By MARCUS STEAD
AS THINGS stand, a so-called ‘no deal’ Brexit appears more likely than ever. Prime Minister Boris Johnson raised the stakes earlier today with his statement that referred to the need for the UK to prepare for an ‘Australian’ style deal with the EU, pronouncing: “For whatever reason it’s clear from the summit that after 45 years of membership, they are not willing – unless there’s some fundamental change of approach – to offer this country the same terms as Canada. And so with high hearts and complete confidence we will prepare to embrace the alternative.”
Boris Johnson’s ‘Australian’ comment was all to typical of a man whose professional life (not just his political career) has been characterised by a lack of clear thinking, and an inability to fully grasp the issues at hand or pay attention to detail.
Mr Johnson doesn’t have a political philosophy as such. As Ken Livingstone, his predecessor as Mayor of London put it, the only thing Boris Johnson believes in is ‘being there’. He was never a committed Brexiteer. Indeed, prior to the referendum, he wrote two articles for the Daily Mail, one supporting Remain, the other supporting Leave, and only decided at the last moment which was to be published and which was to be spiked. Mr Johnson was not a known Eurosceptic during his time as a journalist, nor during his tenure as Mayor. He made the calculation to support Leave based on his own political self-interest, and it was a decision that surprised the then-Prime Minister, David Cameron.
Due to his inability to grasp detail, Boris Johnson’s entire political career has been one based on haphazard, snap decision making, of leaving the hard work to others, before moving on to whatever comes into his head next. His ‘Australia’ comment was just the latest example of this. To compare the UK’s relationship with the EU to Australia’s relationship with the EU is ridiculous.
The EU comprises 11% of Australian goods trade and 19% of its services trade. Total EU-Australia trade amounted to around £111 billion in 2018/19 (at 2018 exchange rates).
For the UK, in 2018, the EU comprised 52% of its goods trade and 44% of its services trade. UK-EU trade is almost six times Australia-EU trade in terms of value, at £660 billion in 2018.
Australia’s main exports to the EU are raw materials, namely coal and gold, which make up two-fifths of its total exports to the bloc.
The UK exports a more varied range of mainly manufactured goods, such as cars, food products and pharmaceuticals. These latter are much more highly regulated industries and, although they would face tariffs in a no deal scenario, they would also encounter significant non-tariff, regulatory barriers.
And this is what’s at the heart of the problem. In the event of a so-called ‘no-deal’ Brexit, much of what goes on in this country would have no legal basis. For example, most of the world’s best Formula One teams are based near Silverstone racetrack. The agreement that allows them to move their cars and parts in and out of the country umpteen times per season would not exist. Nor would the agreement that allows racehorses in and out of the country with ease. There are numerous other similar examples, across many sectors.
On the other hand, I cannot think of a single item of food or drink that couldn’t be sourced from outside the EU if it was absolutely necessary. In terms of items on the supermarket shelf, a ‘no deal’ Brexit may well result in short-term disruption as supplies are rebalanced, but we should avoid talking in terms of an ‘apocalypse scenario’ and alarmism. Getting items in and out of the country would be a bureaucratic nuisance and would cause businesses all manner of problems, but it would not be the alarmist scenario predicted by some on the Remain side who still don’t accept the result of the 2016 referendum more than four years later.
Time is of the essence. The entire business community can handle bad news a LOT better than it can handle uncertainty. If you’ve received bad news, you can act accordingly. If there’s a poor deal coming, or no deal at all, business can use the time to adapt and adjust for that. It’s the not knowing that’s causing a lot of the angst and unrest, and with that in mind, clarity on what the situation will be come 01st January 2021 needs to be given by the end of October at the latest.
November is going to be a very difficult time for this country, as Chancellor Rishi Sunak’s furloughing scheme is scaled back. A large number of people are facing the very real possibility of redundancy. If we, personally don’t lose our jobs, there’s a very high chance we’ll have friends or family members who do lose their jobs. And for all of us, places we like, restaurants, pubs, cinemas, will be closing for good, and it won’t be pleasant. With that in mind, even the most committed Brexiteer would appreciate some clarity as to what the situation will be come January, which is why the end of this month is the realistic cut-off point for negotiations.
We also need a sense of perspective when ‘playing our hand’ in negotiations. Since entering what was then the EEC in 1973, the British fishing industry has been utterly decimated as a direct consequence. Fishing rights feel ‘emotionally important’ in negotiations as a result, but in terms of fishing’s economic importance, it is minuscule. In 2016, turnover for the entire UK fishing industry was £725 million. To put that into perspective, the turnover for Harrods department store alone was £2 billion.
Since the referendum of June 2016, a huge amount of time has been wasted. Theresa May became Prime Minister not long afterwards, and she was a Remain supporter during the referendum campaign, albeit a low-key one. She had a reputation throughout her political career as being dithery and indecisive, these were hardly qualities we needed when entering into tough negotiations with the EU. Furthermore, she had the mindset of treating Brexit as a damage limitation exercise rather than an opportunity to reshape the British economy and restore parliamentary democracy and accountability in a world that has changed enormously since Britain entered what was then called the EEC in 1973.
The most concerning aspect of both Theresa May and Boris Johnson’s handling of Brexit is just how little they, or their inner circle of advisers knew about how the European Union and its institutions work.
So what could have been done differently? First of all, whoever succeeded David Cameron as Prime Minister should have put together a ‘Brexit advisory group’, a sort of ‘mini Cabinet’ consisting of people who actually understood how the EU works, and could therefore prepare a clear strategy for negotiations with Michel Barnier and his team.
Top of the list should have been the academic Richard North, whose understanding of the EU is second-to-none. Next should have been his regular working partner, the late journalist Christopher Booker, founder of Private Eye magazine who for decades had detailed the damaging impact of EU membership upon British life through his books, newspaper columns and public speeches.
Further members of the group should have been Conservative MPs Sir John Redwood and David Davis (the original Brexit Secretary), both of whom have decades of relevant experience. The final member should have been the then-Labour MP Gisela Stuart, who earned the respect of Leave supporters with her displays during the campaign in TV debates and public speeches. Her presence among the group would have not only added a fresh perspective, but would have acknowledged the reality that a very large number of Labour supporters voted Leave in the referendum, that Euroscepticism was by no means confined to the right wing of the political spectrum, and this was a ‘mini Cabinet’ of able people from across the political spectrum.
Instead, both Theresa May and Boris Johnson have lacked people with the relevant expertise needed to understand just how profoundly different in law, interpretation and character the European Union is to the United Kingdom. Their advisers consist largely of people of little relevant experience, and civil service mandarins who regard Brexit as a ‘negative’ and at best, like Mrs May, a damage limitation exercise, rather than an opportunity to be seized.
The Norway Option
Have you ever been sitting in your living room on a summer’s day with your window open, when a bird flew in? The window is wide open, yet despite your best efforts, the bird seems to panic and fly everywhere except through that open window? Because that is what the last four-and-a-bit years have been like in terms of Brexit negotiations.
All along, there was a clear, well-defined roadmap out of the EU that would’ve give the UK a relatively straightforward, though, imperfect solution, and that’s the so-called Norway Option.
It’s effectively a ‘take it off the shelf and plug it in’ Brexit, but the UK Government foolishly ruled it out, both in the aftermath of the 2016 referendum and in the years since. It had the support of the likes of Booker and North, as well as of principled MPs like Stephen Kinnock, who supported a Remain vote but respected the verdict of the people, and saw this as a way forward that both implemented Brexit and ensured economic disruption was kept to a minimum.
Here’s how it works: Norway is not, nor never has been, a member of the European Union. It is, however, a member of the European Economic Area (EEA).
If the UK chose to stay in the EEA, we would be able to leave the EU, agree our own trade deals with non-EU countries (since we would NOT be in the Customs Union), and would stay in the Single Market.
Crucially, we would also be able to suspend ‘freedom of movement’ since EEA members are allowed to activate Article 112 of the EEA agreement, known as the ‘emergency brake’. This method has been used by Lichtenstein to suspend ‘freedom of movement’ indefinitely, and implement its own quota system. As a far larger country with much more clout, the UK could do the same with ease.
There are, inevitably, downsides to EEA membership. We would still have to pay some money every year, though nowhere near as much as at present. We’d also have to accept their regulations when we traded with them, but then again, we also have to accept the rules of the USA, China, India or any other country we choose to trade with, which is reasonable.
But on the crucial matters – Parliamentary sovereignty, the supremacy of British courts, immigration controls, the ability to form trade deals with the wider world, and the ability to form a genuinely independent foreign policy, we would be winners on all counts.
Sadly, that window of opportunity has now passed. Boris Johnson is playing a reckless ‘high stakes’ game. It’s still entirely possible that the EU will return with a new, improved ‘counter offer’ next week. A ‘no deal’ Brexit would harm them as well, since they sell more to the UK than the other way around. But the game Mr Johnson is playing is cavalier and dangerous. The business community has enough to worry about right now without the problems and uncertainty a ‘no deal’ scenario would bring.
Even if the news is bad, Mr Johnson owes it to all importers and exporters to ensure clarity by the end of the month, so they can prepare for the reality of what the start of 2021 will bring.