Henry Newman is Director of Open Europe.
It’s almost received wisdom now in SW1 that Brexit is creating some sort of unfolding disaster in the UK. Admittedly, the recent departure of two Cabinet ministers and the cloud hanging over others does little to alleviate the impression that the Government is in trouble. Yet are things really as bad as everyone assumes? In short: no.
One of the most depressing things about the referendum – now nearly a year and a half ago – is the extent to which it polarised Westminster and the media. Almost everyone took a position. Few have changed their mind since. For many, both Remainers and Leavers, there are simply no legitimate arguments that they can see on the opposing side. This division shapes our understanding of events because for many commentators, politicians and journalists, Brexit can be, is, and will be, nothing but an unmitigated disaster, whatever the facts.
People subscribing to this idée fixe are disproportionately, if not overwhelmingly, represented at many events discussing Brexit. I spoke on a panel at an FCO-organised event a few months ago. When I opened by saying that I myself campaigned to Leave the EU, the moderator replied: “I wouldn’t have admitted that.”
There’s also a strong whiff of what I would call the doctrine of impossibility. That’s the idea that leaving the EU is just too difficult, too complicated, and is, essentially, therefore impossible. Some people remain convinced that ‘when’ the public ‘realise’ just how difficult it will be to leave the EU, they will somehow revisit their decision to support leaving in the first place. As the director of a think tank closely following all things Brexit, I’m inevitably poring over many aspects of the fiendish technical issues thrown up by leaving the EU. Nonetheless, it’s important to separate wood and trees. If there’s a political will then I’m convinced a way can be found.
UK politics are certainly tough at the moment. Obviously, the Government’s life would be easier if it enjoyed a healthy majority or even the slim majority which David Cameron managed to achieve in 2015. But actually, despite her setback in June’s General Election, I don’t yet detect significant Conservative divisions over Theresa May’s Brexit plan. As Paul Goodman argued on Sunday, the policy which was outlined in Lancaster House (and evolved in her Florence Speech) has essentially held up. It’s supported by almost all Tory MPs. There are a few hardened critics, but the ubiquity of Anna Soubry on TV studio sofas is not representative of her following within the parliamentary Party.
Then there’s the economy, which is proving remarkably robust. I don’t want to be all Pollyannaish, and I don’t doubt that Britain faces serious challenges, including, but not limited to, the uncertainty created by the decision to leave the EU. But the economy has defied many of the predictions made by the Remain side during the campaign. A friend told me that, after the referendum, the entire editorial team of The Economist privately predicted a negative third quarter of 2016. Yet the UK has not had a single negative quarter of growth, let alone a recession.
Since the referendum decision, employment has grown to new record highs and unemployment has fallen. Interest rates have risen, but only (so far) to the level at which they were at the time of the referendum – the rate they were at since March 2009. That rise has not, as anti-Brexit campaigners disingenuously claimed, produced “a beating” for “people’s mortgages”. The pound has weakened, but despite what at times looks like attempts to talk the economy into recession, the economic data is mixed with points of strength as well as weakness.
On the continent, Brussels and the Euro elites are furiously trying their best to ignore Brexit. The glossy brochure The EU in 2016, which I picked up on a recent visit to the European Commission’s HQ, almost entirely avoids the issue. A three-page foreword by the Commission President lists a host of achievements, and speaks of “the unity shown by the EU-27”, but makes no serious attempt to address the decision of the EU’s second biggest economy to head for the exit.
Presidents Juncker and Macron have outlined their visions for a future of ‘Europe’ which entail significant new transfers of sovereignty to Brussels. There is no democratic mandate for those changes. Europe itself faces major political challenges. In the French presidential elections, the results were a few percentage points away from a second-round run-off between two anti-Euro candidates. In Germany, the far right entered the Bundestag for the first time since the Second World War. In the Netherlands, Geert Wilders’s party is the second largest in the lower house. Hungary and Poland are clashing with European institutions. In the Czech Republic, the political landscape has been over-turned, in Austria the far right are set to enter government, and Spain is mired in a major constitutional crisis.
What about the negotiations themselves? At present, they are deadlocked in the first phase, following the Commission’s misguided decision to separate out three issues, including the UK’s financial contribution. Hopefully the Council will sign off a switch to parallel talks and trade discussions in December, but that’s not certain. Nonetheless I remain confident that the most likely eventual outcome remains a negotiated exit. As The Times revealed yesterday, Downing Street is now privately admitting what for some time has been obvious: that the transition period will be an extension of the negotiations rather than simply a period to implement new arrangements.
One of the most significant data points to have emerged recently is Opinium’s poll in late October which showed a majority of those surveyed thought Brexit would be bad for the UK in the next few years, but that a much larger majority thought it would be good in the next 10 to 20 years. It seems that the country understands that Brexit entails disruption and part of that is the messy process of untangling ourselves from Brussels after decades of membership. The negotiations were always going to be bumpy and have their sticky points. What is needed is for the Conservative Party, and their rivals, to hold their nerve and focus relentlessly on what comes next.