Davis brings Brexit back to reality

The "major criterion" was getting the best access for goods and services to the European market, Davis told MPs on Thursday (1 December). "And if that (paying a contribution) is included... then, of course, we would consider it,” he said.

Having hinted that he was prepared to slay one sacred cow of the "hard Brexiter," Davis then told a business dinner in Cardiff on Thursday night that the government would not pursue controls on immigration at the expense of the “national and economic interest,” another indication of surprising flexibility.

Neither set of remarks, needless to say, will go down well with the 60-70 Conservative MPs who want Brexit to mean leaving the single market, tight immigration controls, keeping its €10 billion per year net budget contribution and who think that a new trade agreement with the EU can be struck without the UK making any concessions.

Their mantra of "they need us more than we need them" appears to be based on the notion that the German car lobby will put the pressure on Angela Merkel to ensure that Brits get a sweetheart deal that will allow them to keep buying discounted Mercedes and BMWs.

Davis’s intervention marks a distinct change from the belligerent approach taken recently by Theresa May’s ministers. It also offers the clearest indication so far that the UK will seek to remain in the customs union.

Hinting at a more flexible approach to the post-Article 50 talks is smart politics.

Theresa May doesn’t need to pacify the hardcore Brexiters.

But she does need to calm the nerves of the majority of Britons who want to retain single market access and want to keep economic disruption as limited as possible.

Brexit unclear and expensive

The economic data since the June referendum has, so far, confounded many predictions of an immediate post-Brexit recession.

Even so, the Office of Budget Responsibility, the UK’s independent statistics watchdog has projected that leaving the EU will lead to almost €70 billion of increased government borrowing, and almost €48 billion in lost economic growth.

While the sky has not fallen, it is still a time of great uncertainty.

In a bid to avoid the risk of a Brexit "cliff edge" there is a growing consensus in Westminster that the government should seek some form transitional agreement in the likely event that a comprehensive EU-UK deal cannot be reached by the spring 2019 cut off.

A "single market fee" as part of a transitional agreement makes a lot of sense.

Reimer Böge, a German centre-right MEP and former chair of the European parliament’s budgets committee has suggested that the UK could pay up to €5 billion a year single market access, using Norway’s annual EU budget contribution as a model.

That may be more money than Theresa May can get away with coughing up, but it offers an indication of where negotiations could lead.

In any case, if the Conservatives have learnt anything from David Cameron’s demise, it is the need to manage expectations.

One of Cameron’s major mistakes was to promise his party and the electorate an ambitious renegotiation of EU membership terms that he could never deliver.

Similarly, May and her ministerial team must know that the idea that Britain will give the EU-27 nothing yet still gets unfettered access to the single market is pretty fanciful.

As Chancellor Philip Hammond put it on Thursday, “you can't go into any negotiation expecting to get every single objective that you set out with and concede nothing along the way.”

Part of the frustration expressed in the European Parliament last week by EPP group leader Manfred Weber - not to mention Davis’s own Conservative MEPs - was the lack of a plan. “He doesn’t have a clue” was one of the gentler reactions from a Tory MEP following Davis’s ill-fated trip to Strasbourg.

Weber, in particular, sent the Brexit secretary away with a flea in his ear, telling MEPs that he had heard from Davis "no idea what Brexit really means."

Whether Davis’s new-found flexibility cuts any ice in Brussels or Berlin, or, indeed, lasts for more than a day remains to be seen.

Yet politics is, famously, the art of the possible and Davis has, at least, offered the seed of a plan and an important compromise.

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