Taking back control of Brexit

With the Brexit negotiations going so badly, is it time for the UK negotiators to start playing their strongest cards?

First, recognise that the UK does not have a strong hand with regard to trade. The asymmetry arises because EU is the larger market than the UK, and the EU market is subdivided into blocks. So whereas the EU accounts for 44% of UK exports, the UK only account for 7% of German exports. This makes it much easier for Germany to do without the UK than for the UK to do without the EU. On trade, the UK will lose.

The second step is to realise that the UK does have two strong cards. The first is that it is now known that the UK population are not happy with the current relationship and voted to leave. The second is that the EU would like the UK to remain, because losing 66 million members of your club is not a triviality. How far the EU will bend to keep the UK in the tent is unknown, but now is the time that this can be tested. The way the UK can play their strongest card is to say to the EU, the ball is in your court, make the UK people an offer, and we shall offer them a vote on it. If the UK demos reject the offer the UK crashes out so those that support no deal can make their case when the time comes.

Now no-one wants a second referendum – “the instrument of Nazism and fascism” in Atlee’s words – but once you have gone down that route you have to accept that you may need another one to clear up the mess. To ignore this option is to give up on the strongest card. The most powerful force in any democracy is the people – the EU cannot easily ignore the collective opinion of 66 million EU citizens. You could argue we have been here before. The EU did not take the UK seriously enough when Cameron went to renegotiate the terms of UK membership back in early 2016, but we have come a long way since then, and now the UK has a stronger card following the referendum vote.

Like the UK, the EU often makes mistakes. It made the mistake of not offering Cameron a better deal. It is making the mistake of not being more diplomatic in the Catalonian crisis (which also needs another referendum to sort out). But still it is worth giving the EU more chances to improve because what is good for the UK is good for Europe and we should always hope that there has enough smart people to understand that.

Comments

  1. Noel Scoper -

    Selective stats quoting there comparing the EU one way to Germany the other. Actual figures:

    UK exports to Germany 2016: $43.8b (German GDP $3.47T, $48.7k per person)
    UK imports from Germany 2016: $94.1b (UK GDP $2.62T, $42.6K per person)

    By any measure, you can see why Germany wants a trade deal on a country level.

    1. Sean Danaher -

      Noel

      also one rule is that as part of the EU one can not do bilateral trade deals or even start formal negotiations on trade deals. This apparently came as a surprise to the Brexiteers after the referendum. Germany by far prioritises the unity of the EU and the single market over any trade deal with the UK.

      The response to Davis in Berlin has been near ridicule. Even from the rabidly pro hard Brexit Daily Telegraph http://www.telegraph.co.uk/news/2017/11/17/david-davis-derided-german-business-leaders-british-gentleman/

      “But he was met with derision and disbelief. Heads of multi-billion pound companies shook their heads and muttered angrily as Mr Davis fumbled for answers under questioning”.

      1. Dipper -

        For a head of a business to laugh at and belittle his customers in public, even if he had cause, would be regarded as a stupid and short-sighted display of arrogance in any major multinational company. The fact that they cannot be bothered to be polite does not make me want to do a deal, it makes me want to have nothing to do with them. Once they have started sneering, there is nothing you can do that will stop them. Just have nothing to do with them unless you want to spend the rest of your life being hectored and bullied. There is nothing for us here.

        Would the head of the company that deliberately fabricated its diesel emissions test results be amongst these leaders?

        1. Sean Danaher -

          I absolutely don’t see it this way. I see the mote in God’s eye. I see stupidity arrogance and panglossian self delusion on the part of the Brexiteers. I see a Britain I have lived and prospered I happily for 36 years which has turned into a vile country that certainty uses the rhetoric of fascism. I see a country which will possibly look like Bangladesh in 10 years time, or what’s left of it; if the Scots and Northern Irish have any sense they will leave. Politeness goes two ways. I wasn’t present but the laughing was probably in total disbelief at the stupidity, incompetence and unpreparedness of Davis. This is the way war starts. It didn’t have to be this way.

          Maybe patience snapped as Chris Kendall (a senior trade negotiator for over 20 years) said Goodwill is your most valuable resource, hoard it and spend it sparingly.

          “From the outset, the UK has burned through goodwill as if it were an inexhaustible, ever-renewable resource. It is not. Compiling a list of examples demonstrating how the UK has damaged goodwill since the referendum would take me all day and fill far too much space. Just off the top of my head: accusing the EU of meddling in the UK’s election; ad hominem attacks on Juncker and Barnier; treating EU citizens living in the UK with contempt; telling the EU it can “go whistle” for the money which the UK had already committed to spending; threatening to withhold cooperation on security and counter-terrorism… the list goes on and on. None of this was necessary, none of it did anything whatsoever to advance the UK’s negotiating objectives, all it has done is squander goodwill where we most desperately need it”.

          As Chris Kendall also says “The UK government seems to be dealing with a fantasy EU that resembles the caricature presented in British tabloids, not the real EU of which it has been a core member for over four decades”.

          “There was a widespread assumption that the UK would implement the referendum result in its typically sober, intelligent way to minimise shock to itself and the rest of the EU and build a solid foundation for a mutually advantageous future relationship. The opposite has happened. This is simply shocking and will have a lasting impact on the country’s influence and reputation”.

          The case for Brexit has been made using dishonesty on an industrial scale (Prof Michael Dougan) and I can’t see how fantasy can be squared with reality. Chickens are coming home to roost. The only parallel I can see is the American Colonial war when the UK lost 30% of its trade overnight and it took about two generations to recover.

          Posting on this blog is a privilege and not a right. You have upset the barman an won’t be posting here again.

        2. Peter May -

          It being so uncharacteristic of the British to sneer at anyone and certainly never other EU members…

          1. Sean Danaher -

            Hi Peter
            sorry I saw red with Dipper a bit earlier, but it has cleared up why the Daily Telegraph published the story, to rabble-rouse hatred of the Germans and to set the foundation for blaming the EU for a train crash Brexit.

            Another recent right wing press article was in the Sun: “Shut Your Gob” was the headline aimed at my PM Leo Varadkar. Strangely this one had me burst out laughing. If you want to know what is really going on this is well worth a read

            https://www.rte.ie/news/analysis-and-comment/2017/1117/920981-long-read-brexit/

            1. Peter May -

              I’m delighted that the Irish are finally calling out the British deceit of no Irish border but leaving the single market. As long as the EU sticks together the UK govt is up the creek without a paddle. I hope the DuP go off in a huff! Agree, The Sun, like all comics, is drivel but sometimes funny.

            2. Andrew (Andy) Crow -

              Thanks for that link.

              It makes very interesting reading.

              A whole can of worms explained.

  2. Charles Adams -

    The figures are appropriate because the UK stands to lose trade with all EU, whereas Germany would only lose trade with UK. The figure that counts is percentage of total trade in each case. For UK 44% of trade is with other EU countries, see

    https://atlas.media.mit.edu/en/profile/country/gbr/

    For Germany most trade is with EU countries other than UK.

    https://atlas.media.mit.edu/en/profile/country/deu/

    e.g. France + Netherlands (15% of German exports) twice as important as UK (only 7%), so rest of EU is far more important to Germany than trade with UK.

    Everyone wants a trade deal, but if you cannot agree terms, UK suffers more than EU.

    1. Noel Scoper -

      If it’s all EU or nothing then:

      EU exports to UK £318b
      EU imports from UK £236b

      Again, you’d think they’d want a trade deal but it’s not about trade, only about ensuring that no-one else thinks that leaving the EU is good idea to ensure its survival.

      1. Sean Danaher -

        Noel
        I’m sure the Germans would like a trade deal but prioritise the EU and want to retain the integrity of the single market. What continentals fear most is a return to conditions before the 2nd world war. The British in some respect see the 2nd world as their “finest hour”, they simply don’t understand the EU on an emotional level and the passion for which many continentals feel for the EU. For the continent the 2nd world was was a disaster. This is why Cameron framed his case for staying in the EU in purely trade terms, for the UK the EU is simply a trading block. For the Germans it is far more than that. There was never any chance that the Germans would put trade before the survival of the EU.

        Britain will get a trade deal but not on preferential “cake and eat it” terms as dictated by UK. This was absolutely obvious before the referendum. The worry is that the Brexiteers have promised the undeliverable and the right wing press will go on an all out attack and blame the EU. This is the way wars start

        1. Graham -

          I have to think the British, or at least the current politicians, really don’t understand the horrific trauma that most of continental Europe went through from WW1 and the Russian Revolution to Nazism, fascism in Italy and Spain the totalitarian takeover of Eastern Europe and the millions of deaths, horrors of a brutal war and the dislocation all that entailed. While we luxuriate in our “Finest Hour” and endless tv repeats of “plucky” Britain standing alone and films of Dunkirk, (again) and Churchill (again), France and Germany decided something had to be done to prevent another destructive war and so what eventually became the EU was born. So the UK decided we’d better join this, eventually, and spoil it.

          In some ways I think the EU would be better off without the truculence and exceptionalism of a UK always trying to destabilise, but I don’t think the UK will be better off, in any sense, out of the EU.

          This is not to say the EU doesn’t need to change. I don’t think any of us who support membership of the EU are under any illusions over that. But when Brexiteers complain about lack of EU democracy it’s clear they’ve never noticed the House of Lords, or FPTP, or lack of a written constitution or how ex-public schoolboys (and they are mainly boys) dominate many of the institutions of the UK.

          1. Sean Danaher -

            Thanks, very nicely put.

    2. Andrew (Andy) Crow -

      Do people really think these numbers are crucial?

      I don’t. The outfall of Brexit is going to be so much more devastating than a bit of argey bargey about trade figures. What’s a few £million of trade either way going to matter in the overall scheme of things?

      The salaries of civil service staff to sort out the mess will eclipse the difference before we even consider substantive effects of ‘divorce’.

      Are you saying this is really the level of substance that is driving discussions that are taking place surrounding the Brexit process?

  3. Steve J -

    Right now the EU is moving away from democracy. It cannot be stated less boldly than that.

    And you have every reason to be worried if our politicians don’t object to that, now.

  4. Dipper -

    The UK campaign to remain was based on a promise to disrupt and reform the primary purpose of the EU. We were asked to vote to Remain in the EU on the basis that we would have an opt-out on the number one purpose of the EU – ever closer union – and on a platform that we would reform it, despite Jean-Claude Juncker promising that there would be no more reform. The departure of the UK gives the opportunity to the EU to move up a gear on further federalisation. Why would they want to keep the UK?

    1. Andrew (Andy) Crow -

      The Campaign to ‘Remain’ was based on a blithe assumption that the Cameron/Osborne position was acceptable to the UK population and would be carried on the nod.

      The case for ‘Remain’ was not about anything, except vague suggestions that leaving would be financially disastrous; this was dismissed by the media as ‘Project Fear’ and swathes of the public were not persuaded that ‘it’ could get much worse than ‘Cameronomics’. So, what the hell let’s go.

  5. Graham -

    I can’t see this idea gaining much traction, I’m afraid. It seems to imply that it is the EU which is mainly at fault, whereas, Brexit is a mess entirely of the UK’s making.

    I don’t know if the EU didn’t take Cameron seriously or not, but according the Anthony Barnett, who quotes one of Cameron’s close advisors, it was Cameron’s abysmally inept negotiating strategy which was shot down by the EU. It was ill-prepared and his arguments were evidence free.

    Now, the UK can’t simply surrender and plead to be allowed back in, but perhaps something of a joint proposition could be developed. However, that would require a new PM (Brexit means Brexit, after all) and some competent people to do the negotiating rather than the bunch of clowns we have at present.

    In other words, a root & branch clear out, and perhaps (as I think Richard Murphy suggested) a government of National Unity led by someone who wants to stay in the EU. Followed by a radical overhaul of our dysfunctional political system.

    Can’t see it though.

    1. Sean Danaher -

      Indeed Graham

      “The Lure of Greatness” is well worth reading. Barnett said that when the EU asked for evidence such as particular areas in the UK where immigration was an issue he had absolutely no facts whatsoever to base his case up. As has been discussed before there were a wide range of existing powers regarding immigration that the UK could have used but didn’t implement. Cameron comes across very badly in “The Lure of Greatness” as a person with absolutely no integrity, sincerity or vision, just an empty PR man who would say anything if he thought he could sell it to the public.

      Nationalism used incorrectly is dangerous and can easily be stoked up by extremists. I’m particularly vigilant of “patriotism” as it has been used to such a destructive effect in Ireland and NI still lives with the scars today. It is a Genie that is very difficult to put back in a bottle.

      “..a root & branch clear out, and perhaps (as I think Richard Murphy suggested) a government of National Unity led by someone who wants to stay in the EU. Followed by a radical overhaul of our dysfunctional political system.” I think that’s right but there could well be a lost generation before it happens.

      I can’t really see any way out for England

    2. Andrew (Andy) Crow -

      It is quite uncomfortable to be in the position of wishing to see one’s own, supposedly representative, government utterly humiliated in these negotiations over Brexit.

      I can’t be the only person who feels this way can I?

      1. Sean Danaher -

        Andy
        my English wife is even more passionately anti Brexit than I am and very much feels the same way as you do. She is a senior medic and thinks Brexit will destroy the NHS.

  6. Peter May -

    Think it would be a good idea to get the EU to appeal directly to the British people but Barnier is of course a functionary so doesn’t have the discretion to do so. It would have to come from Macron and Merkel (when the latter finally forms a government) or a group of other countries but they might feel they’re intruding on internal affairs.
    The difficulty is I do not see much they could offer that isn’t already available – except for capital controls or at least methods of slowing capital (say, compulsory minimum six months residence on arrival before moving on or 99% tax payable).
    The major problem is seen as being immigration but we know that it’s really austerity and the fact that UK governments haven’t bothered to use the EU immigration rules they could have.

    1. Sean Danaher -

      I agree with that. I think free movement also needs to be looked at on an EU level. Rules which made sense when there were 6 or 9 wealthy West European countries probably need to be thought out more not to denude E Europe of too many of their brightest and best. In 2008 at the end of the Celtic Tiger book it seemed that half the 18-25 year olds from the Baltic States lived in Dublin; bright keen as mustard handsome boys and beautiful blonde haired intelligent girls. Dublin’s gain but heart wrenching I think for the left behind friends and parents.

      1. Graham -

        “Free movement etc”…or fiscal transfers to poorer regions.

  7. Andrew (Andy) Crow -

    “….The first is that it is now known that the UK population are not happy with the current relationship and voted to leave. ….”

    Part of my personal difficulty with this whole Brexit debacle is that don’t actually accept this assertion which is glibly and frequently voiced.

    I firmly believe that that distaste for the Cameron/Osborne government’s austerity policies and smug complacency could easily have been the deciding factor. Voters saw an opportunity to register a vote of no confidence and took it. They are the ‘constituency’ which ‘won’ the Brexit referendum because they saw their wish fulfilled to be rid of an unpopular leadership. Cutting off of that particular nose truly has ‘spited’ the face of Britain.

    add

    1. Sean Danaher -

      Andy
      I had an interesting conversation with the Mother of one of my sons classmates who was very scared of Leave victory because of what she saw as Cameron’s insincerity and condensing attitude during the campaign. Truly Cameron was dire. I’m not sure what is the way forward.

      1. Andrew (Andy) Crow -

        I don’t think anyone can see a sensible way forward, but I have to say that it gives me perverse delight to see Dublin taking full advantage of the stupid position that English politicians have created.

        Even Nigel Farage didn’t expect the referendum to be more than a bargaining chip in UK/EU relations.

        I think Cameron having bounced Alex Salmond into an earlier rather than later Scottish Indyref before enough ducks were lined up on the Scottish side, thought he could pull the same stunt again over the EU referendum.

        He massively underestimated the contempt with which he was regarded by a population who were not happy to be patronised by his ‘All in it Together’ elite complacency.

        Theresa May is a poor replacement because she has not (apparently) the courage of her own convictions. She called a general election to give her a mandate as to how best to proceed then completely ignored the result that indicated a country divided and wishing for a cross party negotiating team. It is difficult to conclude that the GE result indicated anything other than that.

  8. Graham -

    One of the most dispiriting conclusions is that no one seems to have a notion of how to get out of this mess. The politicians who got us into the merde have no clue either – they never had a plan and still don’t. They won’t produce an objective, impartial analysis of the consequences. And like Macbeth, they are “stepped in so far” that it would be as difficult to go back as to go on. So on they go until the strains of the internal contractions bring the whole shambolic edifice crashing down – or does it?

    More generally, it’s a bit like Austerity – so many have critiqued it as a “dangerous idea” and a letter in the Guardian today calls on the Chancellor to ditch it, and there’s a growing consensus that Brexit is going to be a disaster, yet there are still those, allegedly intelligent people (like economists) who support both austerity and Brexit.

    Truly, What is to be done?

    1. Sean Danaher -

      Not all economists are hapless Simon Wren-Lewis suggests blaming it on the Irish: https://mainlymacro.blogspot.co.uk/2017/11/what-ignoring-ireland-tells-you-about.html

      “There is a simple solution to the problem of the border. It is for the UK side to commit to only negotiate new trade arrangements that would be consistent with a soft border. That would mean staying in the Customs Union and parts of the Single Market, but it could leave open the possibility of negotiating over the remaining parts of the Single market and perhaps free movement. Anyone who tells you that this concession by the UK side does not respect the referendum result is once again lying: Leave won precisely because they ruled no arrangement out. Any red lines erected after the referendum carry as much weight as the Prime Minister currently has authority”. That at least would be a start; kick Brexit into the long grass and quietly drip in in 5 years time.

    2. Ivan Horrocks -

      ‘Truly’, nothing Graham – as I’ve just written in a comment on Richard Murphy’s blog. Like the US with Trump there’s no jumping off. Thus, as with Trumpian republicanism, the direction of travel has been captured by a small, extremist minority – as Sean illustrated in a previous blog. Ditto austerity. Knowingly visiting pain and suffering on your fellow man is all part of extreme, partisan politics, particularly if ‘they’ are seen as liberals or social democrats, but really it doesn’t matter who ‘they’ are if they’re not part of your ideological tribe.

      So, we’re going to have to live with the disaster that’s going to hit us and that we see unfold a little more every day, not least because Brexiteers know Remainer are not their tribe and are therefore quite happy to punish us by crashing out of the EU. If others get damaged in the car crash that follows, so be it – that’s collateral for you. Live with it.

      And so, just over a year out from Brexit, like the government, Brexiteers have no answers to an increasing range and number of real questions about the impact of a hard Brexit. The most high profile is the Eire/NI border. But there are many others. Take the examples presented by Honda and by the UK aircraft and aerospace sectors presented to the Business Select Committee in the past week. How can the supply chains and JIT manufacturing systems that are central to their operations be maintained? Who covers the additional costs incurred by being outside the single market and customs union (a hand out from government)? And what rationale now keeps these companies in the UK given the rationale that underpins their UK existence is/was access to the single market and lack of tariffs.

      There are hundreds more examples from each sector (e.g NHS recruitment from the EU has collapsed already adding to the staffing crisis, and the same is also being seen across other sectors and will hit a even harder next year). Where does replacement labour and skills come from – now, not in the future? Or, if it doesn’t what do we as an economy stop doing? Plans for reconfiguring what we do need to be on the table now, not after April 2019. And they need to be detailed and workable. Instead the argument is kept at the level of the Brexit ‘bill’, of which country is trying to screw us most, and so on.

      But as I say, it isn’t going to change, because as with the authors of austerity, it’s more important to keep to the pure, ideological path than take steps to avert disaster. After all, with the majority of the media on their side Brexiteers can always rely on an endless stream of excuses and blaming others once the scale of the disaster is upon us. They’ve had seven years making excuses for the failure of austerity so they’ve had plenty of practice.

      1. Peter May -

        All that it depressingly true.
        So perhaps a new referendum with the BBC signicicantly as aware as Channel 4 might – perhaps – give a fairish result?

        P.S. I think there must be a good slogan to counter ‘ the authors of austerity’!

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