Brexit Crash Out Virtually Certain

On the one hand, a great deal appears to have happened with respect to Brexit in the last two weeks, with David Davis and Boris Johnson resigning from Government and Theresa May stating that she will lead the Brexit negotiations. Despite the threat of an ouster, she’s still the last woman standing.

However, in reality little has happened, save some of the fog is lifting, so the profile of the terrain is becoming more visible. The odds of a crash out Brexit now appear to be 80%. I’m going to be more terse than I normally would be, so forgive me if my simplifications are arguably oversimplifications.

Some reasons why:

May’s rejection of the Irish backstop. Resolving Ireland was a precondition to sorting out other issues. EU chief negotiator Michel Barnier can’t change that order of battle nor can he change substantive parameters without going back to the EU Council. Barnier’s response to May’s renunciation, and her White Paper the trade deal the UK wants, has a thicker veneer of faux politeness than his earlier responses. Some commentators opined that the EU is taking more care so as not to give the UK fodder for blame-shifting (although they’ll do that aplenty regardless).

Let’s be clear: no deal on the Irish border means no deal.

As I read Barnier’s response, he hit the ball back over the net and told the UK that they’d committed to having a backstop, so if they didn’t like the one they’d signed on to, they needed to come up with another one. The EU has already rejected the UK Rube Goldberg machine of a techno-border as well as agreeing to have regulatory alignment, which is tantamount to creating special joint rules and joint oversight. As far as the EU is concerned, a divorce is a divorce, and they have made clear they are not going to set up new co-habitation arrangements, particularly since the UK’s barmycakes proposals would give it a better deal than it had in the EU.

Incoherent White Paper on trade. The UK keeps asking for a special, novel arrangement with the EU when the EU ruled out anything like that the morning after Brexit.

Barnier resorted to his old form with the the White Paper, and for good reason. From the Scottish Centre on European Relations:

The white paper is a ramshackle affair: it attempts to keep the UK almost as close to the EU as it is as a member state, with the crucial exception of services, while denying that closeness and re-emphasising its red lines to Brexiters in the Conservative party and to ‘leave’ voters more widely.

Another EU nien on the UK’s request for a special financial services regime. From the Financial Times on Monday:

Brussels has rejected the UK’s proposals on how to govern the City of London’s access to the European market after Brexit, saying Theresa May’s latest financial services plan would rob the EU of its “decision-making autonomy”…

Mr Barnier told ministers that the plan would ride roughshod over the EU’s stance that equivalence decisions must be made unilaterally by Brussels. He said it would amount to a “system of generalised equivalence that would in reality be jointly run by the EU and UK”.

The UK white paper called for equivalence to be “expanded”, saying it was “not sufficient to deal with a third country whose financial markets are as deeply interconnected with the EU’s as those of the UK are”.

It also envisaged a unique system of joint governance and a “safeguard for acquired rights”, to prevent the UK’s access to the EU financial services market from being easily withdrawn.

Let’s translate, as we did in January 2017, when the EU was even as of then re-rejecting a UK pitch for equivalence:

This is tantamount to asking the EU to overturn its legal system to accommodate British bankers. Na ga happen.

Lack of agreement among the Tories for any particular flavor of Brexit. This has long been apparent with the soft Brexit wing, led by Philip Hammond, at odds with the Ultras marching behind the likes of Johnson and Rees Mogg. But the press is now starting to admit that the deep divisions in the Tories mean no consensus, and that puts the UK on the default path of a crash out.

Parliament also thinks it has a say over matters that are outside its power. For instance, May lost a vote on an amendment that obligated the UK to seek an agreement that would allow it to stay in the European medicines regulatory framework. But this is silly, since only members of the EEA can belong. This is part of a pattern, like some MPs pressing for the UK to remain in the EU customs union as if that would produce frictionless borders, when it won’t, of embarrassing lack of comprehension of basic issues. So the depth and pervasiveness of stupidity on the UK side is another major impediment to securing an agreement.

May’s “no” to second referendum. We’ve already said it is too late to complete another referendum in time for the UK to back out of Brexit if the vote went the other way. But the Prime Minister’s pronouncement somewhat reduces the delusion factor among those holding it out as an option.

Lousy negotiating dynamics. Recall that May to the Irish backstop in December, so she’s just shown the UK to be dealing with the EU in bad faith. Chris Grey explains why, even if the UK and EU actually do manage to start working on a deal, it will be even more difficult to agree on detailed terms:

It would be a silly season story, but Brexit is now a year round silly story so when Dominic Raab pronounced that the UK might withhold paying its outstanding debts to the EU if there was no trade deal agreement it has to be taken seriously….This is a payment that Britain has already undertaken, in the phase 1 agreement, to make…

Thus Raab’s threat is, in a sense, meaningless. But that does not mean it will have no effect. Its effect is to further undermine trust, just when it is most needed. Just as his predecessor David Davis’s airy dismissal of the phase 1 agreement on the Irish border backstop made it vital to the EU to nail that down in a legal text in the Withdrawal Agreement, so will Raab’s statement strengthen the case to make the agreement on the payment watertight.

After all, this payment will not be made in one lump sum but over many years into the future. It is absurd to think that the EU would leave any wriggle room on it, especially with all the noises off from the Ultras that, once over the March 2019 line, anything agreed is up for grabs again…It is a posture which damages not just negotiations with the EU but to Britain’s more general credibility as a reliable negotiating partner. And trust matters in international negotiations.

If this isn’t distressing enough, consider:

May is putting herself at a further disadvantage by negotiating herself. The only time I’ve seen CEOs do well negotiating themselves is when they grew up in industries where pretty much everyone negotiates all the time. And the only industry where I’ve seen that to be the case is media. The top guys in that business are killers and run rings around people in financial services.

But it isn’t just that May flatters herself by thinking she’s up to going mano a mano with Barnier, or go over his head to Tusk or Merkel or Macron. It’s that principals should never negotiate with agents. Never.

May is a principal. She can commit her Government.

Barnier, by contrast, has negotiating parameters set by the EU27. He has to go back to his principals to go outside them.

The agent can use the need to go back to the principal to great advantage, for instance, by getting a concession from the other side in return for something it says it will try to get from its side, then coming back and saying it can only get 2/3 of what it hopes. The other side has already moves psychologically and has become more committed to the deal process by having made a concession. It will probably accept the only partial move from the other side, or will be satisfied by only a cosmetic addition.

But of course it will be the EU’s fault that the UK can’t get its fantasies met.

UK denial and worse inaction in the face of crash out downsides. I hope to address this at more length in later posts. One example is continued UK whinging about derivatives risk (see here for a recap). These remarks look designed to pressure the EU into giving UK banks the equivalence deal it keeps pushing.

The reality is all these UK firms have or will get EU licenses. The derivatives agreements are currently under UK law. That means Parliament and/or the regulators could solve this problem in any of a number of ways: forced reassignment of the agreements to EU entities (just as US courts interpret agreements written under the laws of other states, so too I imagine the European courts could enforce contracts under UK law although it might annoy the hell out of judges). Or the contracts could be force novated into EU-equivalent agreements as of, say, March 28, if the parties to the agreement has not substituted them or cancelled them of their own accord. And yes, there would no doubt be screw ups and hiccups and some chump customers who get exploited, but if the UK and ISDA wanted to solve this problem, as opposed to try to use it as a negotiating wedge for UK banks, I am sure they could come up with solutions for a very high proportion of the cases, and that assumes that contract parties would fail to get out of the way as much as they could themselves.

By contrast, the UK seems to be engaging in handwaves as far as dealing with requirements for ports and air traffic are concerned. Richard North has the patience to watch political TV, and in a series of recent posts, he chronicles how UK officials are acting as if the air transport issue will solve itself. By contrast, Heathrow has raised enough funds to enable it to ride out two months of no revenue. That means its leadership considers that to be a potential worst case scenario.

I suggest you read these posts, Brexit: dog days, Brexit: playing with fire, Brexit: arguing black is white, and Brexit: not an easy option, in full. One sobering tidbit:

One of the most interesting moments of the Dominic Raab (aka midair bacon) interview with Andrew Marr yesterday was the line of questioning on the EU-US open skies agreement.

Marr specifically put to the Brexit secretary that: “with no deal we fall out of that”, to which Raab said quite simply, “Yes”. As a follow-up, Marr asked: “That does mean that the planes can’t carry on flying in at the moment doesn’t it?”, to which Raab responded: “I think we would resolve that issue”.

There we have it in blunt terms. Yes, a “no deal” Brexit would mean that UK airlines would lose their access to US skies. And while Raab blandly assures us that “we would resolve that issue”, can we really be certain that President Trump would give us the access we want, immediately, and without asking for significant concessions elsewhere?

And another:

The thing is, though, if Rees-Mogg truly believes that the WTO option is “nothing to be frightened of”, we are dealing with a man who is either nurturing a staggering level of ignorance or is setting out to deceive.

Either way, this has his co-conspirator, John Redwood, asserting that, under his fabulous WTO regime: “Planes will fly & lorries will move thru ports the day after we leave just as they did the day before.

Bearing in mind just the one example of exports of foods of animal origin, where (when such exports are permitted) goods must be submitted for inspection at the ports to a Border Inspection Post, one wonders whether these ERG zealots have asked themselves why the Port of Calais has brought 17 hectares (42 acres) of land, which could house inspection posts for sanitary checks and logistics warehouses…..

The same must also apply to his recent comments on aviation in the wake of Leo Varadkar’s observation that the UK is part of the single European sky. If we leave the EU a “no-deal”, hard Brexit next March, he said, the planes would not fly, adding: “You cannot have your cake and eat it. You can’t take back your waters and then expect to use other people’s sky”.

This elicited a front-page headline from The Sun, proclaiming: “AIR HEAD Ireland’s PM has been branded ‘mad’ for threatening to stop British planes flying over Ireland as revenge for Brexit”.

There are several issues which arise from this, not least the idea common in the media that somehow things such as restrictions on airline flying are something which are imposed on Britain, either by the EU or Member States such as Ireland, effectively amounting to a “ban”.

The point, of course, is that freedom to fly for UK airlines, variously a right or a privilege, is specifically granted by virtue of EU legislation, in this case Regulation (EC) No 1008/2008. When we leave the EU, that regulation – as it applies to the UK – lapses. There is no ban as such. It is Brexit and the UK’s decision to leave the EU which will have the effect of removing the permissions for its airlines to operate outside domestic airspace.

Some pundits who should know better point to the 1944 Chicago International Air Transport Agreement, arguing that such rights are conferred by this agreement, upon which the UK can rely.

But here one has to understand that the Chicago Agreement does not in itself confer any rights. Rather, it requires contracting states to grant to the other contracting states what are known as the “freedoms of the air”. Thus, such rights do not take effect until contracting states formally agree between themselves bilateral or multi-lateral treaties, generically known as Air Service Agreements.

In the EU context, as between Member States, these have been absorbed into the regulation, the benefits of which will no longer apply to the UK after Brexit. Unless there is then a specific air service agreement between the UK and the EU, there will be no reciprocal rights. The result, as Varadkar quite rightly says, is “planes would not fly”.

In other words, the UK would need to have a massive team trying to get Air Service Agreements in place now. There is no evidence anything of the kind is happening. And these agreements cover critical issues like safety standards. No airline is going to assume the liability of flying into a country and having its equipment serviced by airports who are not party to agreements setting forth the needed safety standards (among many other issues). In addition, aircraft leases would also prohibit it. The air transport issue is a massive Brexit risk that the Government is simply punting on, as if London is obviously so important that the rest of the world will surely bend to the UK’s needs.

The UK is about to get a very rude awakening, and it’s on track to begin on March 30, 2019.

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  1. JJ139

    He is not ignorant, he runs an investment fund – and already opened an office in Dublin. Seems to me he is betting on a disaster capitalism/shock doctrine outcome of no deal and lining his investment ducks up accordingly.

  2. The Rev Kev

    It sounds like some people in the UK government have woken up and smelt the tea. They have now admitted to “plans to stockpile medicines and ensure an “adequate food supply” in the event of Britain leaving the EU without a deal.” I suppose better late than never.
    In reading all about the troubles that the UK will have with air transport post-Brexit, there is one factor that comes to mind. What about all those units of the United States Air Force stationed in the UK? They have about two dozen bases that they use in the UK ( but what happens after a no-deal exit?
    They would be permitted to fly in UK skies under exiting treaties but would they be permitted to fly on to EU skies? Or would the EU simply pretend that as they flew in over international waters that their point of origin would not matter? I don’t know if this is a factor at all or not.

    1. Anonymous2

      Military flights are the subject of different rules to civilian ones so USAF flights will likely be unaffected.

      1. Ford Prefect

        I believe NATO is involved in many of those military and naval transit rules.

        The US will probably need to negotiate new transit rules after Trump pulls the US out of NATO.

    2. Clive

      It is, as usual with all things Brexit, rather complicated.

      Cutting a U.K.-sized hole in this little lot (not to mention the key Shanwick Oceanic Control Area, which the U.K.’s air traffic control manages) more-or-less overnight (and even assuming serious planning has started now, for which there is no evidence of, and it would be getting more and more obvious now if it were happening, six months in air traffic control changes and international aviation agreements is still akin to overnight) will have continent-wide and even intercontinental implications and impacts.

      You pretty much have to rip up the entire airline flight schedules, ground operations, crewing rosters and servicing for 30-40% of Europe’s entire civil aviation industry and start again from scratch. That’s around the percentage which touches the U.K. either directly through landings or stopovers or by relying somewhere on something related to the aircraft currently performed in the U.K.

      You also have given yourself a big reduction in capacity in terms of ground-based facilities.

      And then you have the whole transatlantic corridor to work around.

      Glad it’s not me that has to do the contingency planning.

      1. Synoia

        Closing Heathrow for 2 months would paralyze international air traffic all over the world. The feeder flights would be equally affected.

        Perhaps that’s the cunning plan to cut carbon emissions /s

      2. jsn

        I was talking to a Brit a couple of weeks ago who was operating on the assumption that disruption from a crash out Brexit would be so dire for the EU that May & Merkel would hammer out a deal. Otherwise, he seemed perfectly sane…

  3. ambrit

    The ‘silver lining’ in all this is that the obvious hardships to come as a result of the ‘hard Brexit’ will probably destroy the Conservative Party for a generation. Which is probably how long it will take Britain to recover.
    The political danger for England is that they might end up as a formal client state of America. That would really suck.

    1. PlutoniumKun

      I would not rely on this. First off, there is every chance that the voters will say ‘a plague on all your houses’, meaning that instead of Labour or centrists benefiting, someone else (say for example, the far right) will benefit. Unfortunately, in my opinion Corbyn has made this more likely by his refusal to draw clear blue water between him and the Tories on Brexit.

      Secondly, I would not underestimate the ability of the UK media to co-operate to blame the EU for what happens. From my distant reading, many people in Britain genuinely believe that all the difficulties are being caused by recalcitrant EU negotiators.

      1. Paul O

        I am not relying on this – but I can still hope it comes to pass.

        I don’t think Corbyn is able to draw clear blue water. In what gap exists the water is murky and he tends not to lie for political expediency – which is what a lot of people like about him.

        1. ambrit

          If the blame, at least in the English populace, can be shifted onto the EUs shoulders, what ‘positive’ spin can be put upon this by anybody? Who can produce actual relief from the hardships Brexit will impose on Britain? If not actual relief, then, symbolic relief. Will we see the establishment of a modern Crown Party? A Government of National Unity headed by the Crown Prince? These are murky waters indeed.

        2. vlade

          A large part of Remain will remember that Corbyn:
          – was very lacklustre in his Remain campaigh
          – was the only politician to call for A50 trigger immediately after the referendum (which was beyond idiotic)
          – whipped his party to vote for A50 w/o any plan, which was NOT necessary (most of UK press hates Corbyn regardless, so there was no political leverage for him to do so).
          – whipped his party to vote out EEA option

          Labour has a lead now over Tories – but it’s NOT due to Labour or Corbyn. It’s entirely due to true Brexit believers jumping Tory ship back to UKIP. And that is with Tory party pretty much disintegrating over the last two years.

          Labour is as torn as Tories are, but it’s not that visible to everyone – but is to a large part of both Remain and the most stalwart Leavers. The fanatical Leavers will never vote Labour though, so it’s a lost cause. Soft remain (which was a large part of Labour vote) is not happy with Labour (well, Corbyn) either, and in an event of crash out will blame them quite a bit – and I suspect either vote LD or stay at home if there’s a GE in 2019, which under crash-out Brexit would be likely.

    2. begob

      Another caveat to the Torymageddon proposition is that food shortages will flare up before B-Day, and May will use that opportunity to invoke the Civil Contingencies Act. Once that’s in play every piece of domestic legislation can be amended by executive order, apart from the CCA itself and the Human Rights Act. She can even extend the term of parliament. Tie that in with increasing media collaboration with the state, and this government will have all available guns trained on dissent and may prove impossible to shift.

      On the client state – Richard North makes a simple point: the UK has to strike a deal with the EU come what may, even if it’s after B-Day. The terms will almost certainly preclude a deal with the USA.

      1. begob

        Irish foreign minister Coveney has pointed out that the UK can’t afford no-deal Brexit. Just heard a BBC news bulletin on radio in which a junior minister in May’s government gave a response, repeating the word “contingencies” three times.

        This monstrous birth has started its contractions.

    3. Synoia

      The Conservative Government falls, Labor will then form a Government, and be blamed for all the ills that follow.

      That would be my plan if I were a Tory.

      1. Richard Kline

        This has been the principal scenario I see also going forward. I think it highly doubtful May will survive in government or the Tories as a party until March 2019. The costs of crash out will be an hourly news issue after December 2018 when very manifestly no exit deal will be in process or possible.

        If ‘greatness is thrust upon them,’ Labor would certainly get the blame if they are tied to the wheel in the bridge come B-Day. So I would anticipate a frantic last minute effort to set aside the Exit during the coming December-March period. The question to me is whether, by whatever means, such an effort succeeds. Labour, or more likely a ‘unity government’ could advocate not so much for ‘Remain’ as ‘Suspend,’ blaming Tory incompetence for the untenable position in which the UK will find itself by early next calendar year.

        I think that the UK could win sufficient EU support for a ‘Suspend’ of some kind—though that is far from guaranteed. The advantages to the EU of a British exit have been little discussed in detail to this point but are nontrivial. Europe may decide to cut the tow line on the Sodden Isle. But the costs of crash out disruption are sufficiently major to all that more timid heads are likely to prevail. The EU seldom fails to kick the can down the road when given the least chance.

        Amongst the issues listed by Yves in her post, I find the UK position on financial services the most breath snatching of them all. Yes, of course this would always seem to have been the soft ‘Tory Win’ game plan expected in fantasy by May’s contingent of likeminded dreamers: 1) stay in most regulatory configurations with the EU by ‘strict alignment’ (which the UK would ignore at crucial, self-dealing particulars but pretend to the rest of the time) so as to keep European investment onshore in Britain, while b) gaining unrestricted access to Europe for the City without strict EU regulatory control. “Heads we win; tails you lose; there is no alternative.” Manifestly a better deal for the UK then that which they have now as a Member State, so of course what they expect to wring from those wretched Yurpos who need, need British money and expertise just so very much.

        Well, there is an alternative: the EU can, and most certainly will, refuse the City access to Europe’s markets, which will force the larger share of the City’s business onshore to Paris and Frankfort, specifically the Eurobond market and any third parties expecting the trades to involve or clear in Europe in any way, and by and large bankrupt much of the City in the process. Which seems more likely: that the EU would swallow the tapeworm in this British scheme or that the EU will dig up most of the money tree and take it back to Europe with a sack round the roots on 31 Mar 19? We make you rich at our expense or we make ourselves rich at your expense? This isn’t even a question, it’s a prediction.

        I an uncertain that I have ever seen an act of complete econopolitical folly of like scale elsewhere in history to the “open the airplane door at 40,000 ft because the bloke in the next seat stinks of garlic” that is Brexit. Crashout, should it come, will be a most spectacular decompression event imaginable.

        1. skippy

          Wellie Richard, Nigel Farage won’t give up his £73,000 EU pension, begging the question about what is rolling around in some peoples heads.

          Pleasure to read your thoughts again.

          1. Richard Kline

            Been gone so long it looks like home to me. Some issues I mean to raise over the next biennium, so here I be.

        2. Synoia

          The UK Tory party is called the “hanging and flogging” party for good reason. And its not the Tories who receive the hanging and flogging through self flagellation.

          I had the good fortune to at school with Tories for many enjoyable years. The teachers and their education was first class.

        3. tegnost

          I’m betting on money tree moving also, brexit seems like the gift that keeps giving to everyone but britain (what if ireland and scotland wind up with the whip hand over britain? Centuries of conflict resolved by an own goal)

        4. Yves Smith Post author

          The only way out for the UK is to ask to revoke Article 50. I anticipate the Government at most will try to buy more time, when they’ve wasted the last 2 years. The EU won’t let them get away with less than a full retreat, and even with panic over realities rising, I can’t see MPs and the Government getting out of their own way to grovel for a reversal of Article 50 with no new referendum to cover their collective asses. There are enough nutters who are saying that the “Remoaners” are greatly exaggerating to make it politically suicidal to go Emily Litella and say, “Never mind.”

          1. Harry

            Yes. I don’t see why this isn’t the most likely outcome now?

            Is it just the scale of the humiliation which makes people think this is unlikely?

            1. vlade

              It’s the most rational response (if for no other reason, revocation of A50 does not mean you can’t file it later, when you decided what the hell you want).

              Unfortunately, the UK politcs stopped being rational more than a few years back.

    4. fajensen

      I am not so optimistic, the traditional response is:

      1) Blame whatever the mess is totally on Subversive External Forces and Traitors,
      2) Forge a New Conservative party founded on values like “Strength, Unity, Force of Will” …
      3) Set about Purging Impure Thoughts, as well as the Subversives, Traitors and Heretics …

      The British media are happily heaping fuel on “1” and “3”, the only barrier it that The Conservatives are generally 3’rd generation snot-rollers and navel de-fluffers that couldn’t organise a piss-up in a brewery.

      However, hungrier and more enterprising people always exists, waiting for these situation. The first “deal” the UK makes after Brexit could be with the brothers in the Ukraine!!

  4. PlutoniumKun

    Nothing in this article I can quibble with, its entirely clear that the negotiations have broken down in all but name and there is not sufficient time to cobble together an alternative.

    There was, I thought, one likely way out for the government. This would be to allow things to come to a head sometime in late autumn, and then, with mounting panic, announce that the UK would simply concede on all key points (the Irish backstop, etc.,) in order to buy the time for a transition period. This would mean dumping the DUP, but with sufficient groundwork, I think it would be possible for May to survive by doing this (essentially, by daring the Ultras to bring her down and face an election, and daring the Lib Dems and Scots Nats to vote with the DUP).

    But, to my amazement, May has cut this route off herself by publically ruling out the backstop. This to me is proof that she has no strategy at all, she is simply making things up on a day to day basis. There was no need, (except for a temporary need to sooth DUP nerves), to rule this out – common sense suggested that she should have kept it on the table as a fall back option. In doing this she signalled to the Irish government and EU that there will be no agreement.

    There is one small way out that I can see – and this may be what London is banking on. The Irish government is completely in a bind over the border issue. It may be that in a panic over what will happen, they will change course and publically ask the EU to drop the backstop in exchange for some meaningless words over Northern Ireland (some voices in the Irish establishment are already stealthily pushing for this). I have a small suspicion that this is what Brexiters are whispering to each other will happen if they pressurise Ireland hard enough. The problem is that Varadkar is going for a late autumn election and I doubt he would want to swallow such a public humiliation before an election. It would also be a huge boost to Sinn Fein in the election, and thats something he wants to avoid. Therefore I don’t think this is a possible way out (this is assuming the EU would accept it – its possible they would say its too late to change their minds on it, even if the Irish government asked).

    The other factor is preparation. I’ve been continuously amazed at how relaxed the UK’s establishment has been about what will be a catastrophe on a war scale. With some exceptions, I don’t think any of the major industries have made meaningful preparations. Its much too late now.

    1. ambrit

      Yes. As I mentioned above, a Government of National Unity with extraordinary powers, “for the duration of the crisis.”
      Labour should have gone hard left when it had the chance.

    2. Larry

      It sounds like there are some preparations being made now, like Heathrow stockpiling enough cash to continue operations for two months with no flights. But I will agree that these seem more like outliers of preparation as opposed to national level planning that would be required to avoid major disruptions to everyday life.

      The question I have is how will the establishment and body politic react to the crash out when it occurs? Does this rally the country in a good way and lead to a painful road to EU independence or is it just a shambles that predators pick apart using the shock doctrine? Given that the UK is a neoliberal paradise, it’s probably the latter, but I hope I’m wrong.

      1. Clive

        I do suspect that something will have to be worked out for airspace. Planning and getting approval for new flight paths will need to happen now, even for the EU27, to be ready in time, if everyone insists on playing hardball.

        That said, all bets are off now, as far as I’m concerned. “Anything can happen in the next half hour” (British residents over 40 only may get this reference)

      2. rd

        I expect that things like flight paths and airspace agreements should be quite doable since the paths etc. are already defined and they can write bilateral agreements temporarily codifying those.

        A bigger issue is likely to be security and customs/immigration once the freedom of movement is removed. All of a sudden all the passengers on those flights to the Continent will have to go in and out of customs and immigration. That will be a major staffing and physical facility challenge. Passengers will have to plan on significant delays. If I am travelling internationally in and out of the US, I generally allow for double the time at the airports than if I am travelling domestically and the airports are structured for that volume of international travel.

        1. vidimi

          i think this is much more complicated than it seems for geographical reasons. the UK is a tiny country and does not stand in the way of any international flights in a substantial way. i.e. a flight from NY to Berlin does not need to cross UK airspace. UK carriers need access to foreign airspace to function, though. the assymetry of the respective needs is what will almost guarantee that the UK will need to make some massive concessions to get what it wants. as is, they are banking on london as a tourist and business destination to pull them through, but it’s likely to lose in standing in both.

          1. vlade

            Amsterdam is a major hub, and all great-circle routes to east coast that go through it would have to cross UK space or take a major detour.

          2. Clive

            As I have already stated above, Shanwick Oceanic is UK airspace. NY to Berlin absolutely crosses UK airspace. Please don’t make stuff up, as a) it reduces the quality of the site comments and b) these days it is easy enough to fact-check things before you post them. Any atlas will show you how a plane will need to fly between North America and northern Europe to take a reasonably direct route. The vast majority of transatlantic flights cross UK airspace.

            The EU airspace control region(s) will need to accept the UK handoff for planes on flight paths involving Shanwick. Or flight paths will need to deviate 10-20 degrees of latitude southwards — equivalent to a thousand miles or more, nearly two thousand on NY to Berlin, for your example. This will require a complete rework of flight schedules and crew allocations. That’s before you get to fuel costs.

            This isn’t to say that UK concessions still won’t be extracted. But not for the reasons you mis-describe.

            1. vlade

              SO is not “UK airspace”, in legal terms, no matter what NATS says.

              It’s international airspace (airspace is legally extended to cover territorial waters only, not even economic zone), where air traffic services is jointly provided by Ireland (SHANnon) and the UK PrestWICK. So it’s international airspace where UK has (a joint) responsibility for traffic services.

              Admittedly, taking WICK out of it would cause untold problems, as NATS has the responsibility for procedural Air Traffic Control part. So, for practical reasons, if NATS drops out (because it would not be internationally recognised for example), the impact is the same.

              1. Clive

                Yes, that’s a helpful distinction which NATS glosses over — as you say “U.K. controlled airspace” is a better way of describing it.

                But yes, again as you say, end result is the same unless someone builds a competing “EU ATC” covering Shanwick Oceanic (which would be impossible in any implementable way as you’d have failure prone and confusion ridden overlapping). EU control has to accept U.K. incomings.

    3. Richard Kline

      The lack of effective contingency no-deal provisions in the UK is minboggling until one accepts that the mindset of >80% of the UK political class is utterly delusional. The functional interdependency of most nation-states is not something that they comprehend because it is not in their personal interest to comprehend this.

      One might best never assume that politicians in any party in any country have a competent understanding of the matters over which they have authority. There are always individual exceptions of perspicacity, usually not across the board but on a sectoral basis. That said, most politicians are functionally incompetent with regard to how national level actors function. It is their professional staff who are paid to understand this and ‘advise’ the ‘deciders.’ When the deciders decide not to listen, or to listen to banknotes wearing angels’ wings, we get delusional processes. Usually, such thermite-girder dirigibles collide with incandescent objects or are grounded by the reality police much sooner. The Brexit Nonnegotiations have kept the Flammable Desirable aloft rather a long time, so that the ‘obviously there will be a deal at the last minute’ perspective has remained tenable long past the point when bailout planning and rehearsals were necessary.

      Myself, I don’t mind this because it increases the probability of a desperate ‘Suspend’ push at the last minute, which to me is the least worst course. But then, I don’t live there. If I did, I would say, take the worst probable outcome, imagine one 30-50% world than that, and and consider that locked-in until solid information proves otherwise. Consider: I may despise Amazon (whose Shaft and Balls loom outside my apartment window view east), but contingency is something that they do, constantly and with some competence. If they are planning for possible ‘civil disorder,’ that tells you where their deciders have indexed the next twelvemonth. With the UK chattering class, tho, it’s ‘muddled rum’ as standard issue in a crisis for three hundred years . . . .

      1. Yves Smith Post author

        I don’t see why the EU would accept a “Suspend”. They’ve pretty much said they’d only allow one of at most a few months, which won’t get the UK out of its mess, and then (between the lines ) only if both sides were negotiating but needed more time to iron out language. From their perspective, the UK has been incredibly difficult and has refused to acknowledge the very clear boundary issues the EU highlighted from the get go. Plus there is zero political upside for pretty much all of the political leadership in the EU for giving the UK any breaks. The press isn’t covering the issue at all and even business leaders accept that Brexit will impose costs on them. They’ve made their psychological writeoffs.

        See this for some of the reasons the EU won’t go for an extension (although the writers oddly don’t get or chose not to raise the political implications of the technical issues they raise):

        1. Richard Kline

          You’ve mentioned one major and viable reason to accept a suspend elsewhere in comments to this post, Yves: a change in government.

          I am in agreement with you that the EU will not allow the current Tory government to suspend. Part of the EU position this to my thinking has been the incredible unwillingness of the initial Tory bargaining team to, well, negotiate. Not simply to negotiate in good faith but to negotiate at all. So the “Nope, full time means stop” was much about forcing the foot draggers to actually put proposals on the table. A new government would not be in a position to actively negotiate at once, especially with mere months—or days—to B-Day. Particularly if that government gives some indication of substantive plans, or especially a reversal of course, that gives the EU an entirely different set of conditions.

          The EU has a major incentive to get structural clarity before the next Community budget begins. But that is largely a self-imposed and self-perceived deadline. A new government in the UK advocating a different course may get concessions that are not in prospect now, and should not be in prospect now. Should Corbyn coming in and say, “We’re leaving, but we want more time” he’ll get a “Service unavailable in your area” on his phone call to the Continent. If a non-Tory unity government says “Bit of help, here” I fully expect that a life preserver will come flying over. That’s not a guarantee, but I don’t think anybody on the Continent wants to be blamed for letting the UK burn and drown simultaneously. Unless it is Davids and BoJo blazing deeper in the deeps.

      2. ChrisR

        Richard, your comparison of Bexit to the Hindenburg made me think of the cover of the first Led Zeppelin album, which was conincidentally released 50 years before Brexit day. Good Times, Bad Times might be appropriate theme music for what comes next.

        1. ChrisPacific

          The Hindenburg is an analogy that has occurred to me more than once. It’s one of the things that keeps me checking the news. I (and most of us here) can see the fiery explosion clearly in the not too distant future, and I keep wondering what it will take for the UK government and/or media to notice.

          It’s clear that some (like Boris Johnson) are quite capable of remaining oblivious right up until the moment of impact, but glimmerings of awareness are starting to show up in some quarters. The sooner the UK realizes what’s coming, the greater the chance of mitigating the worst effects.

          It sounds like time has run out for Scotland and NI as well, if Clive’s comments about the necessary lead time for a referendum are correct. Even if the political obstacles were to suddenly vanish overnight and the people decide that they want to declare independence (Scotland) or reunify with Ireland (NI), it’s too late. They are Brexiting as part of the UK, willy nilly, and will be out of the EU and dealing with the associated fallout. Even if they subsequently separated from the UK, they’d still be out, and would need to find a way back in if they wanted it.

        2. Tony Wright

          No,- one of my all time favourite songs would be better ; from the same Led Zeppelin album “Dazed and Confused “. In a nutshell.
          I am glad I will be the other side of the world when Brexit Hindenbergs.

      3. ChrisR

        Actually there are many relevant tracks: Babe I´m gonna leave you; Dazed and Confused; Communication Breakdown; and of course, I can´t quit you babe.

        1. vidimi

          not to forget How Many More Times must we see Britain’s sham negotiations go down in flames. (Meanwhile, JC keeps thinking to himself Your Time is Gonna Come)

    4. Yves Smith Post author

      I had not considered Ireland capitulating. But that still creates big problems for the EU, in that they will not let Ireland become a backdoor to the EU for non-compliant goods.

      1. PlutoniumKun

        Yes, I suspect that if it happened, the EU would say ‘its too late for that’. To be honest, I was surprised that the Irish government maintained such a strong line on it, it goes against the grain of Fine Gael politics (establishment, conservative and anglophile to its core). But I think it would be impossible for them to back out now, for their own domestic reasons and because of EU pressure on trade.

        1. NotReallyHere

          The probability that the UK will be excluded from EU airspace and a hard Irish border is extremely small. First if the UK reciprocates and excludes EU flights from UK airspace, how would Ireland’s planes get to the EU? Second, if the UK does not want a border in Ireland, then it would be up to the EU to enforce one. Are we really saying that the Republic of Ireland (population approx 4m) could defend a border against the UK (pop 66m)? And since there isn’t really an EU army of any credibility, it would require French and German manpower to enforce it.

          In my opinion, there will be a hard Brexit but worst nightmares are unlikely to occur immediately because a hard/ contentious exit would mean:

          1. Ireland forced/ gets out too. It’s at exports will not be able to compete with countries like Brazil etc who can sell at world prices while Ireland is forced to compete at EU prices. Also, since the border will be un- enforceable in practical terms, it is likely that Ireland would become a smugglers paradise which would be unacceptable to the EU.

          2. The end of the euro. If the Irish leave the EU they must also leave the Euro. Opening up the possibility that the ECB can’t hold the line on target 2 etc. This would make any other problems in the southern countries almost unmanageable, especially since it is likely the UK will be working to undermine the Euro (it will be in its interest to weaken the enemy in any way it can if the dystopian nightmares of airspace exclusions and hard borders are realized. So the game will be to ease Ireland out.

          The end of the EU. Because the EU exists only on paper. The material elements that are needed to enforce EU mandates are provided by individual countries (Germany, northern countries and France) so to enforce its decision. A dramatic UK exit would force the EU to rely on these countries to supply the material but, given the system of veto rights, it would be impossible to get them in a timely way. This would be unacceptable to Germany and France.

          The more likely scenario is that hard exit occurs but a lot of smudging takes place to try to spread the horribleness consequences out over time.

          1. vidimi

            First if the UK reciprocates and excludes EU flights from UK airspace, how would Ireland’s planes get to the EU?

            they would take 30 minutes longer :S

            the rest of the post is too whimsical

          2. vlade

            I believe that the Ireland is more likely to be unified than forced out of the EU, if it comes to that (and the EU has lots of carrots, as well as sticks – the UK has only sticks).

            The Brexit may finally make it clear to a number of NI residents who feel “British” that Westminster could care less for them, and hence becoming Irish is a better bet.

            1. NotReallyHere

              According to this link UK and Irish airspace is administratively unified. I suppose they could break that up, but its another negotiation that can’t happen immediately., Also note that the article says

              “The briefing note prepared for minister Shane Ross also echoed the warnings of Ryanair chief Michael O’Leary, who has claimed that air travellers could be back “chasing the boats” if there is no agreement on air travel rules for when Britain exits the UK”


              Maybe that is the real reason Ryan air is laying off 300 workers in Ireland in favor of Poland.

              I note the whimsical comment above and I apologize for my badly written effort before but the sentiment stands. If there is a hard Brexit (no deal Brexit), and IF the worst fears of some commentators here are realized then the EU will not escape consequence free. The UK has the means to cause a lot of damage to the EU. In a hostile scenario, the UK could and, I believe would, use Ireland as one means to cause that damage. In that scenario, Ireland’s membership of the Euro adds a lot of complexity – and I would argue, vulnerability – to the EU side of the equation. I have no doubt that the UK – in an economic war scenario – would use that.

              By way of background. Ireland has made huge strides to lessen its dependence on the UK, but a combination of geographic location, relative size and cultural similarity puts limits to how far this can go. This is well accepted in normal times but it seems to have been forgotten in the current environment. I leave this article detailing Ireland’s entry into the EEC as background.


              A quote:

              “Then on 14 January 1963 French President General de
              Gaulle raised doubts over Britain’s suitability for EEC membership
              and vetoed London’s application. Ireland’s EEC application was
              within the collateral damage of de Gaulle’s ‘Non’. The French
              President did not veto Ireland’s application, but with its main
              trading partner destined to remain outside the EEC there was no
              point in Ireland going it alone. ”

              Today Ireland is not an appendage, but it is STILL highly integrated with the UK and its highest Value Added industries – as defined by the amount of value retained in Irish hands- are still agriculture and tourism.

              So, in the interests of discussion, perhaps somebody could explain how the Irish border will be enforced if the UK doesn’t want that to happen? And if the British Unionists oppose a hard border, then the UK government does too. The UK has never abandoned its Loyalists in Northern Ireland in the past. I don’t believe they will in future either.

              1. Donn

                I don’t think anyone, especially in Ireland, believes Brexit won’t be anything other than massively damaging. But Ireland won’t be forced out of the EU.

                My own view from Dublin is that, regardless of whether it precipitates unification, Brexit will be seen as an historic turning point in the complexion of relationships between our island, the nations in Britain, and the wider European setting. It’ll hasten (painfully) the economic and political reorientation of Ireland towards the continent.

                As others have mentioned in these comments, one can’t help wondering if London will even have the means to maintain its traditional support for loyalist and unionist communities.

                Also, it’s interesting that so much commentary in the UK around Ireland’s role in Brexit seems colored by a sublimated rage towards us, with not infrequent references to treachery and disparities in military capacities, or to our being manipulated or controlled by nefarious Brussels. Same goes for the suggestions that the border issue could have been sorted by Ireland and the UK agreeing it separately.

                All of which, I suppose, would appear to confirm the suspicions of many that London never really ‘got’ either Irish independence or the European Union.

                1. NotReallyHere

                  The problem for Ireland, as I see it, is three dimensional.

                  First their big headline industries (Pharma, machinery, aviation) are really pass-through industries. They produce some employment and a lot of GDP, but the GNP producing industries – i.e. the ones that produce employment and broad-based wealth – are still construction, agriculture, tourism. These industries depend to a great extent on the UK. So Brexit makes “real” Ireland poorer and potentially massively poorer (in an economic war scenario).

                  The second dimension relates enforcement. The EU can lay down on all the rules on borders, import restrictions etc it likes, but it depends on member countries to enforce the rules. If the UK decides that it won’t enforce a land border – Ireland is too small to take up the slack. It can’t do it without help from other EU countries. Who will step in? And if the EU does step in, what is the likely UK reaction to German/French border guards in Ireland? I may be missing something here, but that seems like a basic flaw in the “it’ll be painful but alright in the end” argument.

                  The third, and I think most important dimension is that attitudes among the larger members in the EU towards Ireland would likely change in an economic war/ catastrophic hard Brexit scenario. They viewed Ireland as the UK’s little brother on entry. If Ireland can’t seal the border and Irish employment depends to a large extent on trade with the UK, how long will it be before Ireland is again viewed as loyal to the UK more than the EU?

                  quoting again from the link above

                  “Irish attempts for an interim trade deal with the EEC failed
                  and the European Commission showed sympathy, but little else, for Ireland’s position. There was some domestic discontent in Ireland about an apparently rudderless EEC policy; the truth was that the EEC was not waiting with open arms to welcome Ireland, and Anglo-French tension continued to cloud the enlargement process.”

                  In other words France saw Ireland as a dependency of the UK in the 1960’s. At the time the UK and Ireland appear to be in agreement with this position.

                  Another Quote

                  “When Wilson and Lynch met on 1 May 1967 Wilson explained that Britain indeed intended to renew its EEC application. He told Lynch that Dublin could count on London’s support for simultaneous British and Irish accession. Britain’s application was submitted on 11 May. Ireland’s followed fifteen minutes later. ”

                  So Ireland couldn’t join then either. And when the UK re-applied in 1967 they did so in co-operation with the Ireland.

                  After de Gaulle’s death, when serious negotiations began, the Irish and UK governments worked in tandem to look out for each other.

                  Another Quote:

                  “Protecting Ireland’s interests during the entry
                  negotiations and the transitional period following entry,
                  particularly in trade, agriculture, industry and fisheries were
                  Ireland’s main negotiating concerns. The Committee of
                  Secretaries, the Heads of the senior government departments, considered that ‘the most important objective for us in these negotiations will be protection during the transitional period of our interests in the British market, particularly as regards agriculture’ …

                  Despite the fraught state of Anglo-Irish relations, and
                  what turned out to be the worst phase of the Northern Ireland Troubles coinciding with the entry negotiations, (Irish Foreign Minister) Hillery worked closely with his British counterparts to ensure that Britain and Ireland understood matters of joint concern through the entry negotiations.”

                  In other words Ireland came in as the UK’s little brother.

                  Things have developed since then, but when the banking crisis hit – Ireland turned to the UK. I know there are specific reasons for that. – the UK banks were most exposed and the Irish used market traded instruments to restructure their debt – but the fact remains that it was negotiations between the UK and Ireland that removed Ireland from the maw of the ECB’s austerity machine, and Germany was none too happy about that. That tells us something of the continuing close, if often dis-functional, relationship between the two countries.

                  The tabloid reaction to Ireland makes things worse. There will always be a tension between the islands and the UK establishment/media has always had little or no respect for Ireland’s particular interests/concerns. They seem to see it as a feisty little guy, fun at times, but infuriating at others and they have no hesitation to “put him in his place” whenever they see what they consider to be dis-loyalty.

                  Ireland sees the UK as, I imagine Poland views Germany, big, unfeeling and clumsy. Indifferent most of the time, but heartless when it decides – and despite all that, Ireland has no choice but to deal with it.

                  Full disclosure, I am Irish. I grew up there, was educated there and I find a lot of these conclusions to be very uncomfortable.

                  1. Donn

                    I’m sure we all do! And after all, that’s why we’re here, trying to get our heads around it. Full disclosure on my own part: not only am I, like you, raised and educated in Ireland, but I’m the grandchild of an RUC officer and great-grandchild of an RIC constable, so my concern with Brexit’s impact, north and south, is personal and familial. I just want people to come through this okay. That goes for people in Scotland, Wales and England too.

                    I don’t know if the difference between our perspectives is generational, experiential or just intellectual, but I’m finding it hard to understand how you arrive at the conclusion that an Ireland having difficulty managing a border crisis caused by Britain would by any sequence of events end up being seen as ‘loyal to the UK‘?

                    The liberal quotations of Ireland’s accession to the EEC are interesting, but offer no reflection on the impact forty years of being required to operate as a sovereign state within the European communities has had on the Irish political classes. To quote:”It wasn’t until EC membership in 1973 that Ireland finally began looking outwards towards all directions rather than solely eastwards to New York (Crotty and Schmitt, 2002: 24). In the decades that followed, membership of the EU allowed Ireland to exert itself like never before on the world stage. Membership opened
                    up Irish circles to European and world affairs and provided access to detailed and specialized information…More importantly, Ireland was finally able to emancipate itself from its complex and onerous relationship with the UK (Tonra, 2006: 55).” Full article here.

                    Ireland’s latitude for free action is small, but your analysis is flawed in making no allowance for it whatsoever. And on this front, the direction she has inclined is clear (see Hanseatic League 2.0 and this year’s review of Irish-German relations).

                    As for our headline industries, yes, it’s a very important distinction. But they still currently form a part of and contribute to the Irish economy. And in today’s world, every state’s headline industries are ‘pass-through’ ones, surely? Or is that not what we’re talking about when we discuss the potential drop in the UK’s GDP post-Brexit as companies in a range of sectors relocate out of Britain?

                    Finally, with all the talk of ‘economic war’, you’ll recall from our school days that Ireland actually endured one of these with the UK in the last century. At that time, Britain was still an impressively imperial state; Ireland, an under-industrialized agrarian society with precious few alternate partners. No one in their right minds wants another such conflict. But if a hurting no-deal Britain succumbs to an impulse to lash out, we’ll endure this too.

                    1. NotReallyHere

                      Thanks for the reply and the background. It makes discussion more interesting.

                      There seems to be a general consensus that “Ireland will suffer greatly, but in the end all will be fine because the UK will break up and Northern Ireland’s loyalists will accept a united Ireland, however reluctantly, in order to remain in the EU.

                      I have many reservations about that argument. The most important one is that it seems to be more of a comfort blanket than a thought out argument – it implies that the Irish Republic just needs to hang tough, keep doing what it’s doing, and “it’ll be alright in the end”. I imagine there are situations where that has happened in the past but I can’t think of one. It also assumes that the UK will not act in its own defense, instead it will passively disintegrate. I don’t see that happening.

                      I used the quotations to show that Ireland/UK relations are extremely complicated. To outsiders it is more like a dysfunctional family than two independent nations. For instance, on your comment that foreigners are unlikely to question Ireland’s loyalty to the EU in a hostile border situation, just remember that UK intelligence/security services likely planted bombs in the Republic of Ireland in 1974 ( Dublin, Monaghan) at the time their governments were co-operating very constructively in negotiations with the EEC. They were seen as, effectively, one country then. That may be different now but I don’t see that.

                      It is true that Ireland’s has more open and deeper ties with the rest of the world today than it did back in the early 1970’s but so does everyone else. To capture the industries that MAY leave the UK, Ireland will have to compete with countries that have better geographic access to Europe’s most important market – Germany. That is not going to be simple and while I understand that Ireland has advantages – the English language, the infrastructure, the educated and young population – these may not be enough and even if they are, it will take a long time for them to make an impact.

                      Which brings us to the attitude of the Germans. This is the key to the whole thing in my view and I find it frustrating that there is little discussion about it.

                      I begin my analysis by seeing the EU as a transparent entity. It doesn’t really exist except as a series of contractual agreements among nation states. The EU has no real policy making power and it only has the resources that the large countries decide to give it. The real policy decisions are being made between Germany and France and, more and more, even France is being pushed to the side. It is Germany’s attitude to the EU that will decide the resolutions to the ongoing banking crisis, to trade agreements, to sanctions against Russia etc etc.

                      And if we are in an economic war situation with the UK it will be Germany’s actions that have impact and they will be decided along the lines of German interests, not France, Ireland or anyone else (see migration crisis). I don’t know if Germany has as much interest in Ireland as it does, say Lithiania, Poland, Hungary or the Czech republic, but I do know that the direct economic linkages between Germany and those countries are deeper than they are between Germany and Ireland. Germany has other fish to fry, is my point.

                      If Brexit is as horrible as everyone says it will be then we are all in serious trouble. The UK will enter it unprepared, but the shifts in the EU, the ongoing banking/fiscal crisis in southern countries and the vulnerabilities in the EU’s financial architecture (which, in the end, can only be solved with German money) are going to be strained even further and Ireland is the likely easy target that the UK could use against France/Germany in this battle.

                      On your comment about the economic war. I do remember that from school, “burn everything but their coal”. It was only later when I read more and thought about it as an adult that I could understand that, yet again, the complexity and depth of Anglo Irish relations is fascinating. De Valera defaulted on debt payments incurred in the 1880 – 1910 (Land Acts) period so there were very few years left on those (subsidized) debts. He did manage to polish his anti English/Republican credentials though. So I suppose, good for him.

                      In a repeat scenario, Ireland would be truly screwed. Like Bobby Magee – When you have nothing, you have nothing to lose – and Ireland had nothing to lose in the 1930’s. Today, a sophisticated banking system, masses of real debt (not the tail end of what were effectively 30 year subsidized mortgages) and a mobile population make Ireland more vulnerable to economic shock, not less so.

                      Anyway, we will see how it plays out.

      2. Richard Kline

        Ireland absolutely will not be allowed to capitulate, and anyone in government there knows it. A major feature of Brexit is the significant increase in EU unity on unity which it has compelled the other 27 to adhere to. This has received little comment, but in many respects it is of larger current and much larger ongoing relevance than the fact or nonfact of British exit.

        Irelands’s future, not so say their present, is with the EU. Ulster becoming a smoking plain is s stiff price, but EU compensation payments will buy enough oil of clove to take the sting out.

  5. jim

    The EU have no incentive to negotiate as their primary purpose is to protect the single market. I believe the only deal on offer from the EU has always been just a free trade agreement with UK minus NI like Canada and for NI to remain in the customs union which was never going to work. All of this is politically posturing on both sides as to who will take the blame. Unfortunately honesty from politicians on both sides is in very short supply.

    Best to just get on with the no deal option including re-instating the border in northern ireland. the fact that ireland will be a big loser is just bad luck. Later on if the EU sees any advantage in a deal then they will negotiate one.

    The EU hold all the cards so no point in negotiation.

    1. vlade

      EU would accept EEA format – the question is, would EEA accept the UK? I’m not nearly as sure as North is.

      1. beachcomber


        “EEC format” includes the EU’s four freedoms:- yes or no?

        If yes, how is that reconcilable with the Brexit referendum result?

        1. vlade

          Yes, although there are some “brakes”, but I believe less in them than North does.

          That said, even the EU’s famous ‘Freedom of movement’ is actually much less free than you’d think. There’s a number of ways how someone can be kicked out after three months – but the UK never even bothered looking at what it could implement. For example, IIRC, it could implement the “requirement to have a firm job offer”, a register of foreigners, restrictions on access to social services (and recharge a lot more to EU) etc. etc.

          But there was never political will to do so (make your own guess as to why). But it could implement them now, and possibly claim to achieve significant sucesses in “restricting FoM”, as 99.9% of UK citizen’s would have no clue it would be just implementing existing EU rules.

          1. beachcomber


            OK but you’re completely ignoring another, vital, factor – namely, that along with EU rules (however modified) comes ECJ jurisdiction with attendant subordination of UK parliament’s lawmaking sovereignty and UK Supreme Court adjudication to ECJ judgments. That is a red line however you look at it.

            1. Yves Smith Post author

              No, there is an EEA court. From Wikipedia:

              As members of the EEA, the three countries have access to the internal market of the European Union. Consequently, they are subject to a number of European laws. Enforcement of these laws would normally be carried out by the European Court of Justice (ECJ), however there were legal difficulties in giving Union institutions powers over non-members so the EFTA Court was set up to perform this role instead of the ECJ.

    2. Michael

      “bad luck”? The border I can live with, the way it will stoke old fires and might provoke tensions is what I’m afraid of…..

    3. Richard Kline

      It is not simply that the EU has ‘no incentive’ to cut a bespoke deal with the UK, it’s that is a practical impossibility for it to do so. The principle of treaty convergence, both internally operative and externally operative, has ever been “One deal for all, one deal with all.” The EU has granted exceptions on specific issues over time at opt-in for Member States, but only out of necessity. These have been actively harmful for the functioning of common institutions, which everyone understands, the largest of the many flaws in the European Project to date. Negotiating a bespoke deal now at the unilateral demand of the UK is a massive incentive for other Member States to extort or to continue with their own exceptions, a severe blow at the viability of common institutional functioning in a way that, say, a bankruptcy by a member state would never be. The UK gaining any special treatment is a massive incentive for other non-EU states to extort broad, bilateral concessions from the EU rather than a “Column A, Column B, or Column C with us all” approach. Why wouldn’t the USA demand massive concessions from the EU if little, non-essential Britain were to rip off major ones now while giving nothing except a few billion one-off quid?

      It is politically impossible for the EC negotiating arms to concede an extraordinary status to the UK. Not ‘they won’t’ but ‘they can’t.’ And supposing that they did, I guarantee that several EU Member States would veto any such accord. The UK has never seemed to grasp the impossibility of the EU conceding Britain’s desiderata. The entire UK position that any of this was ever ‘negotiable’ has been an enormous falsehood of self-love. This is what the EU negotiators have stated politely or less so in diplospeak, but that the inflamed loons on the Tory bargaining unit have been incapable of understanding at best—or intent on using to force a no-deal in some individual cases at work. Corbyn and his crew don’t get this either, that some EEA plan they seem to think would be better is achievable . . . when it isn’t and it’s not.

      No one expected to be ‘negotiating Brexit,’ so of course these things were not thought through to the hard facts of reachable shores. Only Tory cranks pressed the self-destruct button, and everyone in Britain has been babbling the fragmentary delusions which they had carried around with them for years on “What if we left?” rather than arguing for realistic outcomes. I’m not convinced that most of the Tories have meant to crash out the UK, but I am convinced that they have believed for years in an outcome set which is politically impossible for the EU ever to concede. This is part of the cost of the UK having won concessions on major points in the past, that the political class there continues to think that political concessions will be wrung on key issues once again when the grit grinds the nit. But they can’t be; and they won’t be. No Sweepstakes win; no lollipop; no life preserver; no fire extinguisher. “We cannot risk ourselves to save you, so we will stand over here. And close the curtains come the hour.”

      1. vlade


        This is what the UK seems to ignore – a number of their requests would require EU to subvert its own acquis, or pass special “UK” laws. In effect, the UK would be better off than a member state, which is just simply unacceptable.

        EU is not intrasigent – it’s constrained by its laws, and has no will to change the laws just because an external party wants to.

        But I got already over the fact that for Brexiter’s its “sovreignty for me, but not for thee” case.

  6. Maff

    The UK is looking at a painful and turbulent transient over a few years. Worse times have been managed before.

    After this the UK will have regained its sovereignty, ability to make trade deals and control of its borders which was what the public voted for in June 2016. Hurrah from me!

    Anyone who says that they know this will pan out badly for the UK in the long term is talking nonsense.

    1. vlade

      In the long term we’re all dead. You may find out that a number of your fellow Leave voters weren’t expecting benefits to accrue to their children or grandchildren, but had a bit more short-term horizon.

      1. Mirdif

        This kind of blithe insouciance makes a crash out almost inevitable. A sad lack of imagination as to how bad things can and indeed will get.

        1. tegnost

          I won’t claim any special knowledge, but a crash out has seemed likely for quite some time to this regular reader of the brexit posts and the resulting commentary at nc. Has a sort of Greece feeling to it where if only you could use your imagination there is a way out, but there is no space for imagination in the context of inter country negotiations and treaties, it’s very black and white, so imagination should really be called “pipe dream”.

    2. Newton Finn

      Yes. No one knows how the inevitable process of ending malignant neoliberal globalization will work out, but the UK will apparently be the first major nation to take the plunge. My guess is that while there will be numerous problems and inconveniences in the short run, the UK, being currency sovereign and first-world developed, will manage to pull it off relatively well in the longer term. If so, enjoy watching all the dominoes begin to fall as neoliberal globalization is deconstructed, and the new world order reverts to what preceded it for centuries: a collection of independent but interconnected nation states. The surgical removal of aggressive cancer is never pleasant, but it is necessary, and in this case, I believe, the patient will survive the operation and eventually return to a more normal, much healthier life.

        1. EoinW

          We’ve had more than 60 boom years. The party can’t last forever. Nothing in life is free. But a few generations timed things nicely enough that they never had to pay for any of it, while their grandkids will pay for it all.

          Who knows how many bad years it will be but it will be bad for everyone. We westerners will have to turn in our silver spoons.

      1. c_heale

        Of all the first world countries, I think the UK is one of the most unlikely to pull it off well. Its manufacturing industry is small, and what’s left will disappear with Brexit as foreign companies pull out, financial services are likely to be badly damaged by Brexit and if the option is taken to make the UK a free trade zone (the aim of the ultra right Brexiteers) serious civil unrest is likely to ensue. There are going to be massive non-tariff barriers to trade in the short term, and through it’s negotiating tactics with the EU, the UK has shown it can’t be trusted. However, the biggest problem imo, is that the ruling elite of the UK are still living in the past and don’t realize the UK needs to make or sell something that someone else wants to buy, in order to survive.

      2. animalogic

        ” If so, enjoy watching all the dominoes begin to fall as neoliberal globalization is deconstructed…”
        That brexit will involve somekind of “defeat” for neoliberalism seems as blindly optimistic as the Leavers arguments have always been. The best hope, & it’s a long shot, is that the Tories will be destroyed for a generation & that Labour might actually become a progressive socialist party. Neither are bets I’d put money on …

  7. Shane Mage

    Yes, you often have “already said it is too late to complete another referendum in time for the UK to back out of Brexit if the vote went the other way.” But I have no idea why not. Since the UK has no formal constitution except for parliamentary supremacy, the only parliamentary obstacles to calling a referendum are parliamentary rules, which a majority vote of parliament can set aside for the time it takes to debate and vote a law. The Law would:
    a) set a date as soon as technically possible for a referendum having force of law.
    b) define the referendum electorate as all britons and permanent UK residents over the age of sixteen, no matter their present domicile nor how long they have been living out of the country.
    c.)The question of the referendum shall be: Yes Or No, the UK withdraws its Article 50 submission to terminate EU membership.
    d.) A majority vote for “YES” shall constitute, without further legislation, a formal withdrawal of the Article 50 application.

    I realize how extremely unlikely it is that May or any other Tory would agree to a real popular vote, or that Labour with Corbyn as leader would ever muster the courage and will to force such a vote.
    But until late March it certainly would not be too late. What the Brits lack is not time but sense and guts.

    1. Anonymous2

      I think a general election is also a possibility (though far from a high probability one). If May does a deal and has problems in the Commons then she could call an election on the basis of ‘vote for my deal or face chaos’. It might work. The question I find most difficult to assess is the real strength of opposition in the Commons to a deal. The ultras make a lot of noise and nuisance but would they bring down their own government? Corbyn will insist Labour oppose May with a view to bringing the Tories down but if she is prepared to stake the future on another roll of the electoral dice perhaps she will be happy to indulge him.
      After all if she loses then the Tories get to pass the poisoned chalice to Corbyn before the balloon goes up. Could be an astute move in the longer term. The risk is an indeterminate outcome which leaves complete chaos, but I think she probably walks the plank shortly after in those circumstances anyway.

      One question is will the ultras try to bring May down first? I have no doubt they are tempted but they only get one shot so, if they fail, they are out of the game for at least another twelve months. Time will tell.

      1. vlade

        IMO GE is more likely than a referendum.

        Unfortunately, it’s more than likely that a GE would return a hung parliament again, so I doubt that would be a solution.

        Barnier said that it would take a new GE or a new referendum would be the only two possibilities where he can see A50 extension – I do wonder whether it’s him overstepping again, or a real position.

    2. Yves Smith Post author

      The processes for a referendum are not at all the same as for a general election. The LibDems put up what was the most accelerated timetable for a referendum, and that was eight months. That didn’t include the time for formulating the question and getting that passed in both houses of Parliament, and Clive has said that takes six months to do it properly. The UK is in this mess in the first place because the Brexit question was stated poorly. Everyone knew what staying in the EU meant, but it was never clearly thought out, much the less put to the voters, what leaving the EU would mean (as in there were multiple ways to do it and there referendum never flagged that, much the less told voters what version they’d probably get).

      Referendums also require the formation of campaigns to market both sides of the question and a period of time for them to do that.

      On top of that, the UK does not hold national elections (I believe this is the result of court decisions) in December, January and February because it would have the effect of discriminating against areas like Scotland where winter driving conditions deter voting.

      1. Anonymous2

        The UK does usually avoid the winter months for elections but if it was regarded as necessary in a national emergency I would expect one to happen. In 1974 there was an election on 28 February in what was also regarded as a national emergency. History could be going to repeat itself. Alternatively late November/ early December could happen. The 1935 election was in November, the 1950 in February.

        1. Yves Smith Post author

          Please pull out a calendar.

          Parliament is on recess until 5 September.

          That leaves less than eight months to Brexit date.

          Any referendum not compliant with established rules is guaranteed to be challenged in court by the Utlras and probably enjoined. So the eight month bare minimum applies, and that did not include necessary legislative acts before and after.

          And the Government is against it and still has a majority in Parliament.

          This is not happening. Period.

          1. Anonymous2

            Perhaps I was not clear.

            I was discussing possible timings for a general election.

  8. Tom Stone

    One hell of a show!
    If things go really bad and Theresa May decides to emigrate…CalPers will need a new CEO soon.

  9. beachcomber


    You present a very compelling “case for the prosecution”. Brexit’s immediate consequences, after March 29th, do indeed seem more likely than not to be painful in a large number of ways, some of which might have been able to be mitigated if the EU had been prepared to bend over backwards to help to mitigate them, but why on earth should it? Besides, many of those ways relate to the desire of a variety of vested interests (prominent among them the City) to preserve after Britain’s departure much or all of the pre-departure status quo; as such, they don’t merit consideration by the EU
    From the moment when Theresa May proclaimed that “no deal would be better than a bad deal” contingency-planning to cope with as many as possible of the immediate worst consequences of a no-deal Brexit should have been put in hand. If she meant that (and she should have) it was inexcusably negligent not to have acted upon it. Instead, cloud-cuckoo-land became her government’s chosen habitat throughout the ensuing 18 months or more (but not only theirs – the opposition made a similar choice, as did the Remainers virtually in their entirety – not to mention a substantial proportion of even the Leavers).

    Some have argued that May’s worst mistake was to trigger the exit process (thereby starting the countdown) before having negotiated – and supposedly, on this argument, secured – all manner of agreements or at the very least undertakings or “understandings” of such a kind as to enable specific, targeted, arrangements to be designed and put in place “come the day” (whenever that might turn out to be). That was always wishful thinking: leaving means (and always meant) leaving, not leaving while keeping one foot (or both) in the door. The EU (reasonably enough, seeing that it was Britain not they which had created the problem) made it clear from the word go that it would enter into no discussion on specifics until Britain formally initiated the exit-process.

    However avoidable, A NO-DEAL BREXIT WITHOUT ANYTHING LIKE SUFFICIENT ADVANCE PREPARATION HAVING BEEN MADE FOR COPING WITH ITS WORST EFFECTS does now seem the likeliest prospect, barring a miracle. As so often before in Britain’s history we will be shown to have been woefully unprepared and will have to resort to muddling through, as usual.

    My own vision for the longer-term post-Brexit scenario would look as follows:-
    ⦁ Scotland votes for independence, its electorate having first been made fully aware of the implications of so voting (see next bullet-point)
    ⦁ There being then in all probability no viable alternative, Scotland joins the EU – due regard having been had to the resulting inevitability of adoption of the Euro as its currency and introduction of a hard border between itself and England
    ⦁ (A possible alternative for an independent Scotland might be to join “EFTA+EEA”, giving it access to the EU single market and (conditionally) customs union. But then Scotland would be forced to introduce a currency of its own, a prospect which – on current indications – it would view with great trepidation if not terror. And a hard border with England would still result)
    ⦁ Northern Ireland becomes constitutionally separate from Britain, with the border between the EU and the British mainland being in the Irish Sea and no hard border between N.I. and the Republic; therewith N.I. remains in the EU customs union and the single market (ie its position vis-a-vis the EU remains largely unaltered from what it is now)
    ⦁ N.I. enters the EU (and the EZ) through unification of the island of Ireland – when (if ever) the electorates of the two halves can both be persuaded to vote for that; in the meantime the inhabitants of N.I. remain British citizens but governed from an autonomous Stormont parliament not Westminster and positioned on the other side of the EU-British border; magnitude of future block-grant subventions from the British exchequer would be up for negotiation
    1. “England-with-Wales” (Wales continuing to have its own Assembly with its existing devolved powers) opens a new chapter in its history, in which it reverts more-or-less to being what it was before Ireland was colonised and the Act of Union with Scotland was passed, with a population of around 55 million (cf. France 65m, Italy 59m, Argentina 44.6m, Canada 37m, Australia 24.7m…) of predominantly anglo-saxon and celtic ethnicity but with a wide variety of (in differing degrees assimilated) ethnic, cultural, linguistic and religious minorities
    2. That new nation then, after a settling-down and sorting-out process, embarks upon a new era – a challenging but energising prospect with unlimited potential for rejuvenation given the will, and the quality of leadership necessary, to realise it in the context of a radically-altered political, social and economic framework; on paper at least it ought to have everything going for it – most of all the vigour, creativity and dynamism of its particular racial and cultural mix
    3. The foregoing leaves aside the vexed question of future external trade relationships (the forging of which must form a, vital although distinct, accompaniment to the purely internal re-balancing/reorientation process). My own personal inclination for the medium term at least would be towards membership of EFTA (subject to agreement by its existing members) but (other than as a purely temporary expedient to tide-over the transition-period – ie until 2020) not of EEA – which in my view would be a worse option than never having left the EU. All other, less immediate and potentially wider, trade agreements would require more extended consideration and negotiation.

    (Currently, all bets seem to be on the Scots taking their leave, and whether that’s anything other than a bogeyman conjured-up by disgruntled remainers as a supposedly-potent disincentive to proceeding with a hard Brexit remains to be seen. Obviously, if the Scots were actually to vote to remain part of Great Britain that would impinge dramatically on the rest of my scenario – but that’s another story).

    As an octogenarian I can’t expect to be around for long enough to find out whether my scenario will be realised wholly, partly or not at all. But I’d like to point out that it does contain one key ingredient in its favour which most others I’ve seen conspicuously lack – namely HOPE FOR THE FUTURE. Without that we might as well all just roll over and die right away.

    1. vlade

      I believe a crash-out Brexit will trigger NI and Scottish referendums. All that it takes to trigger NI referendum is a few polls that show unionism > 50%, and then the UK govt is pretty much required to do so.

      Scotland is different matter, but I’d see Scottish assembly to unilateraly run one, and a campaign of civil disobedience. It would be much harder for Westminster to resist this, especially if it had large problems of its own. Not to mention that more than a few English would be glad to see Scots go, and no-one in Britain really cares about NI. Paradoxically, a back-door to Scotland joining EU might be to do an East Germany trick, and claim it wants to join Ireland together with NI, to create a federated Celtic Tiger ;).

      KEW (Kingdom of England and Wales) would take quite a while to get up and going I believe, but here, all the bets would be off.

      1. beachcomber

        “I believe a crash-out Brexit will trigger NI and Scottish referendums. All that it takes to trigger NI referendum is a few polls that show unionism > 50%, and then the UK govt is pretty much required to do so.

        Scotland is different matter, but I’d see Scottish assembly to unilateraly run one, and a campaign of civil disobedience. It would be much harder for Westminster to resist this, especially if it had large problems of its own”.

        I don’t get the emphasis you put on Westminster’s hand being forced, in regard to either of those possible referenda. What would the objection be to N.I. holding a referendum should a vote in Stormont (if it can ever be got to function again) go in favour of holding one?

        And as for Scotland, why would Westminster want to prevent a second independence referendum? if Holyrood were to vote for it Westminster would have nothing to gain by opposing it and nothing but bad blood to follow. What would be the point?

        1. vlade

          NI and/or Scotland going would make the UK government seem weak, both domestically and internationally. It would not be the “Great Britain” anymore – especially if both joined EU ASAP.

          1. beachcomber


            I beg to differ.

            The “Great” is only a much-used geographer’s label (as in “Great Missenden” and dozens of other examples) which simply denotes a larger geographical entity. I don’t think that Great Missenden ever thought its name to be correlated in any way with its importance – just that it was distinct from and bigger than Little Missenden.

            And I fail to see what both joining the EU has to do with it, one way or the other.

          2. Unna

            Might be a good thing in the long run. Give the British an opportunity to unravel themselves from their monarchy psychosis and focus on the material and spiritual realities of their national existence. Relieve them of the need to “keep up appearances” of actually having an empire, making guys like Boris irrelevant. And how would a post Brexit Corbyn led England-Wales be to live in anyway?

            1. ambrit

              You are assuming that Labour would come out of a hard crash out in any better shape than the conservatives. I can see a Government of National Unity led by the Crown.

              1. Unna

                Yes, I agree. A Government of National Unity led by the Crown. That’s more than merely possible. Especially if things go really bad, and not just for the City but for ordinary people as far as their daily material needs are concerned, and more especially if they think Labour had a chance at government. In fact, I can imagine them allowing problems to worsen just to push things in that direction if they felt the need. I don’t pretend to understand in any depth the inner “constitutional” workings of the British regime, with royal prerogatives, apparent limitations on reporting and speech etc, the role of the military, all hidden behind the image of orderly democratic parliamentary process. To my mind there’s nothing transparent about this aspect of the system at all. I’m sure a lot of people will disagree, and I know this is controversial to say, but looking at that system, I see no reason, given the right circumstances, for the monarch not to spring back into “actual” power as the visible head of behind the scenes power brokers. The institution of the monarchy in the particular British system always has this potential.

              2. Dave

                The issue with the idea of a Government of National Unity is that they only really come about in response to a specific threat, and when everyone is broadly pulling the same direction.

                Replacing some of the current cabinet with the likes of Cable, Starmer, Robertson, Corbyn and McDonnell isn’t going to suddenly make the path through this any less treacherous, it just means that there will be a lot more shouting at cabinet meetings.

          3. tegnost

            EU would be highly incentivized to pull in the other isles just to set an example for other malcontents

      2. BillK

        I don’t see what the EU thinks it is ‘negotiating’.
        The EU states that their rules and regulations are set in stone and cannot be changed. When the UK leaves the EU then those regulations no longer apply to the UK. End of story.
        The only choice offered to the UK is to either remain under EU regulation or to leave. Cherry-picking is forbidden. So what is the point of EU ‘negotiations’?

        1. Inert_Bert

          Hello BillK,

          I think your question arises from the fact that the scope of the article 50 negotiations is more limited than what has been suggested by the British press and by the UK government itself. However, for there to be an orderly withdrawal there does need to be an agreement that will require the UK’s input and consent.

          The UK can/should have plenty of things to say about each one of the separation issues. Sure, they are mainly about solving the most immediate problems that will arise upon the UKs departure but the article 50 proces does leave plenty of room for actual negotiation (over what period are payments made, will the UK lease back assets to the EU? Will there be a political process to oversee citizens’ rights or a purely judicial one? Will NI be entirely in the SM or just for goods).

          The UK has also had the opportunity to flag separation issues of its own and has done so by requesting the transition-period which is also set to be part of the Withdrawal Agreement. In fact, the UK could and should have had more asks! For example, it should have explored possibilities for continued association with regulators like EMA, EASA and Euratom or failing that, requested assistance with setting up national replacements. If the UK had taken the entire Brexit process seriously even this phase of the negotiations wouldn’t have seemed quite so one-sided.

          The portion of the WA that is to deal with framework for a future relationship is going to be the first phase in a long (perhaps indefinite) process wherein the UK and EU wil each finally be able to negotiate on the basis of their future economic interests.

          Finally lets not forget that the UK’s own red lines have done much to push the proces in this particular direction. The separation issues flagged by the EU as well as the available models for a future relationship (the stepladder) are a direct result of those red lines.

          1. Clive

            An oft overlooked aspect, unfortunately there are many, is that in No Deal scenario, U.K. nationals living in the EU27 (except the Republic of Ireland where special non-EU provisions apply for NI citizens) immediately lose their legal basis for residency.

            Absent an arrangement made at the EU-level, it will be down to national governments to resolve the matter as they see fit. Or not. So what happens to U.K. nationals will depend entirely on which country they are in. But in the absences of stated governments’ policies, they will have no legal right to residency. Every jurisprudence that I’ve come across makes it unlawful to employ someone without a legal right to remain in a country. So employers would be forced to summarily fire them. And if a government decides that for the sake of expediency it will turn a blind eye to the problem and hold off on formal deportation proceedings, this would make that government liable to challenges from other illegal aliens or undocumented residents that they have to be treated in the same way and shown the same largesse.

            So, in summary, even a No Deal outcome is not the same thing at all as a No Action Required outcome for the U.K. / EU27. The EU cannot make policy up by itself. The Council must define policy (such as my example for U.K. citizens in EU27 countries) for the Commission to implement. That’s the way it works. If that doesn’t happen, national policy is the default.

            1. vlade

              Not just residency. In case of a crash-out, all non-dual citizens of the UK will become illegal aliens (to use the US term), and for dual-citizens it will depend on what the other citizenship is.

              That means all turists will be there illegaly (which may also invalidate their insurance policies, although it would be a brave insurer who would try that..), their driving licenses will not be recognised (so any rented car will be illegaly rented), if they are in hospital, they will get the bill in full etc. etc.

              If they work – be as residents or not, their employer has option of immediate termination (I suspect all work-law has illegality clauses), or facing legal proceedings. Not even necessarily from the government even, but simply their competitors may do that.

              Basically, it will be one large limbo. Expect the embasies to be swamped (hmm, I do wonder whether there’s anything in how the embassies are treated which would distinguish between EU and non-EU ones, probably are)

              1. Clive

                Yes, definitely. Anecdotal: My friend who lives for a large portion of the year in France and is married to a Frenchman has never done anything specific about seeking dual nationality (she’s British) or registering as a U.K. citizen in France. She keeps ties with the U.K. (bank accounts, properly etc. and uses her mother’s house as a correspondence address) so will be one of the hundreds of thousands — and I’d agree with “millions” estimates which are circulating in some sections of the media — who aren’t picked up in the stats.

                We discussed this briefly a fair while back and she had a wait-and-see attitude (do nothing, in other words). It was a reasonable assumption she’d automatically qualify for French citizenship via her marriage.

                The snag I thought of was that her husband and her are not ordinarily resident in France for tax purposes. This might lessen her claim. At the very least, she’ll need to consult with an immigration attorney to make sure. But that’s a complete waste of time until someone, somewhere, publishes policy.

                She’s rich enough not to care (they could just live in their primary residence outside France indefinitely if need be). Lesser mortals will have much bigger headaches.

    2. paul

      It looks to me that the year zero crowd realise all they have to do is continue to disrupt what little process there is to get their way.

      They certainly have have a clear post crash out plan as far as Scotland is concerned.

      Premises have been leased for a new 3000 strong ‘UK government in scotland’ to administer the withdrawal bill ,which strips holyrood of any meaningful (a lengthy but clear summary is found here) powers.

      The competence and popularity of the SNP has been taken as a grevious insult and they are determined to bring scotland to heel.

      While I doubt it was mention on the UK news, the supreme court started hearing westminster’s case against the holyrood continuity bill (which seeks to conform with the original devolution act).

    3. Richard Kline

      I fully agree that in a crash out scenario the disintegration of the Union in Britain is highly likely, a near certainty. Scotland leaves. The means may vary but the trajectory is certain. This may well happen even if the UK stays. They will get much better terms to join the EU on n accelerated schedule as done post-USSR for the Baltic states, for instance, with pro team convergence measures put in effect by the EU. Would the UK even have the means to resist that if, say, the Scots seized the missile subs out in the Lochlands? (I’m just tossing scenarios half for fun there, but all possibilities are in play after B-Day.)

      NI reunification with Ireland is the most probable outcome. DUP hates it, and civil disorder is a real possibility in that case. But the fact is, England won’t be able to subsidize the special financing of Ulster in the circumstances, so much as withdrawing from India England is likely to simply get back on the frigates and sail home. I could certainly see a Kosovo like protectorate in NI administered by the EU for a couple of decades until enough Orangeites drop off the demographic charts and Irish reunification is completed.

      What becomes of Sodden Britain is anybody’s guess. A long term re-entry to the EU would be likely, but we’re talking generational scales on that. Imagine a Ukraine-style zombie corrupt state where anyone with any talent leaves at age 18.

      Something not on anyone’s radar, but which should be, is that the devolution the post-imperial post-sovereign states in the European Union is a significant potential trajectory over the next 30 years. And why not? The treaty structure of the EU is unwieldy with more members, but that structure is evolving toward one more functional. The push for independence in Scotland and Catalonia is neither coincidental, nor trivial, but part of a major regional push for local autonomy within federal convergence. The separation of Italy into two Member States is not something at all impossible. The UK’s present incoherent and self-immolating attempt to leave the EU is part of a similar drive for ‘local autonomy,’ on the false assumption that the benefits of ‘regional convergence’ could somehow be retained.

      Internal devolution is likely to be a much more pressing issue in Europe over the next few decades than either immigration or further expansion.

      1. EoinW

        I doubt you’ll ever see a unified Ireland. An independent Northern Ireland with a soft border is the best compromise you’ll ever get Unionists and Republicans to agree to. Plus with the global economy collapsing why would the six counties in the north – let alone the other 25 counties – want to be ruled by Dublin? The city is just a giant casino. When the neoliberal order crashes and burns Dublin will have nothing to offer the other 31 counties.

        1. vlade

          The number of people supporting unification has undergone significant increase since Brexit, almost doubling from low twenties to mid fourties. An economic crash in NI would push that number higher I believe. Of course, the thing is that the unification would require not just NI, but also Ireland wanting it, which would be economic drag on it – unless it got a substantial money from the EU.

          1. EoinW

            What’s behind the increase in support? I’d suggest it’s the economic benefits from an open border. Logically people would want to keep the border open, which would be a further boost to support for a united Ireland. The thing is, Brexit will not happen in a vacuum that only effects the UK negatively. The Republic of Ireland will be the next country to have to bear the economic fallout. If a better economy is increasing support then a falling economy will reverse that trend. Hard times tends to make all people more tribal. No where are people better experts at being tribal than in Northern Ireland.

            Yes the UK is going to be first over the cliff, leaping into the post global economy world. But the global economy is drowning in its own debt. It’s not long for this world. Even if Brexit doesn’t trigger a meltdown, something else will eventually. Ireland, with its EU connection, looks appealing now, in our still functioning Easy Money world. it won’t be looking so well the moment the global economy tanks.

        2. PlutoniumKun

          Dublin is in a far better economic position than Belfast. The reality is that Brexit will scupper the NI economy in almost every way imaginable – all it has are two manufacturers left (aircraft wings and buses), dairy, and tourism and thats it. All four of those are under dire threat from Brexit. Even the traditionally Unionist business establishment is now acknowledging that they may be better off within the EU with an agreement of some sort with Dublin (I agree it won’t be overt unification, it will be some sort of compromised protectorate system).

          1. EoinW

            I agree that the NI economy is going to be in trouble. However all our economies are going to be devastated. It’s simply a question of when. I don’t think there will be much time between the economic tsunami hitting Belfast before it hits Dublin. The ceasefire has benefited all because people have been given 20 years to adjust to it. I doubt there will be 20 months after Brexit before the Irish economy is in ruins.

            Ireland has a pretty sad history. The English have ruled the island for centuries. Then came the Free State and 70 years of 26 counties being ruled by Vatican City. The past quarter century Brussels has been in charge. In each case there was a reason the Irish succumbed to a central authority. The English used coercion. The Vatican provided spiritual benefits. The EU material gains(just don’t look too closely at all the debt supporting such gains!). There isn’t going to be a good reason for NI to submit to Dublin’s authority because the moment the global economy goes Dublin will have nothing to offer. It will be interesting to see if the other 25 counties continue to put up with a bunch of dishonest politicians running their lives.

            Yes Unionist businessmen can be bought – all businessmen have their price. But what will Dublin have to offer them post Brexit?

            1. vlade

              NI is a poor region, even in Ireland’s terms (PK, please tell me if I’m wrong). It’d likely attract EU structural funds, and likely could also get more if it called on the German unification example (not that it’s a great example of how to economically unify..).

              EU will be able to pour in funds into NI (NI is already receiving EU funds, which will stop come next March) – I suspect that Germans will be more open to spending on “deserving” Irish than “undeserving” Greeks. So unless you’re counting on EU disintegrating pretty damn soon, I believe Ireland has more to offer (economically) to NI than the UK has.

              If you believe that Westminster will be able to offer NI more than Dublin, well, I’m not so sure..

              It was always – especially for Tories – an unwanted child, where they could not even say they wanted to get rid of it. The last time NI had value to Westminster was WW2, when it had strategic position for patrolling Greenland gap.

        3. Richard Kline

          Eoin, you are thinking in terms of current parameters, not those which will apply if crash out Brexit applies. Unionists may simply be a minority unable to stop a voted referendum. What do they do then, fight a guerrilla war, this time without British help to keep them alive? Unionist money is going to accept the inevitable too, as mentioned by other commenters. The past will not dictate the future in this, is all I am saying. And it seems a dubious proposition indeed that England would or could do much to intervene, as the English would be only too glad to pole the Unionists off to ‘international waters’ frankly.

          It is not in the interests of the EU to force a reunification, so as I said, a zombie Kosovo administration would entirely conform to Yurpo MO. Until enough Unionists died off, emigrated, or got with the program. Even Serbia is applying for EU membership: the logic of the outcome is implacable. If the EU decides that it would rather have unification than accept Ulster as Member State, that is that. And I think the Irish proper will insist on that. So there is the likely outcome.

    4. Keith Newman

      I’m with Beachcomber, Maff, and others who do not see catastrophe in a no deal Brexit. The catastrophe believers are getting carried away. No airplanes flying out of Britain, food shortages, no trade, near war time conditions. Really? In whose interest is that? Europe’s? Really? And the catastrophe will happen to a large advanced country sovereign in its currency? Seriously? And this is going to happen because some trade agreements haven’t been renegotiated by an arbitrary deadline? Come on! The rest of the world will be very happy to take over British markets if European suppliers are stupid enough to abandon them. International agreements can be suspended, prolonged and ignored if it serves the parties’ interests. The ECB ignored its own supposedly immutable rules to prevent economic collapse and save the banks. I remember the shrill end-of-the-world predictions for the year 2000 computer non-issue. Similarly the neo-liberal predictions of immediate catastrophe in the event of a pro-Brexit vote.
      Of course it would have been better to sort everything out ahead of time. Since it seems the parties won’t have done that by the deadline, they will muddle through.

      1. Dave

        Think of it this way.

        On March 30th, a couple of hundred passengers are sitting in a plane at Gatwick Airport for their flight to Paris.

        On March 29th that aeroplane’s legal right to be in the air and land at CDG was covered by Regulation (EC) No 1008/2008. On March 30th, it isn’t.

        With no legal right to fly and no legal right to land, the flight is not insured. Will that pilot choose to take off or not? If you believe that he will, what are you basing it on other than “it’s not in anybody’s interest”?

        Multiply that basic principle across every sector of the UK.

  10. SSV

    Washington is already looking fairly predatory towards the UK, looking for concessions it couldn’t get when the UK negotiated as part of the EU – including an inferior deal on open skies. As this article points out, the Trump administration is looking to treat the UK as an easy mark, as opposed to a partner. But what else would you expect?

    A crash-out Brexit will probably bring in an army of predatory capitalists, and is probably a motivation for some of the hard-core Brexiteers like Rees-Mogg.

    1. whiteylockmandoubled

      What do you mean “what else would you expect?” That Trump would be dishonest and mean, or that Britain would get screwed? Obama wears nicer suits and has a better barber, but given how badly Presidents of both parties, no matter their public style, have royally screwed every other country in the world, why should Brits expect special treatment?

      It’s not the U.S.’s fault that a comically inept generation of British leaders have maneuvered the country into a position weaker than El Salvador or Poland or Pakistan or any other periphery state. If you’re British, get ready to have every ounce of wealth imaginable stripped out of your country and sent to the sociopaths in New York, Frankfurt and Paris, and for the recipients to include your very soon to be recently relocated sociopathic Captains of the Financial Industry from the soon to be erstwhile City of London.

      Strip away all the pious “special relationship” nonsense, and Trump’s job — indeed his promise to American voters — is to screw Britain as hard as possible and render the benefits to Americans. “Inferior deal on open skies?” You have a gift for understatement. Because who gives a shit about British air carriers? let them collapse in the crisis, and let American and EU carriers suck up their assets for pennies on the dollar and take over the routes. If the post-Brexit British state wants to take one over and paint union jacks and scenes of romantic Albion on a couple of aging Boeings and plead for a couple of heavily subsidized heathrow-JFK flights for old imperial times’ sake, well ok, knock yourself out.

      But get ready. Britain by itself doesn’t mean nearly enough to anyone with any power in the rest of the world at this point in history for every single country not to ruthlessly extract better terms of trade for themselves from Britain than they currently have with the EU as the UK thrashes around in an entirely self-made crisis.

      Wow. I had to write that. I don’t really believe in most of it. I’m not an economic nationalist. I know that the Shock Doctrine that’s coming to Britain is going to crush millions of decent people. I know that if the tiny industrial dystopia in airline travel above actually came to fruition, the U.S. might pick up a couple of thousand mechanics jobs or middle management jobs overseeing subcontracted service workers in South Asia and Eastern Europe, but not much else. The assets would go to billionaires and it wouldn’t mean anything for ordinary people anywhere, as will happen across industries.

      But wake the hell up and shed any remaining sense of entitlement. Trump ran on anti-trade right wing populism. There is a left wing strain that envisions global trade with a dense network of social, labor and environmental protections (Corbyn’s reluctant remain-and-fix it position). I have always supported that vision around U.S. trade deals and been sickened to see those deals made along lines that simply enhance corporate power. But that’s obviously not where Trump is going, and he will gain great political benefit from appearing to wrest concessions from the British on behalf of American “jobs.” Nobody should be surprised when Trump does what he thinks is his job. Get mad at Cameron, May, the Blairites and, yes Corbyn.

      I’m opposed to neoliberal policy. But pretending that you can casually disengage from a body that negotiates the terms of trade for a half billion people and a sixth of the world’s gdp and go it alone without any planning is epic political malpractice. Expecting other governments to give you things when they don’t have to is epic self-delusion. Even as big a monster as Trump deserves little blame for taking maximum advantage, and the fact that Britain is in a position to be taken advantage of by someone as dumb as Trump is telling.

  11. rd

    I have been utterly baffled by the British Government’s “negotiation” stance since Day 1. It was very clear that it would not be in the EU’s best interest to allow Britain to Brexit on favorable terms where Britain could pick and choose what they would still comply with while being able to completely control movement of people across the border.

    All along, I figured that Britain would need to adopt the various EU Eurocode etc. standards as British Standards for export and import items so they could negotiate a trade agreement using those standards as a basis. In the future, if they then modified those standards or failed to adopt revisions to the EU standards, then that would likely would require renegotiation of those trade agreements, similar to what the US and Canada have to do with the EU.

    For services, I didn’t see things like financial passports surviving unless there was freedom of movement of people across the Britain-EU border. So many services would move to EU cities and what would remain would be focused on the British market. Since London is a preferred place to live, they could have still kept it as a major finance and other service center (e.g. NYC), even as headquarters, but with much of the EU servicing work done in Dublin, Paris, Frankfort, etc.

    I think there was an opportunity to do all this in an orderly fashion, but Britain appears to have selected the “Chaos” button.

  12. Brooklin Bridge

    Crashout starting in May 2019. The regulation that Could push oil to $200 a barrel 10 months later. Incompetent crooks in the cockpit flying 66+ million Britons into illegal airspace…

  13. jabbawocky

    ‘Parliament also thinks it has a say over matters that are outside its power. For instance, May lost a vote on an amendment that obligated the UK to seek an agreement that would allow it to stay in the European medicines regulatory framework. But this is silly, since only members of the EEA can belong. ‘

    This amendment obliges the UK to maintain access. The only way to do this is to be part of the EEA. This amendment is therefore very important, and in my reading not at all silly. Unless I am missing something.

    1. Yves Smith Post author

      No, it merely obliges May to try to get such an agreement, which she can’t get without withdrawing from Brexit. Neither the Government nor Parliament is considering the EEA option, so to project that onto a non-binding amendment is a remarkable stretch.

  14. Phichibe


    Thanks for the update. I’ve been waiting for your latest since the BoJo resignation and am only sorry that you didn’t have the time to do one of your masterly exegeses.

    A couple of quick thoughts that I’ve mentioned in prior posts on the Brexit clusterf*&k:

    1) More than anything, the number one priority of Brussels is to prevent a ‘run for the exits’ by unhappy member states. At any given time some nation in the EU is unhappy and if Brexit were to be painless for the UK then Brussels fears (rightly so) that within a decade the EU would cease to exist. Put another way: as far as Brussels is concerned, pain for the UK isn’t a bug, it’s a feature of Brexit.

    2) The Scottish independence movement needs to consider what the Spanish (and possibly French) govts will decide about any application to join the EU. Spain is in the midst of a slow-moving train wreck over Catalonia, and as I posted a month ago, I’ve not heard if the current Socialist govt views Catalan independence any more benignly than the Conservative govt that it just replaced. I know that the Spanish conservative Prime Minister Rajoy made clear after Brexit that Spain would veto Scottish membership in the EU precisely b/c it didn’t want the Catalan independence voters to think they could leave Spain, join the EU, and thus have their cake (lower taxes since they wouldn’t be subsidizing the poorer parts of Spain) and eat it too by staying in the EU. FUrther complicating the Spanish dilemma is Gibralter but that’s for another post.

    France also has some low-grade secession problems, notably with Corsica. Germany, otoh, would be only too glad if the neo-Nazi leaning parts of the former East Germany wanted to secede but no such luck (that’s a joke).

    3) I am seriously afraid that as the clock winds down on Brexit that other events are going to explode on the world stage as various nations look to exploit Europe’s distraction. Look for Israel, Saudi Arabia, UAE to precipitate a confrontation with Iran/Hezbollah/Syria, maybe Russia in Ukraine, China in the Western Pacific, etc. This may ultimately be the worst consequence of Britain’s absolute failure to negotiate a Brexit like adults and instead set the stage for a crisis show-down with the EU. Watch this space.



    1. Clive

      The big political risk in an EU pour decourager les autres strategy is that the EU27 (or some of them, anyway) pause for thought for a moment and reconsider what, exactly, they are or might become.

      Which might be viewed not so much as member states, but something which could be labelled more realistically as the hostages.

      1. Synoia

        but something which could be labelled more realistically as “the colonies.”

        Has a more historical ring about it /s.

    2. paul

      I know that the Spanish conservative Prime Minister Rajoy made clear after Brexit that Spain would veto Scottish membership in the EU

      … but his foreign minister, Alfonso Dastis, said spain would not veto membership last year.

      Given the choice between being out of the EU under westminster or holyrood, I’ll take the latter all day long.

    3. EoinW

      I guess you hadn’t noticed that when it comes to explosions on the world that America has cornered the market.

  15. dcblogger

    I seem to be very stupid, why wouldn’t we negotiate an air transport agreement with the UK? We have one with Switzerland, which is not in the EU.

    1. Yves Smith Post author

      The UK isn’t taking even the first step to get any such agreement in place, and they are massive undertakings. The UK would probably have had to start before the Brexit trigger was pulled to have get ones done MERELY with the US and EU. And what about all sorts of other destinations, like China, Japan, South Korea, India, the countries in the Middle East and Africa? Even if the EU handled some them on a multilateral basis, those would still be separate deals.

      Shorter: you can’t negotiate with someone who isn’t negotiating.

  16. Tomonthebeach

    How are EU, US, RU, China, etc. businesses preparing to flock in and pick the UK carcass clean when their economy unravels?

    That is the story rarely reported. It is amazing hubris that UK ignores its economic vulnerabilities. Brexit will likely be the equivalent of a modest nuclear detonation in London. It will disrupt all daily lives in the UK for months or more. Real estate is likely to plummet in value as the mass migration completes.

    In the end, relations between the UK and every other country will be permanently jaded by resentment over their self-inflicted wounds and the losses that their foreign investors are likely to experience.

    1. PlutoniumKun

      They are already doing it – its just under the radar as nobody (especially in the EU) wants to be too overt about it. There are numerous national and regional development agencies scouring the UK and cold calling companies with offers for relocation.

      I don’t think we’ll see true vulture capitalism though until next year – I suspect lots of disaster capitalists will be waiting until there is a major fall in sterling to see if they can pick up bargains. The cannier ones will already I think have their assets out of the UK or sterling and will be waiting to see what happens.

  17. Code Name D

    I remember reading about a story where a reporter interviewed a Brit about why he wanted to leave the EU? Hasn’t he benefited from an unparalleled era of peace and prosperity? The man brakes down into tears, later explaining that he lost all three of his suns in the various US led wars and was laid off twice when his job shut down to move to China. So exactly where was this peace and prosperity the reporter was bragging about?

    When I hear claims that a crash-out will result in real pain. I am reminded of similar claims made in reference to Trumps trade tariffs. How the Trump states will suffer from higher prices and job losses, apparently not noticing that off-shoring and consumer inflation are already problems there – which was why they voted for Trump in the first place.

    I suspect that what ever crash-out ends up delivering. For most Brits, it will just be more of the same.

    1. rd

      This is why the US’s trading partners are carefully choosing the industries and products that they apply retaliatory tariffs to. The goal is to maximize damage on red states in sectors that have been doing ok. They are not applying retaliatory tariffs on things like coal or clothing.

    2. MisterMr


      “he lost all three of his suns in the various US led wars”

      What has this to do with the EU? Shouldn’t this guy blame NATO, the USA or the UK government instead?

      “was laid off twice when his job shut down to move to China”

      What has this to do with the EU either? I can understand those who think that their jobs are taken by, e.g., Poles, but what has China to do with the EU?
      How can this guy expect to be more protected from Chinese competition outside of the EU?

      This example in my opinion explains the central problem of Brexit: people blaming the EU for all sort of unrelated (although very real) problems, that as a consequence will not be solved once the UK leaves the EU.
      A choice made on delusional premises will rarely lead to a good outcome.

      1. MisterMr

        I’ll ad that while I can understand those that think their jobs are taken by Poles or other immigrants from the EU, I believe that the impact of immigration on jobs is minimal, and that anyway could be soved by higer minimum wage laws.

        In short I think this whole neo-protectionism thingie is a really big smoke and mirrors operation, or rather the result of a decades long smoke and mirror operation that in the end went out of control thus hitting even its creators.

      2. todde

        but what has China to do with the EU?

        Trade policies with China are set by the EU, not the UK.

        1. MisterMr

          Sure, but businesses relocate to China because Chinese labor is cheaper, not necessarily because of trade policies.
          What trade deal is the UK going to negotiate with China that prevents businesses to relocate there?

          Furthermore, even if the UK places very high tariffs on China, those jobs that were relocated were presumably tradable goods production, that are sold worldwide and not just in the UK.
          So even with high tariffs these jobs would likely go to China.

  18. viscaelpaviscaelvi

    What about the possibility of the UK… ehem… bending over for the EU at the eleventh hour and accepting a Norway-like agreement, where they accept the common market rules (all of it, all the way up to the European Court of Justice), they pay quite a lot (possibly more than the Norwegians) into the budget and have no say in EU affairs and become a sort of a political pariah for decades?
    Certainly not under this government (although one never knows), but after a cataclysmic (whatever that means) political change in the UK.

    1. PlutoniumKun

      I think a lot of people assumed that would be the eventual outcome. But right now, the politics of both the UK and EU seem to make that impossible. There is no parliamentary majority to accept this (if it was on the table). And the EU is set on its ‘Canada’ option, which is far less. In the longer run, I suspect this is what might happen if the UK ends up with a relatively sane government.

      1. Dave

        Also, unless I’ve missed something then I’m not sure that it’s something that can just be “accepted at the eleventh hour”.

        It’s something that has a specific application process and the existing EFTA members have the power of veto.

        Realpolitik suggests that they wouldn’t, but the whole thing is going to be a good deal more complicated in both London and Brussels than May and Junker shaking hands at the end of next March and everything just being sorted.

  19. Scott1

    I was looking for the commentator’s sentence where was stated it wasn’t too smart for Teresa May to be negotiating directly with EU representatives. Definitely these negotiations ought be done as regular work of bureaucrats and brought to the Prime Minister and Parliament.

    if the UK either does not have competent systems engineers in the employ of the UK government they better find them. For the Prime Minister to be attempting to do this work herself implies a distrust of the people the UK pays to come up with plans based on precedents in international law and best practices.
    The Airlines & Freighter operators will not be sitting around waiting for a shut down of their fleets. There CEOs will be aiming at preventing any interruptions to their businesses and will turn to the ICAO to make sure standard operating procedures are put in place, or simply acknowledged in order to satisfy the insurance companies.

    While the UN is not going to prevent the apocalyptic riot now that the system no longer works for not reforming and reinventing since the roil in the power balance, the UN organizations are its last strength.

    Greece is enslaved by the EU and the ECB. Italy is under assault and will end up in the same situation as Greece for not taking Warren Mosler’s advice. My reading indicated France was a real target.
    It is obvious to me and others that as long as the Euro is used as a lever for Econ War and results in nationstate losses of assets and the miseries of enforced austerity so some German bankers & their corporations collect endless interest it will become clearer & clearer that membership in the EU, will stop being worth it as nationstates are conquered in War by other Means, or War by Finance.

    The UK has apparently been losing its Finance Headquarters to the continent. As this happens it appears to me as if the UK is losing a certain amount of leverage.

    For whatever reasons that the UK voting population decided to pull out of the EU, & there are damned good reasons for others to follow suit if all that happens to them as the financial system operating, is they are one by one or in blocks conquered.

    Not a word have I read that would lead me to believe the Financial System of the EU will change so that nationstates are not made prostrate by the Euro & can operate with a dual currency in each and every one of the member states. If the EU will not alter the financial system so it will be impossible that nation after nation will be forced to think straight at some point and get out.

  20. SA

    The EU doesn’t have to budge an inch to get what it wants: the UK economy will be in chaos long before March 29th (say, beginning this September after no progress in the negotiations) and eventually the UK government will have no choice but to withdraw the Article 50 notification.

  21. vlade

    FWIW, a French minister says that the UK can still change its mind and stay “on the same terms” (it was an explicit question).

    Which I suspect was said only because there’s 99.99999999% probability it will not be taken up on anyways. She also confirmed that A50 extension is extremely unlikely, as it would mean all sorts of trouble for the EU (like running into the next EU elections, budget cycle etc.).

    Interestingly enough, she also said “May said ‘no deal better than bad deal’, we agree”, which IMO is a “no deal will not hold us hostage” message to the UK.

  22. Shrewd Tipster

    When Singapore became independent from Malaysia. The “doom and gloom ” merchants predicted a rather grim economic future for the new Island country. Singapore didn’t have an adequate water supply or any natural resources said the latter day Jeremiah’s .

    The same will probably happen with Brexit. Britain has faced bigger problems in the past, than a no deal Brexit ,and muddled through in it’s own inimitable way. It will do so again.

    Aside from governmental incompetence and a lack of leadership. A combination of deluded Remainers dying in the last ditch on a fool’s errand and Brussels’ determination to punish the UK for wanting a return to self government has meant that a sensible arrangement to the benefit of both sides is now impossible.

    If those who run the EU weren’t still living 1960 they would have used Brexit as an opportunity to create a new union of sovereign states, a more democratic Europe less tied to the neo-liberal prescriptions of its central banks and bureaucracies.

    Sadly Europe lacks the leadership to pursue such a course. A Europe lead by lightweights like Macron, Merkel or May compared to a Europe of the likes of Brandt, De Gaulle, or Kriesky. No more needs to be said.

  23. vidimi

    i had thought i had deleted this comment as it was posted in haste.

    vlade addresses the point that NATS airspace is not legal airspace and that the UK would not have the right to stop anyone from flying over it (eg witness the many times russian bombers enter it), but he makes the other good point that disentangling Prestwick from shanwick would be another operational nightmare so we’d be back at square one.

    but the point remains, the UK needs an airspace deal more than the EU and, while I’m sure a deal will be reached, the UK may need to concede on somthing to get it.

  24. Catullus

    I would like to show this article on Brexit which I found interesting.

    I do not necessarily agree with Zeihan but find him plausible. Time will tell whether he is correct or not. For these who don’t want to read Zeihan, he basically says Brexit will cause the UK’s economy to contract by a fifth (20%!) and despite that awfulness, thinks the UK is still BETTER off without the EU… thinks the EU will be far worse off than the UK in the future.

    1. Shrewd Tipster

      Thanks for the link.

      I think Zeihan is right about the contraction of the UK economy in the short term. Clearly 20% is a worst case scenario although there will be substantial reduction thats for sure.

      He is also right about the post second world war economic order coming to an end and of course the final dissolution of the EU in its present form. The EU has been good at ‘kicking the can’ down the road but not for much longer.

      So, yeah his view that Britain gets a head start in the dark economic times to come is highly plausible.

  25. Rolf

    There will not be a “Brexit Crash Out”. As Yves stated: “[It’s that ] Principals should never negotiate with agents.” And that has probably been the problem in Britains negotiation stance from the start an would have been M.Thatchers approach: “Use your nuisance potential.”
    The UK should have insisted on a bespoke deal in form of a treaty change(Given that any deal under Article 50 will require unanimity and raticififaction by EU27 parliaments, it´s pretty much equivalent anyway) and it should have threatend to block any further EU decisions in the meantime.
    Instead Britain has played by the EUs playbook:
    Currently the UK is negotiating(with the Commission) against itself whilst pretty much having swallowed the EUs preconditions hook, line and sinker.

    In any recent crisis, facing the EU the principals(i.e. the Council) have always stepped in sidlining the Commission.
    Whilst EU-rules might apply to the UK and to Mr. Barnier, they don´t apply to the EU27 in form of the council(“European Council”&”Council of the European Union”). The “four freedoms”(free movement of capital), as well as the “No Bailout clause” have easily been violated, at short notice in the case of Greece&Cyprus.
    Given the impact of a disorderly Brexit in comparison to the economic importance of Greece let alone Cyprus that is pretty much a foregone conclusion.
    Don´t get me wrong, I don´t believe that this will benefit the UK in any way, but should, come January/Febuary 2019, there not be negotiated agreement, I do believe that emergency measures will be implemented to avert a negative impact on the EU27.

    A chaotic Brexit is not in the EU27s interest. A transition period(on a sectorlal or general basis), giving companies enough time to relocate in an orderly fashion however very much is.
    There will not be a chaotic Brexit, slowly draining Britain over a 2-5 year period, even if implemented unilaterally is much more efficient(“The council recognises the complete alignment of regulations in the UK with EU directives and deems them to be equivalent for a 2[5?] year emergency-transition, provided that any changes in EU-regulations are implemented[…], evaluated by the Commission…”)

    Until the Council takes over the negotiations(i.e. it is deemed an emergency) it is far too early to dray any apocalyptic conclusions…

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