The Brexit tide turns
The result of the general election has transformed British politics and changed the psychology around Brexit. Prior to 8 June Theresa May was dictating the British approach to Brexit. Her vision, to take back control of our money, laws and borders, meant the UK must end its membership of the single market and the customs union. But with the Prime Minister’s authority shattered, her cabinet openly divided and Parliament emboldened against a weak executive, the previously stated Brexit policy is being aggressively questioned.
The debate is becoming concentrated on the issue of transitional arrangements and increasingly framed as a choice between two opposing courses: a swift, clean break that sees Britain trade on WTO terms or a gradual departure that preserves as much of the status quo as possible for as long as possible.
The CBI’s intervention yesterday was a significant moment in the Brexit drama, supporting the latter of these two positions with a call for the UK to remain in the single market and in a customs union for as long as it takes to construct a new trade agreement.
This position has the virtue of clarity and coherence. It was voiced on the same day that Michel Barnier issued a pointed warning to those on all sides of the Brexit debate in Britain: “I have heard some people in the UK argue that one can leave the single market and keep all of its benefits – that is not possible. I have heard some people in the UK argue that one can leave the single market and build a custom union to achieve “frictionless trade” – that is not possible…. It is clear that only the combination of the Customs Union and the rules of the internal market allows this free, “frictionless” trade between our States. One does not go without the other.”
The CBI’s proposal is consistent with that view, but is astutely presented as a transitional bridge towards the UK exiting the EU. That has been attacked by Leavers who see it as ruse to stop Brexit more permanently. Yet it is notable that confidence is draining from the Eurosceptic camp.
They see conditions turning against them. No10 is in disarray and May has lost all authority. The Treasury is powerful again. Inward investment looks to be stalling. Wider economic indicators are going the wrong way. Public support for Brexit is declining. Surveying this scene, some Leavers privately question whether Brexit will happen.
However, any hope that Brexiters might compromise looks misplaced. Newly appointed DExEU Minister, Steve Baker made it clear that any deviation from the Prime Minister’s Lancaster House speech would be a serious misstep. And in a pointed remark directed at David Cameron, he suggested that joining the European Economic Area would be ‘like putting blood in the water’. While the argument might be running away from Brexiters the effect has been to make them dig in.
Labour’s position is also important. Jeremy Corbyn and John McDonnell’s outlook is very similar to that of the Prime Minister’s, particularly on ending freedom of movement. But Keir Starmer has shown a degree of flexibility by endorsing the CBI’s intervention and calling on May to drop her red line of pulling out of the ECJ in order to retain access to key markets. It makes the passage of Brexit legislation very unpredictable if MPs on all sides start to rally around a pragmatic economic-led position.
Self-preservation is all that unites the Conservative Party, but the fear of a Tory civil war is preventing the Government from agreeing a clear position and paralysing its ability to take controversial legislation through Parliament. The Repeal Bill should be tabled next week but serious parliamentary debate on Brexit legislation is delayed until after the summer recess.
It is much too soon to suggest that Brexit could be derailed or diluted. Article 50 is triggered and legally the UK is set to leave in March 2019 unless the UK Government withdraws its Article 50 letter or the EU Council agrees to delay. With the clock ticking the UK will end up out of existing EU arrangements or indeed out of the EU without a new arrangement at all. The referendum decision, after all, still stands and Article 50 has been triggered.
Yet the political situation is undoubtedly more fluid and positions that appeared settled are being reconsidered. Business is more prominent and is beginning to shape the tone and nature of the political debate. The more that Brexit is framed as a choice between an incremental process or a sudden shock, the more it will favour those seeking a ‘softer’ path.
The big question is whether a government so seriously divided can change course without falling apart.