The fog has not lifted in Brexit land

The conferences of the United Kingdom’s three major national parties have come and gone. The Liberal Democrats adhered to their usual pro-Europe stance and promised united and decisive leadership. Sadly for them only a few seemed to take notice. Labour set the bar for approval of any Brexit deal the Prime Minister was able to negotiate unrealistically high. So confident was Shadow Foreign Secretary Emily Thornberry about the rejection of any final deal, that she declared a second Brexit referendum unnecessary and said her party should opt for an election instead. Thornberry knows what she is doing, because a hopelessly disunited Tory Party may go some distance to help her and her boss, Jeremy Corbyn, achieve a good outcome in any vote. 

All eyes were then on the Conservative Party conference earlier this week. It was a masterclass in disunity. Most of Theresa May’s detractors were relatively well behaved for the duration of the conference. Not so Boris Johnson, who packed a conference room at a fringe event and tore into the Prime Minister’s Brexit plan (the so-called Chequers deal). 

His speech was, as usual, entertaining, filled with alliterations and well written. It went beyond “chuck Chequers”, pleaded for free trade and attacked Labour’s economic plans – particularly Corbyn’s plans to nationalize the railways and other utilities. Around 15,00 people went to listen to Boris, while at the same time far fewer heard the touching and important speech of Home Secretary Sajid Javid. He talked about his intentions for safeguarding the country and put money behind a plan to help susceptible young people to stay away from crime.

Then came the Prime Minister’s long-awaited speech. She poked fun at herself by entering the hall performing a “May-bot” dance to Abba’s “Dancing Queen” and making a few jokes about her ill-fated performance at last year’s conference. That went down well with her supporters. Self-deprecation is a virtue with the British. Theresa May had a point when she said the party and country had to come together for her to negotiate a good Brexit. However, she went down a dangerous path when she promised that a “good” Brexit deal meant the end of austerity. 

It is unclear how she can adhere to the government’s promise to eliminate borrowing, freeze fuel duty, increase spending on the NHS and live up to all her other promises while not increasing taxes. Something will have to give somewhere. Removing the cap on councils’ borrowing for housebuilding alone may well increase national debt by up to £1 billion. People are used to politicians breaking promises. However, Brexit in whatever form it takes will be traumatic and have negative economic implications. Promising the end of austerity may therefore be unrealistic and dangerous.

The problem with the entire party conference season was that it did not advance the real Brexit negotiations — the ones with the EU — one bit. It must be bewildering and worrying for the EU’s chief Brexit negotiator Michel Barnier, when he sees the open disagreements and cacophony of voices in Britain’s political landscape. The constant bickering about Brexit within the Cabinet is most disconcerting. Barnier needs a partner with a clear position at the opposite end of the table. Take “Chequers” or leave it will not do either. This is a negotiation which inherently means give and take from both sides.

In the meantime business is lost in the Brexit fog. What precautions should manufacturers take to ensure the integrity of their supply chains and access for their goods to the 500 million strong population of the EU? Can Toyota, Nissan, Tata and co. rely on the commercial viability of their UK manufacturing base going forward? What about the City of London? How will Europe’s hitherto largest financial center adjust to the loss of passporting rights (the right of a firm registered in the EU to do business across with EU without additional authorization)? While the politicians are quarreling and making promises, Paris and Frankfurt are making hay: One international financial institution after another moves parts of their operations or even their European headquarters to the shores of the Seine and the Main. There are also questions with regard to energy trading or dealing with nuclear waste, once the UK leaves institutions such as EURATOM. These are the relevant questions which will affect the economy and with it the daily lives of every Briton. The party conference season has done nothing to lift the fog.

• Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources