Cliff Taylor: Is there any way now to avoid a no-deal Brexit?

The trouble with political negotiations is that they often end up with a messy compromise. And when you are trying to skirt around everyone's red lines – as in the Brexit talks – the attempt to strike a deal which keeps everyone on board can lead to the most extraordinary contortions.

In the Brexit talks, even the messy compromise may be a step too far. Finding a landing spot in the next few weeks to finalise a withdrawal agreement will be devilishly difficult, with the Irish Border issue centre-stage. This is because there isn't a solution which everyone can sign up to without one side trampling over their red lines. The EU side won't do this. And Theresa May can't – at least not without staring down the Brexiteers and the DUP. So sooner or later she has to make a choice and make a call over whether she want to do a deal and try to pilot it through parliament.

The summit mood music – in public –was all about trying to give her a bit more cover. But privately, the pressure is on, particularly from France. If some compromise can’t be worked out in the next couple of weeks – or at least come into view – then we are heading for a big bust-up and the real risk of a no-deal.

The compromise, were one to emerge, would involve Theresa May facing down either the Brexiteers or the DUP – or probably both. It would involve the UK signing up for the EU’s version of the backstop – the insurance policy to guarantee that no matter what emerges from future trading talks between the EU and UK, there will be no hard Irish Border.

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To have any chance of this being accepted politically in the UK – and by the DUP – the deal would have to give the impression that this backstop, which would involve the North having separate rules to the rest of the UK in some areas, would be most unlikely to ever be needed.

One way to make the EU version of the backstop less likely would be for both sides to agree that all of the UK would remain in the EU customs union, the arrangement which plays a big part in the free flow of goods for an interim period until a new trade deal was agreed. There are suggestions this weekend that the May may be willing to give ground on an insistence that a strict end date would have to be put on this arrangement.

EU concerns

There are EU reservations here, too – though some speculate that the fears of a no-deal may lead to flexibility here on the European side. The EU will not want to let the UK sign up to some part-membership of its trading bloc where it can gain competitive advantage by having access to European markets, but not following all the rules. However this appears to be the area where the negotiators are seeking a comprise.

But would it fly politically in the UK? If the UK were to seek to remain in the customs union for the long term and follow all its rules, it would destroy the ambition of the Brexiteers to strike new trade deals with other countries like the US. It would also leave the UK subject to EU rules in a key area. Whether Theresa May could survive this politically is very much open to question.

Whatever way you turn, you end up in the same loop. There is a reason why no one has yet found a solution on the Irish Border that keeps everyone happy. It is because there isn’t one. Either May bites the bullet – perhaps encouraged by some EU flexibility – or we head into the big December Brexit crisis.

Were a compromise to emerge to allow the withdrawal agreement to be finalised, it would be messy and have a few temporary sticking plasters. It would leave the shape of the future trading arrangement and relationship between the EU and UK to be worked out, without leaving anything like enough time to do this.

It would, at a minimum, take four or five years to negotiate a new trade deal. Businesses would take another couple of years to implement whatever was decided. Yet under the current proposals, the transition period after the UK leaves – the standstill to allow time for talks on a new deal – would last only until the end of 2020. Then what?

Series of cliff edges

Talk this week in Brussels of extending the transition may indicate some realisation of this, but an additional year, as proposed, won’t do it. So even if a deal is done on the withdrawal agreement, we could face another crisis and another threatened cliff-edge when the transition period ends – in December 2020 or even 2021.

The chaotic state of the whole thing provides an argument for extending article 50 and delaying the UK’s departure – which is possible if all sides agree – though right now this is not on the table.

The stakes could hardly be higher for Leo Varadkar and Simon Coveney. A deal on the withdrawal agreement, while likely to be messy, would at least ensure the transition period comes into play at the end of next March, avoid the chaos of a no-deal exit and provide a future safeguard in relation to the Border. The Irish side believes that EU support on the Border issue remains solid, despite reports that Angela Merkel has called for more flexibility.

If the talks fail and there is no withdrawal agreement, then there will be no transition period and we face the chaos of new trading arrangements with our closest neighbour being introduced overnight. No matter what preparations the Government undertakes for this, it simply cannot avert a lot of the upheaval and economic cost.

A no-deal would have a big political price as well as an economic one, as it would mean the return of the Border. So far the Government has refused to discuss or plan for this, but in a no-deal exit it would be inevitable. Otherwise how is the EU's single market protected, VAT checked and smuggling stopped? Unless, of course, you want to perform many of the necessary checks at new border controls between Ireland and France.