May succeeds but the Cabinet now need to offer clarity
The agreement this morning between the UK Government and the Commission that sufficient progress has been made in the negotiations to move on to the all-important phase 2 discussions is undoubtedly a much-needed fillip to the Prime Minister. She has a deal which Cabinet Brexiters and Northern Ireland’s Democratic Unionists can live with but whose terms gives hope to Remainers that there is still a chance of salvaging an ongoing relationship with the single market and customs union.
This interim deal is also a strong signal that an eventual no-deal outcome is unlikely. The fact that Theresa May has been willing to make significant concessions to secure an agreement and the Commission has played a positive and encouraging role (while not really conceding anything) means that the hardest of Brexits is likely to be avoided.
Tory Brexiters have held their noses on an ongoing role for the European Court of Justice and substantial payments into European coffers in the interest of securing the big prize of ultimate withdrawal from the EU. They point out that today’s deal’s provision to maintain alignment with the single market and customs union only applies to those sectors covered by the Good Friday Agreement.
However, the Good Friday Agreement includes regulatory alignment on agriculture which means that for a significant economic sector, we will continue to be governed by Brussels rules long after we have left the Union. It also means that Liam Fox’s dream of concluding free trade agreements across the world are unlikely to bear fruit. Agriculture is usually an indispensable part of any free trade agreement and certainly a requirement for the US where the farming interests hold considerable sway in the Senate which ratifies any trade deal.
This alone will encourage Remainers to push for broader alignment with the single market and customs union on the basis that if we can’t conclude FTAs with other countries anyway, why give up the considerable economic benefits of the existing arrangements.
This drift towards an eventual endgame based on the single market and customs union is likely to be helped by Labour’s own evolving position. The shadow cabinet and its European spokesman Keir Starmer seem to be on a journey to accepting ongoing UK participation in both the market and the customs union.
However the path will not be a smooth one. For most Brexiters, freedom from Brussels rules and its courts is a red line. For Labour, the freedom of movement provisions of the single market will cause considerable problems for many Labour MPs.
The first major test will be the Cabinet discussion of the end game promised before Christmas. So far, Theresa May has against the odds kept her Cabinet together, largely by snail-like movement on the negotiations and avoiding discussion on anything too difficult.
Discussion will inevitably focus on whether the UK is faced with two simple choices of a Norway or Canadian type deal. Norway is politically unpalatable for Brexiteers who want full sovereign decision making. Meanwhile Canada is not viewed of sufficient scale to satisfy the demands of the British economy, particularly on services.
Moving into phase 2 means May has to crystallise her views and those of the government. The ‘wait and see’ period for British politicians is drawing to a close.