Lunchtime is a long time in politics: Brexit Stage 2 or not
Time is an important commodity in politics. The problem for the British government and its Brexit negotiation strategy is that time is running out. The EU27’s test of ‘sufficient progress’ on the so-called three divorce issues: EU citizens’ rights, financial settlement, and the Irish border are difficult enough to overcome as this week has proven.
Failure to move on to Stage 2 in the next two weeks would effectively end meaningful negotiations on Britain’s exit from the European Union. Theresa May’s torturous and carefully crafted position to balance her party and cabinet whilst reassuring business and remain voters that there would be a future relationship with the EU is coming unstuck. Studied ambiguity has played well for her. She has maximised the use of rhetoric to make it clear that Britain wants a close and ongoing relationship with the EU whilst ‘delivering’ the narrow vote of the British people to leave. Almost all of the big strategic dilemmas in this approach have been left in the air. This week has shown that they need to be addressed.
The DUP’s objection to regulatory alignment to ensure continued trade between north and south in Ireland is a microcosm of a much bigger issue that needs to be addressed. Does the UK government want Britain to remain wedded to the European model of trade or does it want the freedom to create a new approach that would maximise the benefits of the freedom from the EU? There is a very real prospect of a stand-off between the harder Brexit position of key members of the cabinet, the DUP and the Prime Minister’s softer Brexit position. The DUP has triggered a widespread discussion not just about close alignment of Northern Ireland to the EU but also whether this should be UK-wide. This has then opened the possibility for key Cabinet supporters of Brexit of an outcome that would limit Britain’s capacity to forge independent trade deals after 2019.
The real divisions in British politics are becoming apparent. There is a majority in the House of Commons and the House of Lords for Britain remaining in the single market and customs union. This has been a cowed majority, partly because of the Prime Minister’s strategy of delivering a unique deal in Stage 2 that would incorporate all the good benefits from the single market and customs union without some of the restrictions imposed by remaining. We face a potential crisis in British politics with the collapse of the government’s 18-month strategy and the prospect of a ‘no deal’. Will this embolden cross-party initiatives to impose an alternative Brexit strategy?
The smart money would be on a typical EU negotiation fudge. The problem for the British negotiating stance is that the DUP are a crucial element in maintaining the government’s majority in the House of Commons, and historically the DUP have been averse to backing down on points of Unionist principle. Unfortunately for the Prime Minister, what was a technical fix to help deal with the Irish government’s concerns has opened a potential divergence in the treatment of the component parts of the UK.
There remains the very real possibility that Britain will be facing no deal, leaving the EU and joining the WTO, and trading with our biggest single trading block without the current preferential system. The first impact of this will be felt by the exchange rate, with damaging uncertainty and dislocation that would be paid for in the price for sterling. The second impact would be on businesses regarding investment in the UK – contingency plans will be put into place for a completely different trading environment. This will feed through to the political process as business lobby groups demand action to avoid this situation.
The questions remain: is there a sustainable political solution that doesn’t involve Theresa May heading a Conservative-led government? Is there political bravery among the opposition and Conservative backbenchers to support an alternative negotiating plan? What is clear is that Keir Starmer is right in suggesting that the government should seriously consider pausing the Brexit process and allowing time for the UK to craft a negotiation position that commands greater support.