08 Dec 2017

Breakfast in Brussels. The next stage in Brexit puts some interesting new factors on the menu

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Political agreements are like sausages. It is best not to focus too much on how they are made. With that in mind it was probably wise that Mrs May’s breakfast with Jean-Claude Juncker and Michel Barnier stuck to croissants and orange juice.

For the Prime Minister, in reality, relief was the main item on the menu. Six months to the date after the general election day and exit poll which placed her in mortal political peril, she is stronger than she has been at any moment since Professor John Curtice and his team stuck the knife into her with their numbers. It may well not last but it is better than the alternative. If the proposed deal had slipped in to January it could have started to unravel and it would not have concluded before the now seemingly inevitable arrival of the ultra-federalist Martin Schultz as number two in a Christian Democrat-Social Democrat ‘Grand Coalition’ in Berlin. Getting the bargain signed, sealed and delivered before he re-entered the scene was essential.

So what broke the apparent impasse over the Irish Border? Why did stalemate resolve itself in such a comparatively short period of time? The crucial factor here was that the Democratic Unionist Party was far from united about how much it wanted to obstruct an overall agreement. There is a deep division between its Stormont branch, which is focused purely on the politics of the Province itself, and its Westminster wing. which consists of the 10 DUP MPs in the House of Commons and which is much closer to the Conservative Party philosophically, professionally and personally and does not want to do anything that would risk the emergence of Prime Minister Jeremy Corbyn. The first lobby is led by Arlene Foster (who has never been an MP), the second by Nigel Dodds and Sir Jeffrey Donaldson (who these days are somewhat distant from the Northern Ireland Assembly). If the whole of the DUP had been adamantly against this deal then it would not have happened. They were not.

Armed with this awareness, Whitehall swung into action at warp speed. The trick was to retain the word ‘alignment’ as the back-stop position should a comprehensive trade agreement not be signed as the Dublin Government could not really retreat from it, while finding a formula to soften how that term might be interpreted.

In other countries, the civil service elite are recruited from among those who actually know everything about something. In the UK, we prefer to select those who appear to know something about everything. This reliance on articulate and intelligent arts-based generalists (not merely in the senior bureaucracy but almost everywhere in the public and private sectors) has its disadvantages (to put it mildly) but when it comes to throwing a lot of words at a problem in order to resolve it you cannot beat a collection of characters who have read Classics, History or Philosophy, Politics and Economics.

The sentences introduced in to the agreement in the section on the Irish border are a masterpiece in exploiting the flexibility of language. They are truly ambiguous in English. Christ knows how meaningless they will read when translated into Bulgarian or Estonian. Fortunately, no one in Sofia or Tallinn remotely cares about the intricacies of the Irish border matter. For them, like the rest of the EU-27, the issue was whether the UK would offer up enough money. It has and that now moves the process on to the implementation/transition stage and the final deal.

It also means that the Brexit process moves to a very different space in terms of domestic politics.

It is game over for Remain?

The chances of finding a means of reversing the referendum outcome were always slim but they are now all but disappeared. The path to a comparatively orderly withdrawal from the EU in March 2019 followed by a standstill transition until (probably) 1 July 2021 is now clear. There will doubtless be some more mini-dramas and the throwing of toys out of the pram in the months ahead but the line of travel is established. A final withdrawal package will be settled by about October 2018 and this time round the European Parliament will probably play the part of the DUP, in first threatening to scupper the whole enterprise and then backing off once the thumbscrews are applied to them.

All of which means that the chances of ‘No Brexit’ have fallen from 10%-15% a week ago (small but not so scarce as to be completely worth discounting) to 0%-5% today. It was to secure this reduction and eliminate any risk of a second referendum that the Leave contingent in the Cabinet decided to swallow a larger divorce bill than they might have liked and a continued role for the ECJ temporarily.

Taking No Brexit off the table has a significant impact in Westminster. It means that it is not really worth the time or effort of hardcore Remain Conservative MPs to continue to hint that might ally with Labour to inflict real damage on the EU (Withdrawal) Bill and inconvenience ministers. The likes of Ken Clarke and Anna Soubry might mount some sort of last stand, but more pragmatic Remainers such as Dominic Grieve and Nicky Morgan will recognise that the battle-lines have moved elsewhere. The torment over Brexit that the Government has endured in the House of Commons will ease off.

The real debate in the Conservative Party over the future relationship with the EU starts now

Many commentators expressed surprise when Philip Hammond confirmed earlier this week that there has yet to be a full Cabinet discussion about the ‘end state’ of UK/EU relations. Yet avoiding such a discussion until this point was completely rational. To have held it would have invited division, which would have made the approach that the Prime Minister adopted with her Florence speech on 22 September (which was the crucial move in bringing events to where they are today) far harder. By keeping the discussion focused on phase one plus the transition, Mrs May was able to identify an approach that would avoid any member of the Cabinet resigning ‘on principle’ about Brexit and so creating a seminal crisis at the heart of her administration. That bridge is about to be crossed. A set of discussions as to what the Government and the Conservative Party wants to achieve will follow.

At one level, this would appear to be an argument about whether Switzerland or Canada is seen as the role model for the UK in its dealings with the EU moving forwards. This is certainly the starting point but the key issue is whether the Cabinet, the parliamentary party and the Conservative Party more broadly wants to make a straight choice between these options or whether it is prepared to explore a middle course between them, which does not at present have a model or even a name but could be described as ‘Greenland’ (reflecting the fact that the island concerned is autonomous in some spheres but has delegated back its independence to Denmark in others).

Greenland in this context would mean that while the whole of the UK economy would legally acquire Canada-style rights to regulatory independence from the EU, in certain sectors – automobiles, financial services, medicine and pharmaceuticals – it would choose regulatory compliance to achieve market access. Whether the Conservatives are or are not interested in any ‘split the difference’ understanding to maximise party unity will ultimately decide how long it is that Mrs May remains Prime Minister. If it wants to choose between models, she goes sooner. If it wants to find a Greenland, she stays longer.

The fun on Brexit for the Labour Party will soon be over

Labour has managed to paper over huge cracks on Brexit of late by exploiting the difficulties that the Government has faced and asserting that almost every possible option should remain on the table. It is soon going to be obliged to make some choices of its own.

There will be an epic bitter bust-up between the Corbyn tribe, who will want to move on from Brexit back to attacking austerity and injustice, and a sizeable number of Labour MPs who will want to keep Brexit as the principal issue in UK politics and insist that the party campaigns to stay inside the single market and the customs union after Brexit (another position that presently has no precedent and no name).

This will be brutal because it will be the proxy for the wider question of who controls the Labour Party, the MPs or the activists. The best news of all from today for Mrs May will be if that battle soon goes nuclear.

Tim Hames
Director General, BVCA


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