Britain's EU Exodus: Mayhem, Uncertainty & Scandal

“When sorrows come, they come not single spies, but in battalions!”

Wm Shakespeare, Hamlet

One of Britain’s more successful comedy exports has been the 1970s BBC sitcom Fawlty Towers. Set in a seaside hotel, its central characters are its arrogant and bad-tempered proprietor Basil Fawlty and his bossy but lazy wife Sybil. Their combined ineptness in running the hotel gives rise to comically farcical plots involving guests, visitors, staff and tradespeople. Basil’s manic personality, snobbery, paranoia and xenophobia, guarantee failure. Overseas viewers may have thought that Fawlty Towers gave them an insight into the eccentricities and absurdities of British life - or perhaps a prophetic metaphor in microcosm of how Britain is governed - but even they must look aghast at the current chaos and turmoil in British politics. Not only is a weak and divided minority government stumbling uncertainly towards the EU exit but, thanks to the fallout from the antics of film producer, Harvey Weinstein, it is also being buffeted by continuing sexual scandal. By comparison Fawlty Towers looks like a paragon of benevolent good order. No wonder that Steven Erlanger, London correspondent of the New York Times, writes that Britain ‘...is unmoored, heading to nowhere, while on deck, fire has broken out and the captain — poor Theresa May — is lashed to the mast, without the authority to decide whether to turn to port or to starboard, let alone do what one imagines she knows would be best, which is to turn around and head back to shore.’ As a consequence May’s oratorical trope: ‘let me be clear’ sounds more like an unanswered prayer than a lucid statement of policy.

Readers may recall that Theresa May called an unnecessary general election in May, three years before it was legally required, in order to secure a democratic mandate for her version of Brexit. Instead of increasing her small majority, she lost it entirely after an overlong, unconvincing and incoherent election campaign. In order to survive as a minority government, she struck a squalid deal with the small Democratic Unionist Party (DUP) of Northern Ireland to secure majority votes in the House of Commons. In return, the government promised to release an extra £1 billion in funding for Northern Ireland, its austerity policies notwithstanding. 

The election outcome has inflicted irreparable damage on May’s authority and her prospects of survival as Prime Minister and leader of the party. There is no obvious successor waiting in the wings and the party knows that another divisive leadership campaign – eighteen months after the last one – could precipitate yet another election which the Conservatives would probably lose, their reputation for basic competence having been shattered. The party’s instinct for self-preservation and the horrifying prospect of a socialist Labour government under Jeremy Corbyn, is all that unites it. And so, for the moment it suits them to keep Theresa May in post.

May’s diminished authority means that the collective responsibility of her cabinet – whereby its members speak with one voice - has broken down. Some of her senior ministers she dare not remove without increasing divisions in the party and jeopardizing her own position. This hasn’t prevented the departure of two cabinet ministers within a week of each other. First to go, thanks to the Harvey Weinstein effect, was Michael Fallon, Secretary of State for Defence. Hitherto regarded as ‘a safe pair of hands’, he admitted inappropriately touching a female journalist’s knee some years previously. More significantly, he was reported to have told the prime minister he could not guarantee that further allegations of impropriety would not emerge in future, all of which suggested that his hands were not so safe as had previously been thought. 

Next to go was Priti Patel, International Development Secretary and keen Brexiteer, who, in breach of rules and procedure, decided to act as if she were the Foreign Secretary. It emerged that while supposedly on holiday in Israel, she held at least 12 unauthorised meetings, including one with the Prime Minister Benjamin Netanyahu. Patel's attempt to portray the meetings as an oversight was undermined by the fact she followed them up by asking to send British aid money to the Israeli army, for funding humanitarian projects in the Golan Heights, contrary to official policy. Admitting to her lack of candour, she resigned before she could be sacked. 

Meanwhile, hovering in no-man’s-land is Theresa May’s deputy, Damian Green. He was accused of brushing the knee of a young woman activist in the Tory party and of sending her inappropriate text messages. An allegation was also made that ‘extreme pornography’ had been found by police on his office computer back in 2008! He has vigorously denied both claims and, pending the outcome of an investigation by the Cabinet Office, he remains in post. Andrew Rawnsley wrote in the Observer newspaper: ‘Shivers of fear ripple through Number 10 that there will be further revelations about other ministers while they nervously await the outcome of continuing investigations of the conduct of people who are still, for the moment at least, members of the government’.

A sign of Theresa May’s weakness is the survival of the gaffe-prone Brexiteer Boris Johnson, as Foreign Secretary. The main reason she appointed him, despite his manifest unsuitability for the job, was the threat he posed to her leadership and to balance Brexiteers and Remainers within her cabinet. Johnson’s worst blunder yet was his false assertion that Briton, Nazanin Zaghari-Ratcliffe, who is serving a five-year sentence in Iran for ‘spying’, had been teaching people journalism there. Her family has always insisted she was on holiday in the country but Iranian state television interpreted Johnson's comments as a ‘confession’. Labour leader, Jeremy Corbyn said Zaghari-Ratcliffe's future was ‘under threat because of Johnson's serial bungling’. Johnson was forced to apologise for his comment, saying he ‘could have been clearer’. Despite his inability to master his brief or display elementary diplomatic skills, the Basil Fawlty of foreign affairs remains in post.

Since Britain gave notice in March of withdrawal from the EU, the Brexit negotiations have not gone well. As it steers an uncertain course between diehard Brexiteers and the frustrated EU negotiators, no one can see what direction the British government is taking, on issues such as free trade, immigration and the customs union. At least for the present, there seems to be more unity between the other 27 EU member states than there is within the British government. As the talks stalled in the late summer, Theresa May attempted to unblock the process in a speech in Florence on 22nd September. The key priority issues on the agenda, agreed between the parties, concern the financial settlement, citizens’ rights and Northern Ireland. Only when these matters are resolved, can future relations between Britain and the EU be discussed. As always, the fundamental issue is the money that Britain agrees to pay in settlement of its outstanding obligations.

The Prime Minister’s speech provided clarification on some issues and continuing vagueness on others. On money, the prime minister offered to continue making payments into the EU budget until 2020 when the current budget round ends, thus sparing other member states from meeting the shortfall by paying more or receiving less. This is thought to be about 20 billion euros (£18 billion). She was silent on other debts such as the cost of EU officials’ pensions and promised contributions to various EU funds. Thereafter, the frustrating lack of progress by the end of the sixth round of talks prompted the EU’s chief Brexit negotiator, Michel Barnier, on 9th November, to set the British government a deadline of two weeks to give ‘vital’ clarification on the financial commitments it will honour. 

EU leaders will have to decide at a summit on 14th and 15th December whether sufficient progress has been made on the three preliminary issues – the financial settlement; citizens’ rights; and the Irish border. Only then will the talks move on to future relations, a stage Britain is desperate to reach. If this deadline is missed, the next summit is at the end of March, one year on from Britain’s notice of withdrawal from the EU and one year before it leaves. 

Boris Johnson and fellow Brexiteer minister, Michael Gove, are demanding that Britain should obtain assurances on regulatory freedom as a condition of a financial settlement. They said that they want Britain to have the freedom to diverge from European economic and social norms after Brexit:- “It is critically important to improve our country after we leave the EU. It requires a final EU deal that allows us a wide degree of regulatory freedom. We may choose to remain identical to the EU - or we may embrace a vision more aligned with pro-competitive regulation”. 

Michel Barnier, in a speech on 20th November, warned that EU national parliaments will refuse to ratify a UK-EU trade deal, if the UK plans to diverge too much from the EU regulatory model, after Brexit. Clearly nervous that Britain might import American-style neoliberalism into the EU, he said that if Britain were to have access to the single market there would have to be a level playing field: “For the first time ever in trade talks, the challenge will be to limit divergence of rules rather than maximise convergence. There will be no ambitious partnership without common ground in: fair competition, state aid, tax dumping, food safety, social and environmental standards”. Now there are signs that Britain is willing to make a larger payment – yet to be revealed - but thought to be near £40 billion – in order to make progress in the negotiations. Sums such as £50 or £60 billion provoke fury among Brexiteers, particularly the UK’s Tabloid press - some of whom begrudge any payment at all. There have also been rumours of possible resignations by Brexiteer ministers. Some Tory MPs are joining Gove and Johnson in demanding that extra payment should be conditional on further concessions from the EU. And some even advocate withholding further payment while Germany is in political crisis. However, they remain curiously silent about the rising cost of running the Brexit operation itself. On 22nd November, Britain’s Chancellor of the Exchequer reminded the House of Commons, that £700m has been spent on these costs and that he is setting aside another £3billion over the next two years.

Another priority item in the negotiations is the border between Northern Ireland and the Irish Republic after Brexit. There has been no progress on this and little evidence that the UK government has given it the consideration it deserves. It has made airy references to a ‘frictionless’ border, made possible by some unspecified technological miracle. Simon Coveney, the Irish foreign minister said on 13th November, that if it was not possible for Britain to stay in the customs union and single market, then all sides would have to design a solution for the issues of the Irish border and co-operation between Northern Ireland and the Republic of Ireland. ‘That's why we are asking for a rethink and for more progress and clarity on this issue before December,’ he predictably said. Removing Northern Ireland from the customs union and single market, as the Brexiteers want, would compel the Irish Republic to police what would become an external boundary of the EU – to verify that incoming goods meet the requisite standards. A return to a physical border would undermine the achievements of the peace process, a foreseeable risk scandalously ignored by the Brexiteers. 

The Irish government is running out of patience. It has said it will block the progress of Brexit negotiations, unless the UK gives a formal written guarantee that there will be no hard border with Northern Ireland. The Irish prime minister, Leo Varadkar, said that in all the years they had been pushing for a British departure from the EU, Brexit-backing politicians had not ‘thought all this through’. Separately, but very relevant to their position in this, the Republic of Ireland finds itself in an unrelated governmental squabble that might result in a new election there, with all of it’s accompanying uncertainties.

On citizens’ rights Theresa May insists a deal is within “touching distance”. However, the European Parliament maintains that many issues remain to be resolved. These include for example, family reunification, exporting social benefits abroad, criminal checks and the role in disputes of the European Court of Justice. 

Business leaders in the UK and Europe are becoming very concerned by the uncertainty and lack of progress in the Brexit negotiations. Representatives from groups including the Confederation of British Industry (CBI) and BusinessEurope met on 22nd October. They want a transitional deal that preserves the status quo after Brexit. The CBI chief, Carolyn Fairbairn, said all those at the meeting reiterated the damage "no deal" would do to trade. She told the BBC a CBI survey had found that 10% of companies had already activated their contingency plans. The pace of planning by firms was picking up, she added, with about 60% of companies saying they would implement contingency plans by the end of next March. The head of the German chambers of commerce, Martin Wansleben, has said that the car industry alone would face annual tariffs of more than €2bn if trade between the UK and the EU falls under World Trade Organisation rules. 

In the banking sector Brexit preparations are well under way. About 50 banks have discussed relocation plans with the EU authorities, according to the European Central Bank, and around 20 have already applied for European licences in preparation for a hard Brexit. Britain’s aerospace exporters warned the UK Parliament’s business select committee on 20th November, that it could face £1.5 billion in extra costs without a new customs and regulatory deal with the EU. It is also looking at moving jobs abroad because of the uncertainty. Already two EU agencies are leaving London with the loss of 1000 jobs. It was announced on 20th November that the European Banking Association is moving to Paris and the European Medicines Agency to Amsterdam.

A false prediction by some Remainers during the referendum campaign in June 2016, that a leave vote would in itself cause economic collapse, has encouraged deluded advocates of a hard Brexit to declare that the UK could safely leave the EU without a deal. After all, the economy is stumbling along with a growth rate of 1.5% during the last year (2.5% in the eurozone!) and employment figures are strong. However, the economic damage may be more gradual as Brexit and its uncertainties take hold. News for consumers is not reassuring. According to the Office for National Statistics, food price inflation at 4.1% is the highest since 2013. Consumer price inflation overall remains at 3%, up from 0.5% since the 2016 referendum. The fall in the pound has increased the price of imported goods but wages are rising slower than inflation. This is all bad news for importers, consumers and British people travelling abroad. Retailers saw a 2.2% drop in consumer spending in October, the fastest year-on-year decline in four years. According to the credit card company Visa, clothing and footwear sales slumped by 9%, the fastest decline since the survey began in 2009. The CBI’s quarterly ‘Industrial Trends Survey’ covering the three months before October, found that optimism about business conditions fell for the first time in a year. Investment intentions have deteriorated and spending plans for buildings are at their lowest since July 2009. 

The British economy was badly hit by the financial crisis of 2008/9 and its recovery has been slow and weak. Will it be able to withstand the consequences of leaving the EU? Growth forecasts for the UK economy by the International Monetary Fund’s World Economic Outlook, are 1.7% this year and 1.5% next year, near the bottom of the EU league. Low productivity, wealth disparities between London and the regions, inequality between rich and poor amongst the highest in Europe, low investment and weak spending on research and development, do not give grounds for optimism. Such is the view of Martin Wolf of the Financial Times: ‘This is not a vigorous economy well able to take the shock of substantially worse access to its most important markets’. He argues that policies to improve economic performance are essential, because economic disappointment was among the reasons for the Brexit referendum vote. He concludes: ‘The UK has embarked on a risky voyage in a leaky boat. Beware a shipwreck’. 

In his budget statement on 22nd November, Britain’s Chancellor of the Exchequer, Philip Hammond, announced dire economic news. In a country where the growth rate has averaged 2.45% a year since 1955, it is now predicted by the Office of Budget Responsibility that it will fall to a dreadful 1.4% a year, over the next five years.

The EU Withdrawal Bill passed its second reading in the House of Commons on 11th November and is now going through its various stages. The bill will repeal the European Communities Act 1972 which took Britain into the EU. A major ‘copy and paste’ job is involved. All EU legislation is incorporated into the bill which Parliament will ‘amend, repeal and improve’. Any laws which have been converted from EU law or any other EU-related law that exists on the day the UK leaves the EU will be categorised as ‘retained EU law’ and can be amended, changed or repealed by Parliament after Britain leaves. 

Once again, Theresa May has tried to appease the Brexiteers within her party by attempting to write a Brexit date of 29th March 2019 into the Bill. If successful, such self-destructive stupidity would deprive the country of asking the EU for an extension of the Article 50 talks if extra time were needed to finalise a deal. Article 50 provides that the two year negotiating period can be extended with the agreement of the member states. Labour's Sir Keir Starmer said that setting a date in law was a ‘desperate gimmick ...about party management, not the national interest’. Some Tory MPs also opposed the move and once again it was bullying time for the Brexit-supporting Tory press. 

Readers will recall that the senior judges, who ruled earlier this year that Parliament should be involved in the Brexit process, were described by The Daily Mail as ‘enemies of the people’ and as ‘the judges versus the people’ by other tabloid press. Now it was the turn of the Daily Telegraph that puts up for question its former reputation for at least comparative, sobriety. Under the headline ‘THE BREXIT MUTINEERS’, the paper published photos of 15 Tory MPs who opposed the Brexit date being written into law. This initiated a poisonous campaign against these MPs on social media, including death threats. However, this crude manoeuvre appears to have backfired and has emboldened the ‘mutineers’ to continue doing their job as MPs by holding the government to account. It remains uncertain whether the government will withdraw the clause in the bill. 

Another rebellion occurred on 21st November when a Conservative MP wanted the withdrawal bill to be amended so as to incorporate the EU Charter of Fundamental Rights into UK law. The Charter sets out a range of civil, political and social rights for EU and UK citizens. As much of the EU Withdrawal Bill copies and pastes much of EU law into UK law, one would expect the Charter to be routinely incorporated too. Yet again the government apparently regards citizens’ rights as less important than appeasing its Europhobes. However, the prospect of defeat forced it to back down. The government agreed to work with MPs on how rights under the charter could be kept after Brexit.

The Brexiteers would have us believe that when Britain shakes off the shackles of the EU, there is an exciting future in prospect. The excitement is not shared by Sir Martin Donnelly, formerly the government’s top trade official. He believes that Britain will take a major economic hit after Brexit, whatever the trade deal with the EU. Writing in the Observer newspaper he argued that there is no credible free trade deal on offer ‘able to deliver the guaranteed market access, shared regulation and consumer protection that Britain needs’. He has warned MPs that leaving the single market in favour of negotiating a protracted Canada-style trade deal will ‘damage UK competitiveness and leave us with less investment, lower living standards and long queues at the border’. 

So does the cherished phrase in the Brexiteer glossary ‘Global Britain’ mean anything? Has membership of the EU deprived Britain of global influence? Could leaving the EU restore that influence? According to David Hannay, former UK ambassador to the EU and UN, writing in the InFacts website: 

‘..Britain has been a global player since roughly the 16th century. Joining the European Communities in 1973 did not bring that to an end; it actually enhanced it, as our influence in Brussels helped to propel Europe into a succession of global trade liberalisation rounds, brought many of Britain’s former colonies into a close trade and aid relationship with the EU, and made us a more interesting interlocutor for other global players such as the US, China and Japan’. 

Some suggest that Britain could re-establish close ties with the British Commonwealth but, whatever its merits, he adds that it ‘is not about to become a major trade bloc or to coordinate it’s foreign and security policies, however much we might wish that it would’. On the great global challenges of trade, human rights, the fight against terrorism and other challenges, he said that the EU ‘is already negotiating or about to negotiate free trade arrangements with the most promising countries – Japan, India, Mercosur (the South American trade bloc that includes Brazil), Australia and New Zealand’. 

He goes on to say: ‘It is with our fellow Europeans ‘that the Foreign Secretary is lobbying in Washington, to head off Donald Trump’s misguided aspiration to destroy the Iran nuclear deal. If the Paris environmental agreements are to be saved in the face of US withdrawal from them, it is going to be by the joint efforts of the EU and China – not by the UK, a relatively minor player so far as pollution is concerned’.

As noted in our October report, it has become an article of faith amongst Brexiteers that Britain will be free to negotiate better trade deals than it ever got through its membership of the EU. Britain’s chief negotiator, David Davis put it thus: ‘First of all, leaving the EU gives us back control of our trade policy, and gives us the opportunity to maximise returns from free trade.’ The Common Commercial Policy (CCP), as it is called, gives the EU the exclusive right to conclude trade deals. UK governments of all stripes – and Eurosceptic politicians – have hitherto endorsed the obvious truth that the collective weight of the EU in concluding trade agreements exceeded that of any one member state. The abrupt change in attitude by the Brexiteers may be part of its narrative that the EU is bureaucratic and inefficient (unlike the British government of course!) and that Britain can recover its glory days as an independent free trading nation. 

There are few signs that the dream is about to materialise. Trade minister and devoted Brexiteer, Liam Fox, admitted before MPs on the House of Commons International Trade Committee on 1st November that the UK has not signed any deals to continue free trade with countries that already have agreements with the EU. The UK had conducted ‘initial discussions’ with the 65 countries to continue trading on the same terms after Brexit, but he admitted that nothing had been signed. Nevertheless he was hopeful that agreements would be reached by March 2019. In case the committee got too excited, Britain’s chief negotiations adviser, Crawford Falconer, who was appearing with Fox, added: ‘They have agreed that that’s what they intend to do. All I would say is I’ve been around negotiations a lot and what people say today, sometimes changes tomorrow.’ If the UK does not secure continuation of the EU’s deals after Brexit, it will find World Trade Organisation tariffs applied on trade with countries such as South Korea, Israel, South Africa and Switzerland.

What Britain fails to recognize is that maintaining ‘the European project’ is the overwhelming priority for Germany and other EU members. For them it is essential that a country that leaves the EU should not have the same benefits as members. The idea that the EU would sacrifice this in order to preserve its trading relationship with Britain is deluded. Erik O. Eriksen of the University of Oslo reminds us of non-member Norway’s experience. If the UK joined Norway (and Iceland and Liechtenstein) as a member of the European Economic Area (EEA), it would have all-important access to the single market. It would also be governed by the rules just like members. But, unlike members, it would have no say in what the rules are or should be. 

The Brexit cheerleaders have yet to face the reality that the final outcome of the Brexit negotiations will substantially be determined by the EU and not by Britain. As Dutch columnist and author Joris Luyendijk puts it:

‘Extreme disruption is now inevitable for Britain since it can either save its economy by going for a soft Brexit, effectively ignoring the referendum result and thus doing terrible damage to its democracy. Or Britain can save its democracy by implementing a hard Brexit. This will ravage its economy. It is an absolutely awful choice, that Britain has nobody to blame for but itself.’ 

Peter Crisell