One element of Brexit that has me mystified is the lack of appreciation in the British government and what seems to be the overwhelming majority of the UK public of the enormous size of the task versus the un-seriousness with which the Government is approaching it. We’ve referred made comparisons from time to time between Brexit and the 2015 Greece-Troika bailout negotiations. One of the striking features was how Greece, which had been budget-starved for years and had cut government to the bone, was obviously struggling with basic mechanics of negotiation, like delivering documents that outlined negotiating positions.
The UK is not well-equipped to negotiate Brexit, to put it mildly, even before getting to the fact that it and the rest of the EU are very far apart on many key issues, the most glaring early topic being the Brexit bill. As we wrote last December:
The UK has not had to handle any meaningful trade talks in decades, so it has no one with relevant skills in house. To make matters worse, has severely hollowed out its Foreign Office, so it is even lacking in generalist negotiators. The difficulties in getting a team include: no one wants to accept government pay when they can make a multiple of that getting hired through a mercenary like an outside law or accounting firm; those firms tend to have siloed experts (usually by industry), making it hard to make tradeoff across issues and areas; the sort of negotiators that the Brits might be able to tease out of retirement or poach from Brussels are pro-EU and will not be philosophically aligned with UK objectives.
We’ve long thought the odds of a hard Brexit were uncomfortably high, since the Brits have been underestimating how much work has to be done, and kept refusing to accept the Continental position that no trade deal would be negotiated until departure terms were final. The EU has relented slightly and now says they will be willing to discuss trade if enough of the exit arrangements have been sorted out. But those include all the tough issues like the rights of migrants and the economic settlement.
Our dour view is now looking like a sound early call in light of the notorious Downing Street dinner, the details of which were leaked to the German press. Jean-Claude Juncker’s team (and frankly anyone who is not a diehard Leave booster) could clearly see what we’ve inferred from the press: May’s side hasn’t taken any of the many warnings the EU has been sending about their red lines as well as other issues that are important to the negotiations. It’s as if they’ve been sticking their fingers in their ears and saying “Nyah nyah nyah”.
The wee problem is that the EU has recognized that a “hard Brexit,” meaning a disorderly withdrawal, is a real possibility. Even though the EU would suffer, the UK would take a much worse hit.
Yet the UK side, astonishingly, not only seems to believe that the EU will capitulate rather than allow this to happen, it also seems not to appreciate that staking out positions when it lacks negotiating leverage means that companies that do business in the UK will start working overtime to reduce Brexit risk. The best way to do that is shift activities in the UK that serve Continental customers out of the UK. Financial services firms already started that sort of contingency planning the day after the Brexit vote. It’s not hard to imagine they are looking at taking more concrete steps, such as Lloyds of London planning to move 1/6 of its jobs to Brussels.
With this as background, I forwarded Richard Smith and our Clive, both of whom are in the UK, a copy of the day’s “Brexit Central,” a Brexit-cheerleading newsletter that I look at a few times a week because it does link to most Brexit stories, even while trying to take exception to the ones that adverse from the UK vantage. Recall that Clive voted for Leave.
I flagged two of its lead stories:
Theresa May is reportedly drawing up a “nuclear option” of immediately ending payments to the EU…
On the site today my colleague Hugh Bennett examines the European Commission’s alarming negotiating directive that the European Court of Justice should have legal authority to enforce our exit agreement and then act as legal arbiter of EU citizens rights in the UK after Brexit. He argues this would be totally unacceptable.
You gotta love the second item here. “What about ‘The UK is part of the EU until is isn’t’ don’t you understand?”
And on the first, the May threat = instant end of negotiations and hard Brexit. I would imagine an accelerated rush out of the City for any functions deemed vulnerable.
I don’t see any possible way Brexit will end in a compromise now. I’m amazed how bad relations have got and so fast. I suppose I shouldn’t be, given the numpties on May’s team (Boris Johnson gets all the headlines for his antics but David Davis is more of a liability because he’s ideologically obsessed with the EU as an Evil Empire; the EU may well be an Evil Empire but that doesn’t mean you should pick a fight with them at every available opportunity and can’t see past settling old scores). Perhaps May will use a thumping electoral mandate to clear house, but I don’t think there’s exactly a bench full of talent just waiting to step in.
What interests me more is why the UK as a whole is so nonchalant about the chaotic handling of Brexit while the EU (and the rest of the world) looks on aghast. There’s no angst in the streets and if you try to engage anyone in conversation about this, no-one I’ve talked to is remotely interested — even hardened Remoaners just shrug. You can’t blame it all on Daily Mail and Telegraph delusional thinking.
I don’t know if Richard would agree (and I’m not certain on this point so would need a second opinion) but I wonder if, culturally, it is because we don’t view “muddle through” as A Bad Thing but rather as a badge of honour? I recall working on an (ill-fated, of course) project which had a largely German team from the vendor’s side. We had the usual disorganised make-it-up-as-you-go-along mentality which caused utter incomprehension and bemusement. As we were the clients and they were the suppliers, they had little leverage which skewed how much say they had, but they made continuous attempts to instil more rigour and efficiency into the design and decision-making process. To no avail, I hasten to add. It was like trying to push the North Poles of two magnets together. The harder one side shoved, the more resistance was generated. I’ve never encountered anything quite like it, before or since.
In short, there’s more going on here than simple incompetence in government and right-wing media brainwashing. There’s a reason (probably several reasons) why “Brexit Briefing” (below) drops into hundreds or even thousands of mailboxes belonging to presumably reasonably intelligent people (it requires a level of intellectual capability over and above that needed to parse The National Enquirer) and isn’t met with howls of derision but rather – one supposes – nods of agreement.
Richard Smith’s reply:
I agree – reciprocal contempt is the worst imaginable starting point for negotiating anything, never mind a mutually satisfactory compromise….not that anyone in the UK has the faintest idea of what that might be, nearly a year after the vote. It will resemble the Greek negotiation in style and perhaps, purely as a negotation, in success.
I also agree with Clive that we have been a nation of bodgers for a long time, but most visibly ever since our Empire and its supporting Navy turned from a national asset into a liability, post WW1. For that long at least, pragmatism has been a necessity as much as a virtue, but it has always come easily to the non-Cartesian commonsense Brits anyway.
Drilling down a bit more, I think the nonchalance will be down to different things depending on the underlying mindset.
Brexiters simply don’t think there’s a problem, or at least, that, whatever the cost, it will be worth it to restore national sovereignty (libertarians and really old fashioned Tories) or get control of immigration (erm, neofascists and Corbynistas and the New Labour rump) or find better commercial opportunities away from Europe (libertarians) or detach ourselves from at least one neoliberal worker-impoverishing conspiracy (Corbynistas). This is a truly fucking peculiar coalition of the hithero-marginalized but it now appears to be completely dominant in Parliament, and just dominant enough in the country at large (with the exception of Scotland and maybe NI) to give us Brexit.
Remainers (liberals and neoliberals, whether Blairite Labour, Lib-Dem or Cameronite Tory) are still reeling from the shock and a bit cowed. 18 months ago this other coalition (socially liberal, identity politics, deregulatory, mixed-economy but with a small- or smallish-state mindset, internationalist, OK with the financialisation of the economy, offshoring, etc, American poodle, semi-detached from Europe but basically pro, genially corrupt) represented a cross-party consensus that had been dominant at least for 20 years, perhaps since the end of the Cold War, and arguably since Thatcher. Yet it was getting more and more hollowed out; pick your own milestones, but perhaps deregulation and GFC, post-GFC-non-tidyup, Osborneomics, serial Middle East interventions.
Most consequentially of all, it simply had nothing persuasive to say about the local consequences of the giant international wages-and-regs arb that is globalization. No-one ever actually said ‘deplorables’, but it turns out that our deplorables didn’t need the verbal hint. Action and inaction spoke loud enough.
Much of this was way overdue for rethink and reform of course, but it’s too late now. What now turns out to be under threat, and, bodge fashion, in advance of any coherent plan, could turn out to be a lot more:
– An international financial services industry that goes back 300 years (not necessarily a pretty part of the scenery, but one had imagined it well-entrenched by now).
– The UK in its current form (in its essentials, also 300 years old): Scotland and even N. Ireland; Gibraltar.
– A foreign policy tradition dating back to the Elizabethan era (don’t get the whole of Europe on your back at once).
– The basic aversion of the Conservative Party to authoritarian far right policy, at home. They have now outflanked UKIP from the right. This might look like a disaster for UKIP, but in reality it is a potential disaster for the Tories. I hope they unwind it ASAP but we will see.
– The very pragmatism that we think we embody. The whole Brexit thing looks much more like an outbreak of fanaticism than the judicious improvisation represented very well by our previous half-in-half-out Europosture.
Putting any of this at risk is not recognisably conservative or Conservative. It is more like a hapless response to a reactionary convulsion that, if it continues, could lead to the biggest political change in the UK since the Glorious Revolution, and, to some extent, would unwind some of it. It’s all a bit daunting in prospect and Brexit might be just the start.
Meanwhile no-one knows what Brexit even is. The stakes are dumbfounding, and for the Remainers there seems to be little prospect of a Macron-like figure to cluster around. Blair can see a Blair-shaped vacuum in just the right place, but no-one’s anywhere near desperate enough to go for that.
So yeah, Remainer shrugs too; they have no idea what to say.
Note finally, as we’ve also pointed out repeatedly, that none of the supposed benefits of Brexit are likely to be achieved. The UK is a small open economy. If it is to keep trading with the EU, and that is a major objective of the Tories, it will need to conform to EU standards, and yes, jurisdiction. When VW was caught out cheating on US emission standards and paid $14.7 billion in a 2016 civil settlement and agreed to pay an additional $4.3 billion in 2017 which included $2.8 billion in criminal fines. No one in Germany whinged about the US imposing US emission standards on VW’s cars. The EU standards that the UK will be able to escape are labor and environmental rules….which are more favorable to ordinary citizens than the ones the Tories are hoping to impose.
Similarly, as we stressed, there are more non-EU migrants to the UK than EU ones, so even if Brexit does restrict the movement of EU citizens to the UK, there’s no reason to think that their ranks won’t be filled by immigrants from other countries. Nor have we seen any plans how the Brexiteers would address critical shortages, like the fact that 10% of NHS doctors are from the EU.
In other words, there are plenty of causes for alarm, even to those of us who are watching Brexit at a remove. The fact that the Government still hasn’t saddled up in a serious way for this task is a bad omen indeed.