In less than three weeks the United Kingdom is scheduled to leave the European Union. Prime Minister Theresa May will again submit her Brexit deal to the House of Commons on Tuesday. It will almost certainly be voted down, because she has failed to secure the support of her Tory Party’s wayward European Research Group, or the 10 Northern Ireland MPs from the Democratic Unionist Party who prop up her government. She was also unable to reach across party lines in support of her deal despite an increasing number of Labour MPs backing it in the absence of any better alternative.
The prime minister’s deal suffered a crushing defeat in January and she promised to work with the EU to amend it. Alas there were no significant changes. The commission’s powers-that-be, President Jean-Claude Juncker, Council President Donald Tusk and chief negotiator Michel Barnier, had warned the UK that the deal as it stood was pretty much as good as it got. Nevertheless May shuttled frantically back and forth to Brussels and several European capitals achieving essentially nothing. Her attorney general, Geoffrey Cox, and her Brexit Secretary, Stephen Barclay, camped out at EU headquarters in a last-ditch attempt to gain concessions – to no avail.
On Friday Michel Barnier promised that the UK could unilaterally quit the Irish backstop, which is designed to avoid a hard border between the Republic and Northern Ireland deemed necessary to maintain the peace under the Good Friday agreement. Barnier’s condition was that Northern Ireland remained in the customs union even if the rest of the UK left. This is not and will never be palatable to Her Majesty’s Government, because it would be tantamount to creating a border in the Irish Sea.
So what will happen and why is the situation so hopeless?
After May loses the vote on Tuesday, which is all but certain, Parliament will vote the next day on a no-deal Brexit. Most pundits think that will be rejected as well. After that there are many options. The UK could ask for an extension of Article 50 which stipulates the leaving date. There could be another referendum, or a general election. The prime minister may stay or resign. There are so many options that any diagram depicting them resembles the circuit board of a particularly ill-designed electric power station.
Even the hardest Brexiteers will awaken to economic realities when they realize that the £350 million a year earmarked for the NHS in lieu of the UK’s payments to the EU will not materialize.
Cornelia Meyer
An extension of Article 50 is possible only with the consent of the EU, who may or may not grant it. While some member states may be supportive, French President Emmanuel Macron has said he would veto an extension unless it had “a clear objective and was based on a new choice.” His Lithuanian counterpart, Dalia Grybauskaitė, and others seem to be of similar minds.
It is true that several European countries, particularly Germany, the Netherlands and even France, have little interest in Britain crashing out of the union without a deal, because the UK is an important trading partner. This holds especially true after the European Central Bank downgraded the growth forecast for most eurozone countries. In aggregate, the eurozone economy is predicted to grow at an anaemic 1.1 percent instead of the previously predicted 1.7 percent. Italy and Germany are expected to be particularly hard hit. However, UK politicians would be ill advised to hold their breath for last-minute concessions, despite the bleak economic outlook. Things have progressed too far and the negotiations were too bruising to leave sufficient room for economic rationality to prevail.
As for Britain, Simon Kuper made an astute observation in his regular column in the Sunday Times Magazine. For Remainers the debate has always been about the economy, especially about the negative consequences of leaving the EU. For the Brexiteers it was more cultural. It was about sovereignty and immigration. May gauged that correctly when she made it clear that the UK wanted to take back control over its money, its borders and its laws.
Remainers were seen to be scaremongering when they warned of the dire economic consequences of leaving the union. In the past few years Britain has been doing well and exports were up, especially courtesy of the pound’s depreciation after the Brexit referendum. All that is bound to change in the event of of a hard Brexit, when there would be tariffs and long queues at Dover and Calais (the latest cancellations of investments in the automotive industry by the likes of Nissan, Honda and Tata are a harbinger of things to come). Even the hardest Brexiteers will awaken to economic realities when they realize that the £350 million a year earmarked for the NHS in lieu of the UK’s payments to the EU will not materialize.
Whatever the outcome of the votes in Parliament next week, the UK is getting perilously close to the cliff edge of a hard (no-deal) Brexit. It will be interesting to see how citizens who put culture (immigration and sovereignty) above the economy will react when faced with the real consequences of a hard Brexit.
In the meantime, the neutral observer may be forgiven for comparing the debate within the UK, and between Britain and the EU, to a dialogue of the deaf between people who can scream at the tops of their voices, but simply cannot hear.
- Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
