The final reckoning for the Brexit shambles will be ugly

Martin Wolf: Theresa May promised strength and stability – she has delivered the opposite

Idle folly has trapped the UK between an EU rock and an ultra-hard Brexit

Idle folly has trapped the UK between an EU rock and an ultra-hard Brexit

 

Theresa May promised strength and stability. She has delivered the opposite. It would be funny if it were not so serious.

Donald Trump is fixated on the idea that the world is laughing at the US. In the case of the UK, it has to be true. David Cameron launched an unnecessary referendum on EU membership; his successor Mrs May follows by destroying her political position. The country looks ridiculous.

The general election has also increased the likelihood of “no deal”. Contrary to the idea that “no deal is better than a bad deal”, this would be a calamity for both sides.

The irony of the election is that the Conservatives’ 42.4 per cent share of the vote was its highest since 1983. It was also higher than the monthly average of polls throughout almost all of the last parliament.

What was unexpected was Labour’s ability to squeeze the minor parties, whose share of the vote fell to its lowest level since 1970. The party’s leader, Jeremy Corbyn, a perpetual rebel, proved the ideal pied piper of protest.

May has lost her majority and authority. As the former chancellor George Osborne noted, she is a “dead woman walking”. She now relies on the cantankerous DUP.

Compromises

She has also already wasted an eighth of the time available after triggering article 50 of the EU treaty. She will find it virtually impossible to agree and then legislate the necessary compromises with the EU in time, if at all.

Foremost among those compromises will be payment of large amounts of money and agreement to grandfather existing rights of EU citizens in the UK. Yet, quite apart from taking up time, another election might fail to resolve anything. It might be another hung parliament. The UK is in a spectacular mess.

The obsession over EU membership of a part of the right, combined with the irresponsibility of Cameron, arguably the worst prime minister in UK history, has brought the country to a crisis. The likelihood that there will be no deal is now higher than before the election, since a deal depends on accepting the EU’s terms for divorce. There is no reason to expect trade in goods and services or aviation to flow, let alone smoothly, after such a disorderly exit.

Arranging post-exit trade will take co-operation and preparation. With “no deal” the UK could not expect either from the EU, which will view it as an outlaw – a country that has repudiated its obligations. That, after all, is what “no deal” means.

Defects

To reduce the country to such a relationship with its neighbours and principal trading partners would be insane. But that is what the referendum risked – and still risks.

Among many defects was the failure to specify alternatives properly. There is no binary choice between Remain and Leave. There is a possible choice between Remain and many Leaves. Subject to agreement with the EU, these could vary from the softest – permanent membership of the Single Market and the Customs Union; to the hardest – no post-Brexit deal; or the chaotic – no deal at all.

Given how close the outcome was, Remain would almost certainly have defeated any specific version of Brexit in a two-way race. Yet in the end the UK can only have a specific version of Brexit. That is why it is democratically legitimate to demand another referendum between Remain and the negotiated version of Brexit (if any). Unfortunately, it might be difficult for the UK to withdraw its application to leave.

This foolish process has now set the UK on a path to a chaotic exit. Britain has long wanted to divide Europe. It is now uniting it against itself. That is a strategic disaster.

Retribution

Moreover, on its own its clout is limited. Already it finds itself inhibited in its relations with Trump’s US for fear of retribution. In the trade deals that will matter, with the US, China, India or the EU itself, the UK will be a weak supplicant. It will have to accept what mightier partners demand.

Harold Macmillan followed up his acceptance of the end of imperial Britain with an application to join the then European Economic Community in 1961 for good economic and political reasons. He understood that the UK’s strategic interest had become being part of a strong Europe.

The best choice for the UK remains to Remain. All the alternatives are much worse. Some now hope that the country could stay inside the Single Market and Customs Union, so enjoying at least the economic benefits of membership. But that means accepting both free movement and regulations over which it would have no say. This would give nearly all the perceived disadvantages of EU membership without the benefits. It would be politically intolerable.

So the UK is now left scrabbling around in a search for politically more tolerable but economically far worse options than full membership.

Terms of divorce

The least bad option would probably be to accept virtually all the EU’s terms of divorce, plus a lengthy post-2019 period of transition within the Single Market and Customs Union, followed by as comprehensive a free-trade agreement as possible. This would be worse than continued membership. But it would be relatively manageable.

Unfortunately, reaching and implementing such a deal, in the limited time available, also requires a strong, stable and sensible government. That is not what the UK has or seems at all likely to have.

Idle folly has trapped the country between an EU rock and an ultra-hard Brexit. “No Brexit” is still far better than alternatives. The pariah status of “no deal” would be far worse than any deal. But a bad deal, or none, lies ahead. For this, the Conservatives are largely to blame. Voters will be enraged when they realise that. The reckoning will be ugly. –Copyright The Financial Times Limited 2017

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