Thursday, 8 June 2017

Blog Post For A Future Generation


How exactly will Brexit be resolved?  How will all this mess be tidied up so that we can all get on with our lives? What can you expect from the next few years if you have a one-way ticket on the Brexit bus?  How will the next generation react when the harsh realities of Brexit become clear? Will we just end up exactly where we started?  Well, if you came looking for definitive answers to any of those questions you came to the wrong place.  Despite my lack of predictive power I'm going to have a right old go at answering some of these imponderables in a wildly speculative post. Enjoy.


Full disclosure: normally I plan out my posts paragraph by paragraph, exactly the way I was taught to at school. You might not believe it but it is honestly the case that some forethought is involved in these blog entries. This time, however, I didn't actually know what I was going to write in advance of writing it because I really don't know how Brexit will be resolved. Yes, I know, how very apt!  What follows are my thoughts as they happened in real-time.  Let's find out together if planning is a good or bad thing in a kind of internet literary experiment.  Right, that's enough of this meta-blogging.  Let's get cracking.


Catastrophic Brexit


A catastrophic Brexit is the outcome that has been threatened by David Davis on multiple occasions. In this scenario, the UK simply walks out of the exit talks with the EU.   As a consequence, all treaties with the EU and all associated agreements with third parties will lapse on 31 March, 2019 without replacement or extension. Every single one will be void. The UK will cease to operate with any of the international legal relationships that define the developed world. Planes will be unable to take-off or land; the Channel Tunnel will be forced to close; money transfers will cease; the legal frameworks that protect business and consumers will no longer function; nuclear fuel and hazardous chemicals will be stuck in transit; the rights of citizens caught up in this mess will be open to abuse. Normal life as we know it today will no longer exist.

Optimal Brexit per Gove is found at 1.76 Farage. Any more and it's a catastrophe.
This is not a credible option because the chaos it would create would result in the rapid fall of the government. Honestly, I cannot envisage any government surviving this mayhem. Even if David Davis did adopt this strategy there would be enormous pressure on him to alter course before his intentions become reality. That pressure would come from the money markets, it would come from business leaders, lawyers, supermarkets, his own colleagues, farmers, Heathrow Airport, and me. That's right, Terry Entoure would blog about it in the third person and walls will tumble. Ok, a currency crisis would obviously be more effective but in my own mind it would be all down to me and my powerful words. Read them and be afraid, Mr Davis!

Catastrophic Brexit is unlikely to happen because anyone who follows that path will be ousted by the simple rules of power and politics. Does anyone remember the UK's dalliance with the Exchange Rate Mechanism? The money markets started gambling against official Tory policy, forcing the UK to prop up Sterling at great national expense. That policy decision was abandoned after just a few days due to the spiralling costs. Brexit poses far greater challenges than simply propping up a currency so David Davis or his replacement will be forced to compromise and negotiate.  Brexiteers can complain about the democratic will of the people all they want but it won't diminish the power handed to foreign exchange dealers through market deregulation in the 1980s.

Will any of this deter David Davis from carrying out his threat?  I think he is actually stupid enough to think he can walk away from the talks but his successor probably won't repeat the error.


Hard Brexit



A hard Brexit is the offical route of the Brexit bus. It is barely less catastrophic than walking away in a huff because it guarantees exactly the same outcome: the UK would cease to have the international legal relationsips that define the developed world. The problem here is that the red lines of the UK and the EU are irreconcilable. The EU demands that citizens' rights are protected by the ECJ, while the UK rejects a continuing role for the ECJ in any form. In fact, rejecting any role for the ECJ means that the UK cannot participate in any EU initiative from the European Arrest Warrant to the Open Skies Agreement. The EU also demands that any transitional phase be subject to the legal obligations of EU membership, while the UK demands an immediate end to the four freedoms. In addition to these red lines, the UK has some extremely vague policy that has yet to be expressed in the form of sentences and words and punctuation. It will take linguistics academics and behavioural experts years of research to work out exactly what the UK intends across many areas of policy. The Customs Union springs to mind as a good example. Will the UK be in or out or in an exotic macroscopic quantum state? Agreement to vague demands is just impossible.
My slides on superposition Brexit states.  Yup, completely meaningless.
The hard-core Brexiteers want the talks to be conducted in secret. It doesn't take a genius to work out that they don't want a ticker-tape of bad news to undermine their objective of a hard Brexit. That is not going to happen because the EU has published its guidelines on transparency. Instead of secrecy, we are going to be treated to a steady stream of official reports on the progress of the Brexit talks from the EU. The currency markets will respond immediately to any report that the UK will soon leave the EU by stepping into a legislative void. By threatening economic chaos the markets will put pressure on the government to solve the problem the way they want it solved.

It's my view that governments cannot survive the economic chaos of a hard Brexit. It's also my view that governments cannot survive even the imminent threat of a hard Brexit due to the immediate reaction of powerful currency markets. Whoever is in charge will either need to change their approach before it's too late or they will be kicked out by their own backbenchers. It's worse than that because altering course might also lead to the fall of the government. After all, Tory and Labour campaigned on a clear policy of the most extreme form of divorce and there will be residual feeling that it ought to be delivered. The next government, of course, will merely inherit all the problems of the previous. That cycle can only ever be broken by the formation of a government that agrees to compromise on almost all of the UK's red lines in order to achieve an orderly Brexit. Until that compromise is reached all that will happen is a cycle of governments armed with the same dogma that led to the fall of the last.

The key point in all of this is that the EU has planned for Brexit; it has published legally binding policy documents; its message is consistent with its own treaties and with the legal templates it has forged with third nations; it is united; everything the EU said last July on Brexit remains valid today. The UK, on the other hand, has come up with nothing more than uncosted policy statements presented in the form of snappy slogans. It has flipped and flopped and stumbled towards an indecipherable position that makes no rational sense. The inherent weakness of the UK's position means it will be first to compromise. It didn't need to be this way but here we are.

Why won't the EU be forced to compromise to the same degree as the UK? Well, it will be forced to compromise from its initial negotiating position but the limits of those compromises are set out in a series of legally binding policy documents. Michele Barnier might even take the view that the EU should compromise further but there's not much he can do about that because anything he does beyond his legal powers will be rejected by the EU. The EU has taken some months to get to its current position: policy proposals have been published, debated by the European Parliament and ratified by the European Council of Ministers. It is doing exactly what it did during the Croatian accession talks, the CETA trade deal, the South Korea trade deal, and TTIP. This is how it conducts its business. A common criticism of the EU is that its democratic processes are time-consuming but that works to its advantage in the Brexit talks: once it has chosen a direction there is no way to change it in time. The UK, on the other hand, has no formal policy documents outlining its negotiating strategy. All it has is a couple of White Papers of dubious quality and some campaign slogans. It is also the only side that is able to change direction rapidly due to its insistence that strategy is dictated by an unaccountable team. The principle of least resistance dictates that the UK will cave first.

Orderly Brexit



Sooner or later there will be an accumulation of pressures from money markets, from businesses moving their headquarters to EU soil, and from the City of London losing its EU passporting rights. Perhaps the UK will be heading towards a self-inflicted recession. Maybe it will already be in recession. Maybe the problem will be a recruitment crisis in the NHS or a brutal downgrading of the UK's debt. It doesn't really matter what crisis acts as the tipping point: a time will come when the UK will be forced to compromise on its red lines. It will probably require a change of Prime Minister, maybe even a change of government, maybe even an emergency election laying out the available choices. All of this will take time that is already in short supply so the UK will be forced to take up the limited offer of a transitional phase on the EU's terms. The UK will take up that offer and effectively remain in the EU until at least 2022.

I didn't mean that sort of orderly but actually it sort of works.
This vision of orderly Brexit is not good for the UK because it makes it look weak and disorganised. That is not a good look for a nation that desperately needs to sign a trade deal with the EU, sort out its WTO schedules, agree renewed trading relationships with all EU partners, and sign 750 legal contracts with 160 nations on everything from airline safety to passport recognition. It needs to do all of that by 2022 just to tread water.

The "orderly" Brexit described here will do significant harm to the UK's economy. It will limit the ability of the UK Government to borrow money on favourable terms; it will lead to uncertainty in business; it will reduce the tax take from financial institutions that successive governments have relied on; it will place restrictions on trade not seen since the 1950s. The UK's international reputation as a place to visit, work and conduct business will be damaged for the next generation.   More than any of this it will be a severe test for the limits of democracy in the UK. None of this is good.  This is not an orderly Brexit but it is the best we can hope for right now.

The Future


What happens after Brexit? Historians might note that the UK intially rejected the vision for the EU laid out in the Treaties of Rome in 1957. Instead of joining a trading block with strong intentions of closer integration and cooperation, the UK joined EFTA. The UK's sluggish economy resulted in an attempt to abandon EFTA after just 1 year of membership. Attracted by the stellar growth of the EEC, Harold Mcmillan applied to join up back in 1961. That was rejected by Charles de Gaulle, as was Harold Wilson's attempt to join in 1967. By the 1970s the UK was the "sick man of Europe". It's eventual accession to the EU and the opportunities it presented turned the UK into one of Europe's most successful economies. Will history repeat itself?

There is no question that EU membership has been an economic success for the UK. In a few years time, after the current wave of xenophobia was blown over, the EU will once again appear a more attractive option than going it alone. It will take a new generation of voters and political leaders but that is the most likely outcome. Maybe it will start with small items like closer cooperation on the protection of fishing grounds or maybe the UK will want a slice of the Single Digital Market. It doesn't really matter how it starts but one day we'll look back and realise that Brexit was all for nothing. How much damage could have been avoided if only that realisation had dawned as early as 2017? That's a moot point because right now Brexit is a process that we all have to go through. Almost nothing can stop Brexit because it has just enough momentum that it can't be stopped in time.

If you're Scottish, of course, the wilderness years can be avoided by voting for independence. We must never forget that.

This can all be avoided by voting Yes in a second independence referendum,

Terry

PS I think the planned posts are better but I've always been one to prove a point even if it means a kick in the shins.  Can I be Minister for Brexit?

PPS Feel free to disagree with my analysis.  Maybe you think that the next government will stand firm or that the chaos will be containable. Please leave your views in the comments section.  If we still disagree then I'll see you in the car park outside Tesco at 8pm.  Oh dear, this always happens when planning goes out the window.

PPPS Switzerland took a hard look at their own equivalent of catastrophic Brexit and backed down long before it became a likelihood.  There's that famous European pragmatism.  Everyone used to think the UK were the kings of pragmatism.  What happened?


13 comments:

  1. Most of what you've said will cometo pass, I think. The one thing you haven't included is the most likely outcome from game theory. Once the UK is approaching chaos, it will be offered continuing EU membership, but without the current special conditions. And the electorate will force the government to accept.

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    1. That's an excellent point.

      Would the UK accept continuing EU membership under any condition? It's hard to imagine swings in public mood, especially as I don't live in the UK. It just strikes me that this wave of Empire nostalgia/take back control/reduce immigration/bring back the old passports/pounds and ounces/feet and inches etc doesn't seem like it's going away any time soon. The Leave message has also changed from "everything will be brilliant" to "we need to go through some pain to get to the other side but that's just how medicine works". I can imagine some really angry people actually taking to the streets over that outcome.

      I do hope this is a realistic scenario. I could only really imagine the UK edging slowly back in but that says more about my perception of the UK than it does about actual likelihoods.

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  2. Good points, and I wouldn't have recognised that it wasn't planned.

    But then, I've never planned a post in my life (and heaven knows it shows)!

    The promises that were made by Brexiteers before the referendum were taken seriously by a lot of people. I'm sure by now we've heard of the racism directed to not just EU citizens, but anyone with a foreign accent or brown skin, including Americans. The most incredible was on the day after the referendum, a woman who had fallen and broken a leg asking the middle eastern doctor treating her why he hadn't already left. No, really!

    One of the things that the UK government will have to manage is the expectations that were awakened by the Sun and the Mail, not to mention the Daily Diana. This was what a lot of people actually believed would happen and why they voted the way they voted. The papers they read simply didn't bother with the truth. Nor did they mention at any point negative consequences... It was all sunny blue skies and passports and a stack of British values.

    The fact that Farage, Johnson, Gove and sundry other idiots who should have known better, were also saying these things, only served to make them more believable. Well, at least to some.

    So, the poor old government of, well, whoever it is tomorrow, will have to cope with the effects of Brexit, hard or otherwise on the value of the pound, inflation, debt, and the other things you mention above, and balance that with the expectations of the Daily Mail readers who were promised that all the foreigners would be sent home an that there would be a money tree to shake for the NHS.

    It's a lose lose situation for them. If they weren't such an incredibly ghastly lot, I might be tempted to feel a twinge of pity. Nah, only joking, I wouldn't.

    Just a point. You said... "I think he [David Davis] is actually stupid enough to think he can walk away from the talks but his successor probably won't repeat the error."

    Does this mean that you think that Corbyn may win, and give himself this nightmare challenge, or that May will win and replace Davis with someone who has at least a smidgen of a clue? (Although my question would be...who? I don't suppose President Obama is looking for a job?)

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    1. The sheer power of tabloids means that a significant portion of the population have been fed lies for at least a decade on the EU. The polarisation of society and the way it receives information means that supporters of Brexit are likely to remain supporters of Brexit. It is going to take a run on the pound or a bout of unemployment to shift their view. This is all terribly depressing.

      Ah, well there is some evidence that unplanned posts lead to confusion. So, I'm working on the assumption that May wins and that Davis stays in place for the immediate future. His replacement would be the result of a political crisis arising from the exit talks. I would guess that would be another Tory. It could be anyone, really. I can't see Corbyn or anyone from Labour getting a chance at power unless there is another election. Surviving the next term, however, will be a challenge for the Tories, especially after weakening the principle of the statutory 5 year term. I don't know what lies ahead for the UK but I don't think we'll look back on it as years of political stability.

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    2. Seriously I'm absolutely dreading it.

      However, as I expect you'll now know, the Exit Polls are predicting a hung parliament.

      If so, given that May called this unnecessary election to bolster her own position, I suspect that her continuance in the roll of PM will now not be an option.

      Even if the polls are a bit wrong and it's not as disastrous for her as it seems, she still won't have anything like the majority that would make her "strong and stable" as she wanted to pretend to be.

      For her to stay on the polls would have to be terribly wrong.

      So, it possible that it's back top the drawing board again, and another 3 months Brexit time wasted.

      How they must be laughing...

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    3. I must admit that I'm not watching the election. Instead, I've been playing jaunty songs on the ukulele and mucking around with a tiny little drum machine smaller than a pocket calculator.

      Just took a look. Oh dear, oh dear, oh dear.

      May is obviously toast if she can't form a government. I would guess that anything worse than a significantly increased majority will also end in her resignation. Mixed feelings about this.


      What a complete waste of time. This could have been used to prepare for the Brexit talks but the principle of purdah means that the civil service will have ceased planning since the election was called. We should be having the talks right now. The clock is ticking away.

      Yup, the EU must be laughing. They are probably a little nervous themselves, to be honest. Can this get any worse? Yes, of course it can. Boris for PM?

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    4. Possibilities are Boris, Gove, Loathsome... I doubt the Disgraced Fox would stand again, after the humiliatingly small support he got last time.

      Who the hell else is there?

      I hope you'll record the ukulele and drums for our entertainment.

      Apparently the exit poll for Scotland is valueless. There were only 10 polling stations in the borders participating.

      Some say technical difficulties. It was raining.

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  3. Thing is she didn't have to do it and it would not have strengthened her hand even if she had won a supermajority.

    See this:

    https://news.liverpool.ac.uk/2017/05/03/watch-professor-michael-dougan-theresa-mays-brexit-election-pitch/

    So now what hand will Theresa play?



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    1. Yes, this was a complete waste of time. About 8% of Brexit time was lost to this nonsense. It can easily add up to more just to sort out the election result.

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  4. You asked what happened to pragmatism.

    I would suggest Billionaire Money and Manipulative Media.

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    1. "Billionaire Money and Manipulative Media", a historical dissection of Brexit to be published in 2027. Sounds about right.

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  5. I know this post does not meet the intellectual clarity of you nor your readers, but ( you knew there would be a but, and so did your readers ) This looks to me like almost an entire nation jumping off the White Cliffs of Dover whilst singing Vera Lynn tunes and smiling as they crash and burn.

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    1. Great metaphor! The nation jumped off because someone said there was an old lottery card at the bottom.

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