23rd January 2017
–By Keith Nieland-
May May Land
Queen May has spoken! We now know the door through which we will exit the European Union is the one marked the “hardest of hard exits” – no single market and no customs union.
Everything thrown into the air, 45% of our trade with our nearest neighbours put at risk, cordial relationships with our longest standing allies also put at risk in exchange for a new order based on immigration control and an as yet to be negotiated set of free trade agreements. All to be achieved to the background music of the UK taking its ball home if it does not get its own way, and becoming a North Atlantic tax haven.
The University Professor
The PM’s speech was the ultimate triumph of political ideology over evidence-based decision making. In decades to come, professors on business Masters’ degree courses will be using it as a case study. The intention of all those fine words against the reality will consume thousands of essays. How many years before the new order of comprehensive worldwide free trade agreements is in place is anybody’s guess (assuming Trump does not turn us all into dust beforehand)? But one thing is for sure – the task will outlast May and her little gang of Euro sceptics.
Brexiteers will shout against the evidence base for remaining in the single market and customs union, but here it is.
We export more to Ireland that we do to China; almost twice as much to Belgium as we do to India; and nearly three times as much to Sweden as we do to Brazil. It is not realistic to think we could just replace European trade with these new markets.
In a stand-off between Britain and the EU, 44% of our exports is more important to us than 8% of the EU’s exports is to them.
Remaining inside the EU does make us more secure, it does make us more prosperous and it does make us more influential beyond our shores.
Now the three paragraphs above are not my words but Theresa May’s. And she finished by saying “I believe it is clearly in our national interest to remain a member of the European Union.” She uttered them during the Referendum campaign. So what changed her mind?
May the Populist
If you listen to May’s speech it is quite easy to hear it being delivered by President Trump. His populist dog whistle tunes were all there if you listen hard enough. Our problems are created by meddlesome foreigners and unwanted immigrants. “Britain First” was her unsaid cry to be achieved by breaking away from Europe and creating a new order based on worldwide free trade agreements and tough immigration controls at home. If things get difficult there was an appeal to the Dunkirk spirit and British bulldog traditions and a threat to piss off our allies of 70 years by becoming an offshore tax haven. She forgot to mention the extra £350m a week for the NHS this new order would allow, but I can only guess she ran out of time.
On one level May’s speech was a meek and pathetic surrender to the saloon bar politics of Nigel Farage. No wonder he welcomed it. The politics of blame and envy in full flow with a flourish of nationalism thrown in. At best it was a gamble (which some would describe as reckless) in basically stating we have got it all wrong for 40 years so let us start again.
Very soon May and her team will face the reality of their offer to the UK populist vote which they hope will keep the Tories in power for years to come. Already the unrealistic amongst Brexiteers do not understand why we have not yet left the EU and for some of them any form of immigration control will not be enough. Any TV news vox pop interview on the streets finds them with ease. They will soon get bored with the lack of apparent action but UKIP will always be on hand to offer even more extremist policies to keep them happy.
Meanwhile, in the real world, May’s government needs to find and recruit an army of skilled, experienced negotiators to both get us the best EU divorce deal possible and negotiate an as yet unspecified number of free trade agreements. The EU, of course, already has a team of experienced negotiators as do some of the countries we will be trying to do deals with – China and the USA amongst them. Our lack of skills and experience could find us paying a heavy price. We will always want to close deals more quickly than the other side of the table as the future of our economy will depend on it, but that will not be a mutual risk.
America First v Britain First
So May’s first big test comes in a few days when she goes to Washington. Her office will make much of her being the first foreign leader to meet Trump but for many the reality is that they do not want to meet him – ever! Does anybody believe, given Trump’s inaugural speech, he will do us any favours? His aim will be the issue of a 140 character tweet informing his fans of the UK’s role in making America great again.
Is it outrageous to suggest Trump may want us to block car imports from Europe through tariffs so as to make US-made cars a more attractive proposition in the UK? Will he want the UK to take its steel from the US? Port Talbot could be under threat again. Will his aim be to make the UK just another state of the Union? What will Trump’s reaction be if May just says no to something he might want? I would suggest we have few bargaining chips beyond Marmite and bagless vacuum cleaners.
If you scratch the surface of some communities it is easy to find discontent with immigration: there are too many immigrants, they depress wages, take houses and jobs and change the character of communities. However, we rarely look at the issue through the lens of the countries from which immigrants come.
I know from personal experience of Australians who have given up trying to come to the UK because it is just too difficult. Many countries now see us as unwelcoming and their citizens do not want to come and work and study here. So how will this go down, say with India, Australia, China and New Zealand, when it comes to trade deals? Will we be saying that we want you to take our goods and services and will take yours but not your people? May could find herself being bitten by that part of the populist vote that does not want Indians and Chinese people here at any price. May could find herself revisited by the ghost of the free movement of labour.
Calling the Bluff
What will May do if a country just says “Thank you, but no thank you. We just do not want to do a free trade deal with you”? Or the negotiations simply collapse or take years and years? Given how desperate we could be to strike deals to keep employment in the UK and the economy buoyant what will we do if, for example, Switzerland say “non”? Is there a risk the EU will happily negotiate our divorce then say – given your threats we have no desire to negotiate any form of free trade deal with you – and just leave us to stew? After all we could have maintained our trading status by remaining in the single market.
A Reckless Gamble
In many ways May’s speech was duplicitous. It played light with the practical consequences and time frame for basically achieving such a major rebalancing of the economy. Her response to challenges was a mixture of threats and appeals to the national spirit. Already some of the forecasts of what was branded “project fear” are coming to pass. The 20% fall in the value of the pound against the dollar has fuelled a 20% increase in the cost of petrol. Inflation is rising and thousands of high paid banking jobs are planned to disappear over to the continent. Those cheering the departure of the bankers conveniently forget that the high paid pay high amounts of tax and the spending of their disposable income provides jobs for others.
When Article 50 is triggered the uncertainty will only increase and there is nothing markets dislike more than uncertainty. At best it is highly ambitious for May to be able to negotiate our divorce from the EU and a totally new economic model within a two year time scale. Many would say it was totally impossible. It took the EU seven years to negotiate a pretty straightforward trade deal with Canada, which ironically we will not be part of once we leave.
Holding May to Account
It is little wonder May wants to keep the House of Commons as far away from the EU negotiations, and whatever follows on, as possible? There are greater minds than hers lurking on the backbenches to ask searching questions. I just wonder to what extent May was emboldened by a weak and poorly led official opposition – that’s the Labour Party if anyone needs reminding. The only nationwide party committed to representing the views of the 48% of voters who did not vote for May’s vision has less than 10 MPs. Corbyn’s long personal dislike of the EU makes him totally unsuitable to fulfil the proper opposition role to what May proposes. Labour should seek to amend any Article 50 legislation to maintain single market and customs union membership – the only assurance to stop May playing Russian roulette with the economy and jobs and livelihoods of millions of people. The minimum Labour should do is to lay down an amendment that reflects official party policy adopted at September’s conference.
May could be right and it will turn out fine. If that was the case why has it not been done before? The reality is she has dressed up in populist rhetoric what is a complex, time-consuming and potentially extremely damaging way forward.
It must also be mentioned that if the PM is such a convert to free trade why is she turning her back on the world’s largest free trade zone?
The House of Commons has not very long to get its act together to not just scrutinise what May proposes but to replace it with something more realistic and less risky. Otherwise, cheered on by her backbench Brexiteers and a compliant press, May will have a free hand.
Corbyn’s Brexit performance has so far been inept so he needs to step up to the mark and make Labour a serious opposition. The current situation is bad for democracy with 48% of voters all but disenfranchised. May needs to be properly held to account.