There’s no fudging this one. But it’s unlikely that history will dispute the horrific scale of Theresa May’s disastrous grab at a bigger parliamentary majority for the Conservative Party on 8th June – or that her party has been left with too few seats to be able to run a government on its own.
By 26th June, Mrs May had been reluctantly confirmed in office by her colleagues and had managed to lash up a slim working majority by linking up with Northern Ireland’s Democratic Unionist Party. That’s the same DUP that doesn’t care for catholics or gay marriage or abortion, and the same party that brought the Stormont parliament to a crashing shutdown earlier this year, over a botched energy saving deal that pays farmers millions of pounds in subsidies if they heat empty sheds in winter. (An issue on which leader Arlene Foster is still unapologetic.) And the DUP that demanded (and has achieved) very large subsidies to Northern Ireland for its favours in Westminster – in addition, of course, to the disproportionate amounts that the province already gets.
There are other issues for Mrs May to consider, such as the fact that Stormont will be politically crippled if its major sectarian party is seen by its Sinn Fein opponents to be in league with the bigger power in Westminster. Not an easy situation for any Prime Minister to get squeezed into, then. But unfortunately that appeared to be the only choice she had unless Mrs May (or, if appropriate, her replacement) could somehow squeeze a few more weeks out of the Brussels negotiators as they started to make restless noises about Britain’s awkward reluctance to get down to substantive talks. (Not an impossibility. But we’ll discuss that one in a minute.)
Prime Minister Corbyn?
But will Mrs May get to remain in post as PM? For all we know, Labour’s Jeremy Corbyn might yet be the leader who will take up the negotiations with Brussels at the head of a multi-coloured governing coalition. Indeed, that possibility might also stand in the event that a quick parliamentary collapse condemns Mrs May’s government to yet another general election. Sorry about that, Brenda from Bristol, but these things can happen.
For what it’s worth, Corbyn favours a soft Brexit which would aim to preserve Single Market access – and which would in fact square better with the publicly-voiced demands of industry. A nice irony, since Corbyn’s election manifesto displayed a sometimes chilling tendency to regard free-market enterprise as a class enemy and a convenient cash cow. (A distinction from Mrs May’s own view of business, which appeared to be that she didn’t really understand it but she was sure it would manage all right even if its trade channels and its ability to source its manpower were to be curtailed by a hard Brexit.)
A lot of huffing and puffing
But such considerations only take us as far as the British perspective, and I’d much rather be talking about what Brussels really intends. How are we to interpret the loud declarations from Michel Barnier, the EU’s chief Brexit negotiator, that we’re not making things any better for ourselves by delaying the start of the talks? What should we make of Emmanuel Macron, the dynamic new French president who insists that we only have ourselves to blame and that he’s not going to give an inch in concessions to perfidious Albion? What, indeed, of Donald Tusk, the European president, who reiterates that there are no hard or soft Brexit options, just Brexit?
Now, I’m going to suggest that there’s a certain amount of huffing and puffing going on from the EU27 at the moment, and it’s all very understandable but it might not be for real. On the face of it, yes, our continental counterparts are telling us that they aren’t willing to grant us any extra additional negotiating time at all. Europe has better things to do, says the European Commission, than to pander to the chaotic behaviour patterns that we Brits have displayed so far.
The EU, it notes, has several other quite large fish in the fryer at the moment, including sorting out the banking and financial situation; fighting a wave of secessionism in major countries; developing a cohesive foreign policy strategy; dealing with Turkey and the refugee problem; and – last but not least – figuring out what to do with an abusive, divisive and generally impossible American president?
Europe thinks about Europe
All of which is more than true. But let’s consider the likelihood that at least some of the European Commission’s hard line toward Britain is at least partly down to a wish to frighten off any potential insurgencies from the Eurosceptic and secessionist factions in other EU states – France, Germany and Spain, to name but three. Whack the naughtiest boy in the class, and the others will pipe down and get on with their work.
But here’s a point that needs making. During our own self-absorption of the last three months, we appear to have forgotten to read the European papers. If we did, we’d notice that the dark forces of Euroscepticism, islamophobia and the rest have been significantly in retreat since the start of January.
France, Austria and the Netherlands have all successfully shot the electoral rapids this year without succumbing to hate-based parties. Italy’s euro-secessionist Five Star Alliance did exceptionally badly in mid-June’s local elections, and the disruptive prospect of new elections this year seem to have been staved off. And Germany’s crackpot Alternative für Deutschland now looks unlikely to bother Chancellor Angela Merkel during this autumn’s federal elections. Although she’s understandably keeping her head down on the Brexit issue – having only made one explicit threat to Britain, back in May, when she noted sourly that the EU “could no longer completely depend” on its traditional allies, Britain and America, and that Europe must now fight for its own destiny
The banking crisis in Italy has been addressed with a €20 billion recapitalisation of the failing Monti di Paschi di Siena. The eurozone economy has staged a dramatic recovery in recent months, with new updates in late May portraying a healthy 1.7% growth during 2017 – with a rebound in capital spending and a sharp fall in youth unemployment that leaves Britain and even America looking like poor relations by comparison. (The fall, that is – the actual unemployment volumes are still dire, but they’re moving in the right direction.)
Britain, we love you. Honestly…
Then there’s the simple fact that, at the end of the day, most of the EU27 really don’t want to see Britain crashing out of the club. It’s not just that our partners need our trade, or even our very large net subsidies to the central funds; it’s also that they have significant workforces in Britain which depend on a continuation of the social movement policies that we’ve operated up till now.
And that’s where Britain needs to do its part. Mrs May has been firmly told by her own MPs that she needs to stop running the country like a certain North American president if she wants to stay in her job, and that she ought to start listening clearly to the demands of industry. Number one of whose concerns is the prospect of losing Single Market access (or, at least, the customs union), and number two is the continued availability of EU-zone labour. Not just the brilliant scientists and scholars, but also the million or more of low-paid workers who do basic jobs in construction, healthcare and farming.
That would seem to me to be a significant concession, as long as she or her successor can be persuaded to make it. It’s one of only two real deal-blockers to Single Market access at the moment – the other being the supranational powers of the European Court of Justice – and I’d say that the signals are currently pointing in the right direction.
Hope yet for the Single Market?
Get the Single Market provisions into place – or at least, a workable facsimile based on so-called ‘equivalence’ (whereby we get an effective access by virtue of our conforming to the EU rules even if we’re not governed by them) – and a lot of other bricks slide into place. The key prize would be a retention of the European Banking Passport, which forms part of the Single Market and without which London would be severely disadvantaged.
Not for nothing are major financial institutions packing at least some of their best china into the removal companies’ cardboard boxes at the moment – there’s every reason to suppose that they’ll go ahead and load them onto the van for France and Amsterdam if they don’t get some assurances pretty damn quickly.
So how tight is the timetable?
Right at the moment, as we’ve said, the EU27 are making great play of their refusal to extend the Article 50 deadlines – because, they say, the March 2019 cut-off is set in stone by the Lisbon Treaty, and it’s not within their powers to change it. Indeed, M. Barnier has been demanding that we get the basic Brexit negotiation finished even sooner than that, by October 2018, so that the deal can be put out for approval by the 27 member parliaments in time for March 2019.
Well phooey. For one thing, there has hardly ever been an EU negotiation that’s come in on time, and it would be truly miraculous if the Brexit negotiations managed it now. Every budget since the dawn of time has over-run its deadline, sometimes by months and occasionally by years.
The MiFID II process is already running three years behind its original schedule, thanks to bickering between the parliament and the executive, and the only reason it’ll come into force on 3rd January 2018 is that the warring heads have been soundly banged together. (Britain, meanwhile, has been getting quietly on with integrating the MiFID rules into its regulatory structures. No surprise there, then.)
Some trade numbers
And finally, as I keep saying, Britain’s trading role within the EU is simply too enormous to want to lose. Around half of Britain’s exports normally go to other EU member states – around £240 billion in 2016, out of £550 billion in total – and Europe supplies 53% of our imports, or about £290 billion in 2015. To put it differently, we account for 8% of the combined EU’s exports.
There are a few caveats that we need to remember here. Firstly, that figure for UK exports might be overstated by around 2%, because, says the ONS, some of our sales to Rotterdam are actually just passing through on their way to other parts of the world. And secondly, there are inconsistencies in the measuring systems used by other countries which may mean that our EU imports are closer to £350 billion.
Hmmm, interesting. Could you really imagine that Brussels won’t go the extra mile to maintain that kind of an arrangement? No, nor can I. That’s why I’m quietly optimistic that Mrs May, or whoever is unlucky enough to find himself/herself in her shoes, will get a better reception than the other side is letting on. Just keep talking, Prime Minister, and don’t take the setbacks personally.
