I have also heard Europeans say: “Imagine! The British voted in June last year to leave the largest and most successful free-trade area in the world, which, with a $2 trillion economy, is twice the size of China, which speaks English more or less all over and plays the game according to the rules that the British Conservative government laid down in the mid-1980s, and yet they want to quit in the name of free trade and in order to be great players on the global stage,” to quote the British foreign secretary. There has to be a really good reason for this Conservative government to want to do that, even if we cannot see it just at this moment!
Last Friday marked the end of the sixth round of talks between Britain and the EU about the Brexit divorce, or how Britain will leave the EU, and what comes next. Little progress was made, and the Europeans, who have a number of other matters to worry them, are becoming increasingly frustrated and puzzled. What do the British actually want from these talks? Why are the talks dragging on with so little progress being made? Europe has plenty of issues on its plate, many of them more important than Brexit, although the British, obsessed as they are with this topic, seem not to realize this.
The failure of the two sides to agree on the basic principles of the divorce is beginning to get serious. We are more than half-way through the exit process. The referendum in which the British people voted to leave was in June 2016, and the British government triggered the exit negotiations, which under European law have a two-year duration, this March. The government has introduced a law in Parliament which states that Britain will leave the EU at 11pm on March 29, 2019. This must now be debated.
The EU side pointed out, as the latest round of talks failed to reach any conclusions, that there will have to be agreement on three key issues within two weeks. The British side spoke of the need to “move together to seek solutions,” and this after nearly nine months of talks. The three issues how much Britain must pay if it is to break all institutional links with the EU — the so-called divorce bill; the rights of EU citizens currently living in Britain and British citizens in the EU; and the Irish border question.
The last point is one of huge sensitivity, since an open border between Northern Ireland and the Irish Republic, which will remain in the EU, was a key part of the Good Friday Peace Agreement. Yet a key reason for the Brexit vote was a desire to “take back control of our borders,” and not have an open border with another EU member. This point alone is of such complexity that it could cause the whole negotiations between Britain and the EU to collapse.
Puzzled Europeans still don’t know what Britain wants, and the future of London as a financial capital hangs in the balance.
The reason some solutions have to be found within two weeks is that the next European Council Summit takes place on Dec. 14-15, and any agreements would have to be presented to the 27 EU member governments by then, so that the council can approve them and agree that the talks move to discussing the future relationship between the UK and the EU. Once we enter 2018, little more than a year remains before Britain leaves.
There is, however, another practical deadline looming, more important in a way than the progress of the talks. Most major companies in the UK, and particularly the international ones based in London, have been telling the government that if they are not told by the end of this year what the future will hold, in terms of the free-trade area and the application of EU rules to British trade (which most of them want to maintain), they will make plans to establish bases in Europe and cut recruitment of staff in the UK.
The Confederation of British Industry, which represents 190,000 member companies, reports that over 60 percent of their members are making contingency plans to move part of their operations to Europe if there is no clarity over Britain’s future trade relations with Europe. In short, they are saying that a point of no return will be reached early next year if clear transitional arrangements have not been agreed. The future of London as the financial capital of Europe hangs in the balance.
Clearly, British businesses will be voting with their feet and moving offices to Europe, as some already have done, since they will not be able to work in the atmosphere of uncertainty that Brexit is now causing. Many major banks have announced that they are planning to move staff to Europe, with Frankfurt the leading candidate; 13,000 jobs have already moved across the English Channel. These are tense days, and this will not be a joyous Christmas in the City of London.
• Anthony Harris is former British ambassador to the UAE and career diplomat in the Middle East. He can be reached at [email protected]