Sunday

25th Sep 2016

Column / Brexit Briefing

Brexit: preparing for a bitter divorce

  • An increasingly large faction of the Conservative party is prepared to advocate a "hard Brexit" - leaving the single market, and taking its chances with the WTO. (Photo: Reuters)

So we have a tentative date: Brexit talks are "quite likely" to start in January or February, says Donald Tusk.

Let’s not get too excited.

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Even if, as Tusk stated, Theresa May triggers Article 50 at the start of 2017, the UK government will still be in no position to hold substantive talks.

The government’s new Brexit department is in the process of launching around 30 EU-related policy reviews. If the government works at break-neck pace, these reviews, and policy "red lines" for each, will have been completed by mid-2017. Only then will Britain be able to negotiate on detail, just at the time when Germany gears up for elections to the Bundestag.

Nonetheless, the pre-Article 50 "phoney war" is well under way, and neither side is leaving much room to manoeuvre.

The ideal arrangement for Theresa May would involve unfettered single market access and "passporting rights" (the right for British-based financial firms to do business in the eurozone), free movement for Britons to live and work across the EU, and, of course, strict limits on EU migration.

Shaky wisdom

The assumption (or wishful thinking) among Remain supporters is that either the negotiations will be so protracted that the UK will still be an EU member in 2020, leaving open a slim prospect of reversing the referendum result; or that the will of Theresa May and the Treasury will ensure that Britain at least retains single market membership.

This perceived wisdom is now looking increasingly shaky. It underestimates just how powerful and emboldened the eurosceptic wing of the Conservatives is. An increasingly large faction of the party is prepared to double down its bet by advocating a "hard Brexit" - leaving the single market, and taking its chances with the WTO.

In its launch report published on Sunday (18 September), the Leave Means Leave group (which is obviously insufficiently convinced by May’s "Brexit means Brexit" mantra) backed by a group of Conservative MPs, describes remaining in the single market as the “‘no say, low growth, regulatory burden, sovereignty illusion’ option locking in perpetual trade deficits”.

“No deal is better than a bad deal,” says the new group’s chair, Leave campaigner and businessman Richard Tice.

'A la carte' approach

The British left is also edging towards demanding a UK specific deal on single market access. Speaking in London last Thursday (15 September), Labour leader Jeremy Corbyn described the referendum as “the end of a failed economic model”, arguing that any new settlement with the EU would need to allow more government intervention in the economy.

“The state aid rules of the EU are no longer valid,” he said, adding that “governments across the world are choosing intervention”.

It was, in many ways, the sort of speech that European social democrats used to make 30 years ago, emphasising the need for stronger trade union rights and protection. If you had added some nationalist rhetoric on refugees and migrants it could have been Marine Le Pen speaking.

Corbyn’s party is bitterly divided and, at present, bordering on irrelevance. Even so, the fact that Labour is also moving towards an "a la carte" approach to single market membership suggests that Open Britain, the pro-single market pressure group formed from the ashes of the Remain campaign, will only be able to rely on the tiny rump of Liberal Democrat MPs for unconditional support.

If British politicians are edging away from a Norwegian or Swiss-style arrangement with the EU, the EU seems scarcely in a position to offer any better.

The Visegrad group made clear in Bratislava that freedom of movement is non-negotiable.

Playing ‘deal or no deal’

Dutch prime minister Mark Rutte may be in denial about the referendum, complaining that the UK is “still in the EU”. “I don’t think it’s good to have summits without them,” he said. As it was, May’s government behaved like an annoying ex by threatening to veto any attempts at EU harmonisation in defence policy.

In a break up, both parties usually want to keep the house, the car and the family pet. Compromise is needed to reach an amicable settlement.

Self-interest, not to mention sanity, may ultimately ensure that a deal can be struck. “The 27 will sign up to a deal with us,” May insisted on Monday (19 September), adding that “this is not just about us, it’s actually about their relationships and trading within that European arena”.

For the moment, however, if Britain is planning to play "deal or no deal", and the EU is unwilling or unable to offer much to sweeten the departure terms, Brexit looks increasingly like a bitter divorce.

Benjamin Fox, a former reporter for EUobserver, is a consultant with Sovereign Strategy, a London-based PR firm, and a freelance writer

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