We’ll attempt to be sparing in our Brexit update, since the noise to signal ratio is even higher than usual right now.
As you’ve undoubtedly heard, the EU Council approved May’s deal as expected. May gave in to Spain’s demands over Gibraltar:
96% of Gibraltar voted to Remain. In response the UK has sacrificed Gibraltar to get its disaster of a Brexit deal agreed by the EU27. Abject failure. The only hope for the people of Gibraltar is Remain, via a #FinalSay #PeoplesVote
For Gibraltar #OnlyRemainRemains https://t.co/m8aFWiyUdf
— #FinalSay (@finalsayeu) November 25, 2018
That concession wasn’t lost on the members of the press that aren’t rooting for May (most notably example is the BBC, to the degree that the Twitterverse has been rounding on them regularly). It confirms the widely-held view that this Brexit puts the UK in a worse position that it was when it was in the EU. Mind you, that was an inevitable outcome, but there’s no pretending any more now that a deal has been completed. And as various commentators are pointing out, May never considered less bad choices, such as joining the EEA/Efta. Mind you, we think the latter was unlikely to work, since the UK was a bad partner in the EU, and would be even harder to deal with if it were to have become the economically dominant member of the Efta. Similarly, May never began the war-level preparation required to make a crash-out something less than an abject disaster, which would have increased her bargaining leverage with the EU and would also have served as preparation for a bare-bones free trade agreement, which the UK could have conceivably sealed even in its 18 month transition period.1
The pound is trading higher despite the fact that it is just about universally anticipated that May’s Brexit pact will be voted down in December. The scheduled date is December 12, conveniently right before the December EU Council meetings of December 13-14.
May is going into a full bore media push, supposedly going over the heads of MPs to appeal to the public. Given how well her past personal selling efforts have worked (the snap elections, her various failed EU charm offensives, with Salzburg a capstone of sorts), it’s hard to see how this will have any impact, particularly given her bargain basement popularity ratings:
Theresa May SELL OUT!!
Theresa May couldn’t lie straight in bed!!!!
Theresa May “please look… here have my granny.. take her.. take her for free!!!”
— ARTIST TAXI DRIVER (@chunkymark) November 25, 2018
Even with some of the Tory media pumping for May, there’s not enough time to move public opinion in a meaningful way in a few weeks.
May is now asking to debate Corbyn, something she strenuously avoided during the general elections. Perhaps her point is to try to show that Corbyn, and by extension, all of the opposition, has no alternative to her scheme.
And there’s lots of trumpeting of faux alternatives, such as the idea of a no-crashout no deal, which includes having the EU give the UK another year to get its act in gear. Of course, no one has talked to the EU to see if it is even remotely receptive, and if so, how high the price tag would be.
Lots of people who should know better are pushing for a second referendum, from the Independent to Tony Blair. Blair’s Sunday Times “open letter to EU leaders,” meant as a companion piece to May’s open letter to the UK, is yet another case study in exaggerated sense of self-importance that got the UK in this mess. Blair does point out that May’s deal is unpopular and will be nixed by Parliament. So what does he propose then? That these EU chieftans “step forward with an offer which deals with the principal British anxieties about Europe,” which he admits is immigration. Ahem, did Blair miss that the UK didn’t take any Syrian refugees? Or that it was the UK that pushed for more Eastern European members in a too-clever ploy to try to dilute the influence of the German-France axis, and the UK more than ten times the Polish immigrants than it had forecast? Oh, and he wants a second referendum too.
Macron’s remarks at the press conference after the EU Council approved May’s deal are an indicator of how indulgent the EU is likely to be going forward. From the BBC:
But the bluntest warning came from the French President Emmanuel Macron, who suggested that if the UK was unwilling to compromise in negotiations on fishing, which would need to make rapid progress, then talks on a wider trade deal would be slow.
“We as 27 have a clear position on fair competition, on fish, and on the subject of the EU’s regulatory autonomy, and that forms part of our position for the future relationship talks,” he said.
The president implied that without sufficient progress on trade, the backstop plan to avoid a hard border in Ireland would have to be implemented, including a temporary customs union for the whole of the UK.
“It is a lever because it is in our mutual interest to have this future relationship,” Mr Macron said.
This is not an idle threat. As Ambrose Evans-Pritchard pointed out in the Telegraph last week, Brexit only gets harder from here on. Only a qualified majority (at least a majority of states in number constituting 65% of the population) had to approve the Withdrawal Agreement. A trade agreement is a treaty, and those require unanimous approval, including by national parliaments. The Walloon parliament initially nixed the ratification of what should have been an uncontroversial agreement with Canada. Fishing rights are an most obvious sticking point with the UK; there will be plenty of others. And recall if the UK winds up having to use the “customs territory” backstop, it can get out only by mutual agreement of the UK and EU, which gives the EU an initial veto. Disputes go to an arbitrator, but since the UK would have to satisfy the arbitrator that it will not have a hard border with the Irish Republic, it’s hard to see how it satisfies that condition otherwise.2 As Ian Dunt put it:
It doesn’t matter how you look at it. You can squint with one eye, or stand upside down, or peer at it askew. You can be as sympathetic or stern as you like. It makes no difference. From every angle, on every basis, Theresa May’s deal is horrific.
It is intolerable on a democratic, political, economic and logical basis. It takes one of the world’s leading powers and puts it in a diplomatic and trading stranglehold. It undermines Britain’s economic status, demolishes its political status, severs its territorial integrity and imposes a dangerous and unacceptable governance structure on Northern Ireland…
The deal offers a transition to the end of 2020. This can be extended once, but this must be done by July 2020. This is, to all intents and purposes, the new cliff edge. Without an extension, we will fall into the backstop. And no matter what wasteful lies May tells now, Britain will never pick the backstop, because it is appalling.
So in July 2020 the UK will inevitably ask for an extension of transition. The EU will give it to us, but first they’ll ask for money. And we will pay. We’ll pay them anything they ask for, because the entire structure of the deal gives the EU negotiating advantage….
The extension can only last two years, until the end of 2022. But this is not enough time. The EU will be focusing on European elections until May 2019. No meaningful talks will take place until there is a new commissioner, sometime in the autumn. Then Britain needs to work out what it wants, something it has so far showed no signs of being able to do. Then it needs to negotiate it. Then it needs to implement it – a job which can be big or small, depending on the outcome of the negotiation. And then it needs to be ratified, which requires approval from every parliament, in every EU member state. The last part alone took two years for Canada.
This thing is not going to be done by 2022….
If 2022 ends with no deal in place, which by any realistic assessment it will, we fall into the backstop. And then the real horror story starts. Overnight we lose services access to the continent. Our customs arrangements shrivel up into a little ball. There are no transport agreements, so permits for UK hauliers will be limited to five per cent of existing traffic. There are no veterinary or phytosanitary agreements, so agricultural products will be stopped and checked at the border, causing huge disruption. There is no common regulatory regime on goods, so they will also be checked and tested.
We become little more than an addendum to the EU’s trading relationships with other countries….
And after all that, May didn’t even prevent the carving up of the UK’s territorial integrity in the Irish Sea, as she claimed. There are actually two regulatory levels in the backstop proposal.
Even though we are in an overly dynamic situation, to invoke another one of Lambert’s pet expressions, it would be irresponsible not to speculate.
Even though the Government lost on its procedural motion to try to bar amendments to the Withdrawal Agreement, our Clive argues that they may not get attached to the bill regardless, particularly the ones we are likely to see, that the Agreement is somehow contingent upon a second referendum, and the Kier Starmer idea of having all sorts of legal changes made supposedly so as to make it impossible for May to have a crash out if she can’t get the Withdrawal Agreement passed. As we have said, the latter scheme is silly unless it has provisions that not only repeal the “leave EU” act but also explicitly direct the Government to rescind the Article 50 notice, since as we know, Brexit happens automagicaly unless the UK asks to back out. It is implausible to think that there would be enough votes for that in early December. From Clive:
The UK government does control parliamentary time https://beta.parliament.uk/articles/uUGNLmVo and can guillotine any attempts at filibustering on primary legislation. It’ll all be down to amendments. Here it would need a constitutional layer to give an accurate opinion because UK legislation and parliamentary procedures are very obtuse. But I think there’s real doubt that the clerk to the commons would accept an amendment which says, in effect, you have to have a referendum on this bill becoming law. Parliamentary procedures are designed to stop an amendment which creates a condition that might not happen (such as the UK government having to both bring forward new primary legislation, which might not get passed — such as a referendum — and then that referendum concluding in a way which supports the bill being voted on) being attached to a bill. Parliament can only conclude a bill in a way which creates legal certainty. In effect, a bill can only be passed if, as a result of that bill, the courts can look at that bill and say, without any ambiguity “this is the law, this is what the law says”. You couldn’t have the Withdrawal Agreement pass through Parliament — whereupon it becomes law — but then have everyone (including the courts, both UK domestic and others such as the CJEU) have to then say to themselves “ah, well, maybe not, we’ll have to wait for the referendum result, whenever that is, whatever questions are on it, to know what the UK’s legal position in in respect of the EU”. I imagine the UK government’s chief whips office is going through all this now. It’ll go back to the point I raised in the above paragraph — just because Parliament is sovereign, it doesn’t mean it can act like a constitutional equivalent of a drunk in a bar.
It is way over my pay grade, but I wonder whether Starmer’s long list of legislative changes could be required to be a separate bill. Similarly, if MPs propose enough amendments, May could well miss her December 12 target. Not that matters much; the EU is not going to cut the UK any slack when May’s deal gets voted down or if Parliament, either with the Withdrawal Agreement or otherwise, decides to have another referendum. And May telling MPs, either as part of her campaign for the Withdrawal Agreement or in trying to swat down amendments, that they can’t amend the bill, that the EU is done with negotiating (obvious but something they are not disposed to hear) will not get her more votes for the bill, at least not in December.
Another factor at work is reflexivity. Mr. Market does not seem to be all that worried about the virtual – certainty of Parliament voting down the deal in December. Is he convinced it will eventually pass, or is he instead relying on the various hopium escape scenarios the political classes are cooking up? It appears they are expecting rationality to prevail when not much of that has been on offer for the last two years. Vlade flagged a Bloomberg story, Will May Get Her Deal Passed The Second Time? Markets Think So, and added:
Seems like the markets are betting on a second vote to pass the deal. Which could work only if markets very clearly panicked after the first vote. Which, if they are taking it as given it would be lost, they won’t. If there’s no market panic, there well may be no second vote, as it will embolden the Ultras (“we told you it’s not a problem”).
To take the screaming fire in a packed theater, this is more like the fire is already raging in a theater, but everyone still sits down, because no body wants to be the first to scream it, hoping that some mystical firefighters will arrive just so.
Robert Peston provides a final bit of intelligence:
I am reliably informed by senior officials in Brussels and in foreign capitals that a request to postpone Brexit is both half anticipated and would be sympathetically received.
But there would be strings.
The delay could be no more than a couple of months, because there is an absolute horror of the UK participating in elections for the European Parliament at the end of May.
And EU governments would want an assurance that the extra time would allow the UK to achieve a settled position, either on the Brexit it actually wants, or on no Brexiting at all.
Here is the nightmare, for the UK and the EU, for them and for us.
It is patently, obviously, maddeningly clear that there is no settled position in parliament on an optimal Brexit.
That leads a growing number of MPs to muse that the best thing may be to cancel Brexit altogether.
Some tell me that as a nation we should risk the humiliation of apologising to the EU – and the world – and just rescind our “Article 50” request to leave…
But more MPs would blush to do so without seeking the permission of the electorate in another referendum – but it is by no means clear that the British people are less divided and more certain about all this than their elected representatives.
When parliament and people are divided, there is no higher authority to consult.
Perhaps opinions will solidify as the press continues to discuss the Withdrawal Agreement. May was being uncharacteristically truthful when she said there were only three options: her deal, no deal, or no Brexit. A Lord Ashcroft poll found that only 13% of Leave voters thought that May’s agreement “honours the result of the EU referendum held in June 2016”. So the political obstacles to walking back Brexit may be lower that MPs perceive…but will they get the memo soon enough to act on it?
1 Of course, there would still be the Irish border, issue, but had May not made her foolhardy snap election gambit, she could have opted for the “sea border,” particularly since she could make the case that it would be much better economically for Northern Ireland citizens. She’d still have faced a rebellion from the ERG, but she would not have had to get as many votes from other parties.
2 We remain skeptical about vaporware techno-solutions.