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The End of the Road for Brexit

October 21, 2018

If you bought a house by the coast without viewing it and decided to move in, but then discovered that it was just weeks away from falling off the cliff, would you still want to live in that house?

The current Brexit negotiations are at an ‘impasse’.

 

There is little progression with the terms of the withdrawal agreement as the Irish Border is a real sticking point. In simple terms, to avoid a hard border on the island of Ireland, a form of customs alignment or union will be required for there to be continued frictionless trade. Avoiding a hard border is crucial in honouring the Good Friday Agreement, which the government has made a commitment not to undermine.

 

The future relationship talks have also stalled because the UK needs to do a trade-off; sovereignty or economic prosperity. If the UK remains a member of the European Economic Area and honours the four freedoms of the Single Market, it can achieve a Norway style deal. However, it would tie the UK in with EU laws and potential legal jurisdiction from the European Court of Justice.

There are solutions that could solve the Brexit conundrum, but ideology and political manoeuvring has effectively prevented this. The Prime Minister’s Lancaster House speech in January 2017 had initially set out ‘red lines’ on the withdrawal agreement with the key announcement being that the UK would be leaving the Single Market to end free movement of people. Alongside this new future relationship, a vision of creating a global Britain was put forth as it was claimed that the UK would be able to easily strike FTAs across the globe in all continents once it also leaves the Customs Union.

 

The hope of being able to cherry pick elements of the EU led to the triggering of Article 50 of the Lisbon Treaty and started the process of the UK’s withdrawal from the European Union on the 29th March 2017. This will arguably be known as the start of the most volatile and unprecedented period in modern UK history.

 

Sterling has devalued. GDP growth has become sluggish as the UK was slowest growing economy in the G7 in 2017 in comparison to before the referendum, when the UK was the fastest growing economy. Inflation is increasing as it reached 2.7% in August 2018, which is above the Bank of England’s 2% target.

 

This has been fuelled by Brexit uncertainty and a lack of confidence in the economy. As businesses are drawing up contingencies with planning for Brexit, they are having to do the unthinkable and prepare for No Deal. BMW will close their plant for a month. The NHS will put in an emergency order for 112 new ambulances and medicines. Supermarkets and retailers could be forced to stockpile goods. Leaving the Single Market would strip financial services of passporting, which is regulatory alignment required for access to other member state’s markets. In fact, financial services alone contribute 11% of UK government tax receipts and 78% of the UK economy is composed of services.

 

A No Deal Brexit would have been laughed at by almost anyone in 2016 because the EU supposedly needed the UK more. Indeed, it was Nigel Farage has claimed that a Norway style deal would be in the best interests of the UK with membership of the EEA. Liam Fox stated that this should be the easiest ‘trade deal in human history’. Michael Gove said that the UK ‘holds all of the cards’ in the negotiations.

 

Even the Department for Exiting the European Union released an impact assessment report, whereby it evaluated the effects on the economy in relation to different scenarios. Unsurprisingly, the assessment highlighted that a ‘no deal’ outcome would be the worst possible compared to a softer Brexit. A ‘no deal’ outcome would result in 8% lower GDP and the ONS believes it would lead to 2.8 million fewer jobs. There is a clear economic case for a rethink on Brexit.

 

A way to overcome this impasse could be through the use of technology and ‘inspections’, according to the European Research Group. The so-called Canada+++ deal. However, this does not solve the issue of the Irish Border because ‘inspections’ will still count towards having friction in trade and effectively a border. Moreover, there is no incentive whatsoever to industries like financial services and this is indeed a bad deal. The alternative is to opt for a softer Brexit, which the government is reluctant to negotiate.

 

With no real way forward, it’s time to end the chaos with a People’s Vote. This vote, in my opinon,  should effectively put forth a binary vote between Remain and the negotiated deal/no deal

The result of the 2016 referendum was honoured. In the binary vote, the majority of the UK had voted to leave the European Union and the process of withdrawal from the EU was started via the triggering of Article 50. However, the non-binding, advisory 2016 referendum didn’t give a mandate for the type of Brexit. The question was simply remain or leave the EU. There were no options such as ‘leave with no deal’. There was no clarity for what Brexit should look like and thus any form of Brexit cannot be the ‘will of the people’ until there is a mandate. Even Jacob Rees-Mogg has said in the past that there should be two votes, where the second vote is held after the negotiations.

 

The case for a ‘Peoples Vote’ is clear; let the people end the process they started. This should not be seen as a second referendum because it isn’t a rerun. It’s clear that the impasse is almost impossible to break unless either side drops their red lines. The risk of splitting up the UK is also not worth the desires of supposedly taking back control of things that the UK could already control. The Irish backstop could result in the Northern Ireland remaining in the Single Market and Customs Union, but the rest of the UK wouldn’t and thus create a sea border. It will be a No Deal Brexit and that is far from a compromise. It is often too easy to forget about the 48% that voted to remain. They only wanted one thing; business as usual.

 

The fact is that there has to be a parliamentary vote on the final deal or No Deal by MPs. The Labour Party will vote against the government as its clear that a No deal Brexit or a Canada+++ deal will not pass their 6 tests. It’ll then be an election or a People’s Vote, where remain is not being ruled out as an option. Either way, a People’s Vote is likely to be forced through.

 

So, why not let the people have the final say?

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