed in dollars. The annualised growth rate since Brexit has been a decent 1.8% – so much for the immediate plunge Remain predicted – and unemployment has dropped from 4.9% to 4.6%. Excellent. But they glossed over fast-rising inflation, edging to 3%, and consequent squeeze (again) on frozen pay and living standards. As the FT (pause for Brexit hisses) gently pointed out, 80% of the growth was driven by a weird post-Brexit surge in consumer spending – predicted by neither side – with business investment making no contribution. You do not achieve sustainable growth through an unsustainable credit binge.
Perhaps that’s why the Brexiteers are so persistently gloomy as their favourite chickens fly home to roost. They didn’t mean to win the referendum any more than Jeremy Corbyn intended or expected to win the election. It was mostly posturing. Try this from Bernard Jenkin MP, an Essex Tory and ardent Brexiteer, writing for the free-market think tank, Politeia:
“The scaremongering reflects a very effective attempt by the unreconciled Remainers, who are determined to de-rail Brexit if they possibly can. We know who they are. They are the likes of Sir John Major, Ken Clarke, Michael Heseltine, Tony Blair, Peter Mandelson and Alastair Campbell. They are the big corporates, the City institutions, the US banks, and all the other vested interests represented by the CBI and the British Bankers’ Association. These are the people who wanted the UK to join the euro. They brought you the financial crisis. Now they really believe they can overturn the substance of the referendum decision. One former Cabinet Secretary who worked under their aegis was heard reassuring a retired senior diplomat. ‘Don’t worry, the aim is to finish up with Brexit in name only.’”
Funny that he places the Usual Suspects for the crash (even Alastair Campbell), as if most central banks – the US, the ECB, China – hadn’t failed to curb the excesses of their investment banking sectors. But Jenkin is an attractively modest man who would not claim to be as clever as “Cliff” Lawson, who had his own boom and bust in the late 1980s. There will be no cliff, says Jenkin, if the EU and UK – note that if – “can negotiate a half decent arrangement for our departure – and it is inevitable that we will. There is too much of mutual interest for us to fail”. All those problems about standards, tariffs, aviation service agreements and the definition of a “car” are mere scaremongering, he insists. I’m not so sure. We are leaving in order to gain competitive advantage in world markets over the EU 27, say the Brexiteers, free of Brussels red tape (can we still use “red tape” pejoratively after the Grenfell fire?) and the regulations which hold back German exports to China. Might they not use the opportunity to do the same to our financial services sector? I think they might unless Davis is both lucky and diligent. The evidence so far points that way.
Still, I’m an optimist and both hope and increasingly expect that we will muddle through without too much self harm. Bernard Jenkin is not alone in harbouring suspicions that extend beyond the lazy self-reinforcement of the paranoid, tax-shy press or inexperienced backbenchers – some now inexperienced ministers – who have made modest careers out of putting Brexit fingers in their ears. Ex-MP Paul Goodman, who quit the Commons to become editor of the ConservativeHome website, is a very subtle operator. He too fears that since May’s “bungled election” (his phrase) her weakened political position will allow the forces of Remain to claim its mandate to soften Brexit; to align it more closely with reality, as some (me included) would put it.
It may be true – it is true – that 85% of the new Commons was elected on party manifestos committed to Brexit. But on most maths there is also a majority of MPs for a softer Brexit than a “no deal” hard landing. Saturday’s FT (pause for more hisses) cheekily reported that 176 of the 317 Tory MPs elected backed Remain, not least the 13 elected in pro-Remain Scotland whose success saved May’s bacon more than Arlene Foster’s £1 billion DUP bung. They may prudently have cleaned the evidence from their social media pages, but we know where they live. Goodman fingers the House of Lords as a source of trouble, as well as George Osborne’s ungentlemanly editorship of the Evening Standard and the Mail on Sunday’s in-house war with Paul Dacre’s Daily Brexit.
There is also the revitalised Labour Opposition which almost stumbled into government on June 8 as ill-prepared as any since Ethelred the Unready formed his first cabinet in 978, with the task of resisting European interference. Jeremy Corbyn’s MPs made the first of many attempts in the new parliament to amend the Queen’s Speech to “end austerity”. Tabling challenging amendments is what oppositions are paid to do, so that is progress of sorts.
But “ending austerity” is an illusory policy except at the margins – more spending on public services paid for by higher taxes on most of us – despite being supported by many well-meaning economists who haven’t yet spotted how fragile “Go It Alone” Britain’s borrowing capacity might suddenly become in a very unstable world, where the Gulf – the Qatar crisis – and East Asia – North Korea and the South China Sea dispute – are near boiling point, while the White House Tweets erratically.
Fortunately for the shaky stability of the public finances, shadow chancellor John McDonnell called the Grenfell Tower deaths “murder” in an exuberant moment at Glastonbury. Sooner or later this stuff will catch up with Mr Angry. Sooner or later the Glasto crowd – young, educated and pro-European – will detox enough to notice that Corbyn is a life-long Brexiteer. Less well educated, but more serious, the DUP has already spotted the parallel Sinn Fein connection. It all points to May’s survival, in my opinion, though I have had a bad year so far.
ConHome’s Paul Goodman is too deft an operator to make much of the increasingly visible divisions within the cabinet, at least its relatively few serious players. They include May when she recovers her confidence and a proper No 10 team, her Brexit point man Davis and the chancellor, Philip Hammond, back from his near-death experience and full of political beans. It is striking how little anyone else in cabinet says on the great issue of our times, at least in public. Boris Johnson and Liam Fox are marginalised, on their merits rightly so. Most will fall into line when the big day eventually comes. None of them – in my opinion – will dare challenge May unless further disaster falls her. She will stagger on, perhaps to recover spectacularly, as inexperienced Stanley Baldwin did after a near-identical election blunder in 1923.
At issue among what political Washington would call “the axis of adults” (those trying to restrain Trump) are: the substance of the eventual deal on the Brexit cash settlement; on the terms and courts which will govern EU citizens’ rights in Britain (and vice versa); on the EU’s Irish border; and on the vital transitional arrangements – Davis is already refashioning his weasel words as “the implementation phase” – which will hopefully spare us the Lawson Cliff (a lot of cliff has been falling at Beachy Head this month) on single market access and trading standards issues wrapped up in the customs union.
May’s opening bid on the rights of EU citizens was deemed constructive but insufficient in the capitals of Europe, exactly what you would expect. But it has always been fixable and will be fixed. The cash issues have gone quiet which may be a good sign, leaving the professional diplomats to sort out something reasonable that both sides can sell. The replacement of knowledgeable George Bridges (he resigned in disgust) with Brexit Know-All MP Steve Baker in Davis’s DEXEU team may cause grief. There again, Baker is not daft and would not be the first new minister to trim long-held beliefs after getting a glimpse of what much-missed Tory sketchwriter, the late Frank Johnson, used to call the black stocking tops of power.
What currently alarms the Goodmans, the Jenkinses and Redwoods – Brexit fundamentalists – is the emerging consensus that there will have to be some kind of “transitional implementation phase” after Britain formally leaves the EU, presumably on March 29, 2019. Hammond is suggesting that it may last three, possibly four years. At a Times conference this week Davis breezily asserted – he knows no other way – that it will all be “simple” and can be sorted in two years. After that Liam Fox can be cryogenically thawed and allowed to negotiate those future trade deals over which he’s been clocking up fruitless air miles. We shall see in due course. Splits are part of the process and the EU 27 not homogenous either. What it – and their media – are better at is proclaiming victory. “Britain Isolated In Europe” and “Britain Outvoted Again”, has been Fleet St’s last default position for as many summits as a I can remember – which is a lot. I have the summit T-shirts and still wear the Lisbon summit belt.
Lurking within the “transition” folder is continued membership of the single market and/or customs union or something very similar, like Norway’s much-cited relationship inside the European Economic Area (EEA), Switzerland’s or a bespoke deal with compromises on appellate courts and free movement (which is no longer quite sacred in Brussels or Berlin). It might, say pragmatic ex-Remain Optimists. YouGov’s poll suggests some June 23 Brexit voters might agree now that they can see that exclusion might damage the economy. The Sunday Telegraph’s doughty pundit Christopher Booker always did. Don’t these idiots get what “no deal” would mean? he shouts at shire readers most weekends. But financial services – Britain’s one conspicuous trade surplus sector – are not totally covered by the customs union. The EU’s single market ambitions since Margaret Thatcher signed up in 1986 have never quite got there, as City firms know to their irritation.
Even Fox has conceded the case for a transition. But might compromises here be allowed to slide into permanency, meaning that Britain doesn’t really leave the EU after all? That is what the Brexit Pessimists fear and Remain Optimists hope, not least because some flexibility on immigration will prevent care homes, IT departments and coffee shops from seizing up. How long does Goodman want to wait for his takeaway skinny latte? Labour’s Mr DEXEU, Keir Starmer, who is gradually shaping up to become a serious player, used a phrase I liked during one of this week’s studio tours. Quizzed about the Oslo model or Berne’s he replied: “Let’s look at outcomes, not models.” That’s the spirit.
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