Henry Newman is Director of Open Europe.
The UK seems to be approaching (another) stalemate in the Brexit negotiations. With a depressing sense of continual déjà vu, we seem to be having the same arguments again and again and again – over the economic cost of leaving the EU; whether to leave the Customs Union or not, and if the UK should start from a position of being more like Canada or more like Norway.
The fundamental question of where the UK wants to end up after Brexit remains essentially unanswered by the Government. For months, the Cabinet subcommittee tasked with making these crucial decisions has dodged it and deferred the choice. Officials tell me that these meetings end with a summary of the points made by participants, rather than clear action points with which to instruct Whitehall.
Meanwhile tensions in SW1 have reached frantic levels. In the absence of a clear central vision for the future, ministers are starting to freelance – sending pointed tweets, giving loose remarks or sanctioning briefings which aggrandise themselves and attack their colleagues. Comments are over-interpreted, so Philip Hammond’s remark that we will end up with “modest changes” is seen to evince a plot to reverse Brexit. Had Penny Mordaunt said the same, it might have been dismissed as a having-cake-and-eating-it wish to keep trading terms with Europe unchanged.
The Prime Minister is by nature cautious. That trait has, arguably, served her well. But a decision is now desperately overdue. The longer we defer, the more Brussels shapes the narrative. London is forced onto the back foot and negotiations slowdown. Months ago, senior officials told me it was becoming impossible to make proper progress in preparations for leaving without answering this fundamental question.
Outside of central London, things are actually rather different. The 2017 Q4 growth rate – despite the uncertainty of whether “sufficient progress” would be achieved – reached 0.5 per cent, just a little lower than France’s 0.6 per cent (which is described as “healthy” and part of a “boom” across the Eurozone by the Financial Times). Other key indicators such as the unemployment rate remain at record lows. Even more significantly, repeated polling suggests that broadly Britain hasn’t changed its mind about the referendum.
Yet the worry of Conservative MPs is that the comment of a Cabinet insider, reported by James Forsyth, rings all too true: it “looks worse from the inside than the outside”. Most parliamentarians have a clear view about whether the Prime Minister should jump towards Canada or Norway. But I’ve heard from many Conservative MPs (on both sides of the question) who simply now crave a decision. The respected former minister in the Department for Exiting the EU, George Bridges, summed up the choice during this week’s Lords debate as: “what is the country we wish to build once we have left the European Union?”. He argued that this prior question of whether we “value more” “parliamentary sovereignty and control or market access and trade”, must be answered before we can argue about the sort of agreement desired with the EU. He’s right: hence the impasse.
Yet yesterday morning, Theresa May rejected that this choice even existed. If that’s the case why did Whitehall officials ask each department, months ago, to plan for both scenarios? It’s time to grasp the nettle and level with the public, the party, and her Cabinet. Until she does how can she, to quote Lord Bridges again, “possibly negotiate clear and precise heads of terms for the future relationship with the EU?”
What should the Prime Minister say?
First of all, she should be honest that Brexit will come with costs. The silly line that “no one voted to get poorer” misses the point – Brexit was not fundamentally an economic decision. So, despite economic analysis from the Treasury or wherever else in Whitehall, the Prime Minister must treat this as a political choice. Be direct and clear. Say that leaving the Customs Union and Single Market will mean short-term disruption and costs to our economy, but explain your plan to deal with that. Even if you accept the economic impact in the recent leaked analysis (which showed a potential hit to the economy far beyond that which Open Europe modelled before the referendum), the Government has the potential to pull policy leavers which could more than compensate, many of which have nothing to do with the EU.
Second, be bold. If you’re going to go through all this disruption of Brexit, what’s the point if essentially you end up trying to recreate the whole shebang on worse terms, without a vote or a seat at the table, from the outside? My view is that the solution is to accept the logic of the Prime Minister’s (now defunct?) favourite maxim. If Brexit means Brexit, it means leaving the Single Market and Customs Union, and it means controlling your own regulations without asking Brussels first. So it means starting from the premise of a trade deal, although hopefully ending far closer to the EU than Canada. This has been the Prime Minister’s broad position since Lancaster House. It’s often suggested that the Remain wing of the Cabinet wouldn’t wear such a choice. I doubt it. Resigning would risk a contest where another leader, perhaps one prepared simply to walk away from the negotiations, could triumph.
Third, she needs to calm things down, to remind people that despite endless speculation that the negotiations were doomed, we reached “sufficient progress”. That was a significant personal achievement, with Jean-Claude Juncker and his team fudging certain issues and softening the timetable. Neither side got exactly what they wanted, even if the UK probably had to move further. Meanwhile, our economy remains strong and growing.
But above all, the most important thing is to decide. In politics, it’s too often true that there are only bad choices between difficult alternatives. This is even truer about Brexit. The longer the decision is deferred, the more the rumours swirl, the weaker Britain looks in the negotiations, and the more the countdown clock ticks away. As we squabble and dither, somewhere, over in Brussels, up on the thirteenth floor of the Berlaymont Building, there are surely a few wry smiles.