New balls, please: Why Britain needs to raise its Brexit tennis game
There was a tennis match in “Brexitland” last week, with back-and-forth statements and counter-statements serving as the ball. Sadly this was not Wimbledon, which is enjoyable; instead this was politics, highlighting the impending uncertainties, and just how difficult things might become after March 29, 2019, when Britain is scheduled to leave the EU.
On Tuesday, UK’s Brexit Secretary Dominic Raab assured all EU citizens in the UK that they would be able to remain on the same conditions they enjoy while Britain is still a member of the EU. This was a shrewd move because huge swaths of the economy could not operate without EU employees — hospitality, retail and the NHS, to name a few. However, the following day it emerged that hundreds of British-born children of EU citizens had had their UK passport renewal applications rejected. The government quickly said this was a clerical error, but error or not, the branches of government clearly need to work on their communication channels.
Also on Tuesday, the EU’s chief Brexit negotiator Michel Barnier said the EU should not be blamed for a no-deal Brexit. This was designed to pre-empt the fallout from the release of 24 documents alerting the public to measures taken, and needed, in that event. On Thursday, Raab presented those very technical papers competently, albeit with the charisma of an avatar. They related to the financial industry, trade, medicines, agriculture etc, and were the first in a series of such announcements.
The papers highlight the increased bureaucracy surrounding trade. Importers and exporters were advised to enlist the help of professional companies to deal with the paperwork. The new regime could cost UK and EU businesses up to $20 billion a year, according to the Financial Times. Raab assured the public that the UK would simply revert to WTO rules when trading with EU countries.
Not so fast, Roberto Azevedo, Secretary-General of the WTO, told the BBC: Other countries might take advantage of the UK’s weak position, complicating or preventing WTO terms on some points, he said. He warned against underestimating the uncertainties, because the situation was unpredictable.
It is heart-warming to see the new Secretary for Exiting the European Union (Brexit) taking his job seriously and applying the diligence of a good lawyer to the job at hand. Trade and financial negotiations are all about detail and meticulousness.
The papers lacked specificity as to how the City of London would deal with the loss of passporting rights — the right to settle euro-denominated transactions in the UK. It warned credit-card holders that it could become more expensive to make purchases in the EU, and bank-account holders that they may face difficulty accessing their UK accounts on the continent. Worse, it left in limbo whether the hundreds of thousands of British retirees who live in France or Spain would be able to collect their pensions.
Raab also pointed out that while the UK would be accepting EU standards for medicines, companies should stockpile enough to get them through the six weeks after Brexit. The EU was fast to counter that there would be no reciprocity on accepting medicines manufactured in the UK.
The papers dealing with how to handle value-added tax on cross-border transactions were so complicated that anyone might be forgiven for refusing to continue reading after the first few paragraphs.
All in all, Raab credibly asserted that while these papers were designed to prepare the UK for a no-deal Brexit, he was nevertheless optimistic that an agreement could be reached. In other words, prepare for the worst and hope for the best. However, a curveball was rapidly launched from the Remain camp within Raab’s own government.
The Chancellor of the Exchequer, Philip Hammond, said a no-deal Brexit would reduce Britain’s GDP by 7.7 percent over 15 years.
It is heart-warming to see the new Secretary for Exiting the European Union taking his job seriously and applying the diligence of a good lawyer to the job at hand. Trade and financial negotiations are all about detail and meticulousness. This said, last week made it clear just how unprepared the UK is for all the vagaries and eventualities Brexit will throw up. There are uncertainties on both sides of the channel. However, since invoking Article 50 in March 2017, Britain has been in a weaker position, as one country pitted against 27 EU member states.
First and foremost, it will be important for the UK government to get its act together and speak with one voice. Failure to do so would seriously undermine its negotiating position and pose a risk to business and life as we know it in the UK. A maximum level of preparedness beyond government guidelines is needed. The 9,000 additional civil servants the Department for Exiting the European Union intends to hire between now and March will not be enough to do the trick.
- Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources