Monday, October 02, 2017

Growing number of voices say Brexit won't happen

Hard line Brexiteers may well be adamant that Brexit will happen, but there are a growing number of voices who feel that Britain won't actually leave the EU.

In just the last week or two there have been several high profile politicians who have suggested Brexit won't happen. But what are the chances that Britain will change its mind?

In August this year the new LibDem leader Vince Cable said a combination of the politics of Brexit "unravelling" and the "sheer practical difficulties" could stop UK Government plans to leave the bloc.

"I think there is more than a possibility that it may never happen. I'm not saying it definitely won't but there is a significant possibility," he said [Independent / Guardian]

His views certainly weren't new. Indeed he had expressed such doubts on the Andrew Marr show on the BBC a month earlier.

The former PM Tony Blair had also expressed his doubts several times this year, and said it was "absolutely necessary" that Brexit did not happen. His most recent prediction was that there was a 30% chance of Brexit not happening.

Tony Blair, appearing on Bloomberg TV, was asked what the chances of Brexit not happening were. "It's really difficult to say," Blair responded, "Most people would tell you, and I should say to you I think it is likely it happens."

"On the other hand, I still have some difficulty seeing how after the general election, which produced a hung parliament in the UK, this government is going to get its form of Brexit through. Because I think there are a lot of Labour MPs who will oppose it, and a lot of Conservative MPs who will oppose a hard Brexit. So there's maybe, I sometimes say, a roundabout 30% chance that it's changed. But the truth is a lot will depend on how the debate develops over this year."

He wasn't the only politician expressing doubts on the business channel. Former UK cabinet minister Michael Heseltine said it was "very possible" that Britain would reverse its decision to leave the European Union. "We will once again recognise that that's where we belong," he said in an interview with Bloomberg's Mark Barton on 28th September, just 10 days after Blair's appearance.

The Tory grandee also appeared on the UK radio station LBC where he even suggested Britain would not only remain a part of the EU but also adopt the euro.

He told LBC radio it was "very possible" the UK will never leave the 28-nation bloc, despite Article 50 being triggered in March and the Brexit negotiations now being well underway.

Asked why, Lord Heseltine said there were two likely reasons. "One, that public opinion changes – which it hasn't done yet – and secondly, that Parliament, which is the sovereign body of our country, just hasn't got the stomach for it, so there will not be a majority for it, and a way will be found to upset the present Article 50 procedure." [Independent]

Lord Ashdown, a Lib Dem grandee and former leader of the party, also suggested that Brexit would not happen simply because the current government were "hopeless".

He accused the Government of being incapable of delivering "anything" and predicted there would be a "something quite close to a parliamentary stalemate" in the spring of 2018.

Lord Ashdown, who was speaking at a fringe event at the Lib Dem conference in Bournemouth on Britain's Brexit options, said, "My view is that the dysfunctionality, the dystopian hopeless dysfunctionality of this government, they can't deliver anything - if you ask them to deliver the Sunday papers they couldn't do it, or at least they'd have a row about it." [Mirror]

Failing negotiations

The UK negotiations with the EU have done little to inspire anyone on either side, leavers or remainers. Nor has the EU's chief negotiator Michel Barnier been entirely impressed, saying that there needed to be a great deal more progress before the subject of trade could be discussed [Guardian].

The Prime Minister's speech in Florence was lauded by some in the Conservative party as an attempt to help break the deadlock, especially concerning issues surrounding Britain's financial commitments [Bloomberg]. However, it was condemned by hard liners within her own party for making too many concessions. On the other side it has been seen as an admission of defeat and a desperate plea for more time on seeing that the negotiations were not going so well.

"The Florence speech demonstrates the sheer scale of May's mistake in making Article 50 notification when UK not ready," David Allen Green, a Law and Policy commentator at the FT, tweeted.

Nonetheless, Barnier did describe May's suggestion of a 'transition' as being 'constructive' [Guardian], although the European Union president Jean-Claude Juncker didn't seem quite so optimistic and said a 'miracle' needed to happen in order to go forward [Independent].

Steve Bullock, a former EU negotiator for the UK, was also less than impressed with May's speech saying the the week's events "showed the psychology of Brexit to be composed of arrogance & self-importance accompanied by a crippling victim complex"[Twitter]

Unfolding fiasco

The picture on the surface certainly doesn't look as regards Britain's position in Brexit talks. But neither does the situation look good for Britain and its economy. The pound remains weak, the UK's credit rating has been downgraded [Bloomberg] and the economy is not as strong as some have suggested with consumers surviving on credit rather than earnings [Independent]. In addition Britain has now sunk to the bottom of the G7 growth table [FT].

Meanwhile big business remains uncertain which way to turn. One sector that is gambling in the face of Brexit is the insurance industry some of whom are playing a high stakes game of poker. Contracts agreed, sometimes decades ago, under EU passporting rules might be in jeopardy if and when the UK leaves the EU.

Insurers say that if and when passporting disappears from the UK, they will be unable to legally pay out on those policies. The Association of British Insurers says that its members face the choice of breaking the contract or breaking the law. This is not a small matter since liabilities under these long-term cross-border deals run into billions of pounds [FT].

Some businesses have already taken a hit. As the Tory party conference opened in Manchester it emerged that Monarch airlines had gone into receivership. Monarch had been in financial trouble for some time and only days before with talk that its licence was at risk [Telegraph].

The full reasons why the airline collapsed are multifold. Unite's national officer Oliver Richardson said, "There were a number of factors that impacted negatively on the company."

"However, continuing uncertainty surrounding Brexit and the ability of UK airlines to fly freely in Europe after the UK has left the EU undoubtedly hindered Monarch getting the investment it needed to restructure and survive." [Telegraph]

Wavering odds

So what are the odds that Brexit won't happen. Blair gives it a 30% chance while others such as Vince Cable, Lord Heseltine and Lord Ashdown will only say, Brexit "probably won't" happen. As far as the business experts are concerned there are few who will step up to the plate and air an opinion on the matter. However, the banking corporation Morgan Stanley have suggested there is a 10% chance Brexit won't happen [Business Insider].

That is perhaps little consolation for remainers whose voices are getting louder [BBC / Metro / Reuters]. But it is nonetheless worrying for euro-sceptics, some of whom feel that there are many in government desperately looking for a way to stop Brexit altogether.

In the time since the referendum Theresa May has shown herself to be disingenuous after making a complete U-turn concerning her views on Brexit having seemingly ignored everything she said in a speech she made before the Institute of Mechanical Engineers months before the referendum. This was seen by some to be a cynical attempt to secure leadership of the Tory party. Having seized power she has uttered one meaningless soundbite after another - Brexit means Brexit, a Red, White & Blue Brexit - before invoking Article 50 only to dissolve parliament in order to fight an election which resulted in a hung parliament. 

In order to get the required majority May then made a deal with the DUP with promises of significant amounts of funding to Northern Ireland. However it didn't come without tears being shed. And according to the Times the Queen was not amused, indeed there was apparently 'fury at the Palace' over May's behaviour.

As for the Europeans with whom she and her party are negotiating, there appears to be complete bewilderment as to what direction she is going [Spiegel].  

Ticking clock

Time is running out for Brexit. According to the chief EU negotiator, Michel Barnier, only one year remains to construct a new and acceptable relationship between the UK and the European Union, since six months will be needed for its ratification by the other 27 member states. Any agreement will have to take into account not only trade, but also security, defence, terrorism, crime and much more [New Statesman]. 

Meanwhile the British public is gradually becoming aware of the costs of Brexit. Sterling remains weak despite short lived rallies. Prices have risen for imported food and clothes, and travel abroad has become more expensive. Wages have not increased to match prices, though the relaxation of the austerity pay freeze of 1% may ease the position of public sector workers a little. Many business leaders, though not all, have also come out to complain about lost millions due to the fall in sterling and the uncertainty for the future [City AM]. 

UK growth is down, for the second quarter this year, indeed it is the weakest since 2013 [BBC / Sky News / Guardian].

And what of the special deals Britain will make on the world stage after Brexit? It is already looking shaky after the US, with whom May had touted as a forthcoming major trading partner, slapped a 219% tariff on Bombardier which manufactures aircraft parts [New Statesman]. 

It has also emerged that trade statistics, often used by Leave campaigners during the EU referendum are heavily distorted by the UK's gold import/export industry. The Government's trade statistics show that, over the past five years, the share of UK goods being exported to the European Union was only 46% - a fact frequently referred to by those who campaigned for Brexit.

However, this number is severely distorted by the flow of gold bullion in and out of London - the world's major centre for the trade of this precious metal. In the fourth quarter of last year, a sharp outflow of gold showed up as a sudden spike in exports, causing some economists to conclude that Britain's manufacturers were starting to benefit from a post-Brexit jump in confidence.

In fact, the spike was primarily a sign of investors pulling gold out of vaults in London [Sky News].  

Industry is already getting worried, and particularly the car industry, which is reliant not only on Europe as an export market but also as a source for parts and materials [Sky News].

Cliff edges

Britain, after Brexit may be able to negotiate its own trade deals, but it will have to, if working under WTO rules, negotiate with 163 WTO members when drawing up tariffs and trade deals. Indeed any Brexit negotiation will be like a walk in the park compared to the UK 'rejoining' the WTO as an independent trading nation [Politico].

The UK does not have to join the WTO as such, since it is already a member by having been a part of the EU. The UK's detailed WTO commitments on tariffs and barriers to trade are set out in schedules shared with the EU. On Brexit, the UK would, however, need to have its own schedules and for those schedules to be certified, there must be no objections by any other WTO members, all 163 of them. And the sticking point here is that the decisions within the WTO must be unanimous [BBC / FT].

The UK will of course still be obliged to follow EU rules when it comes to anything exported to the EU.

Outside the EU the UK won't pay the membership fee of some £16 billion a year. But it has to remembered that nearly half of that came back as a rebate. And in addition there were other significant returns in terms of EU funding [BBC].

In fact, rebates and funding aside, the EU membership fee accounts for only 2% of total UK government expenditure [EconomicsHelp / Full Fact / BBC].

For richer or poorer

So will Britain be richer if, as May insists, Britain does leave the EU in March 2019? Well the government may well profit. After the UK leaves in March 2019 it will not be obliged to adhere to new EU tax rules aimed at stopping the likes of Google and Amazon from engaging in tax avoidance  [Times of Malta]. Thus Britain could well become a tax haven for such companies, which would go against the grain of many right wing papers that have in the past few years heavily criticised such enterprises.

But will the average Briton benefit? It is highly unlikely. Agriculture will be unlikely to see EU subsidies replaced by spending from Westminster. Education may also lose out and school milk, currently subsidised by the EU, may also take a hit. And with increased tariffs on many imports, the cost of living is certain to increase, not taking into account continued weakness of the pound.

As for the £350 million for the NHS, which has already been established to be a fantasy figure even by the ONS, cuts rather than spending is likely to be the order of the day.

And as the numbers of EU workers diminish, whole sectors of British industry will also suffer. Whilst only predictions, cuts in the number of EU nurses, fruit pickers, teachers and others will surely change the economic and social landscape.

No future?

It is easy to be flippant and scream "passports, fish and sovereignty". However the change in the colour of one's passport will not make anyone's life easier. Supposed changes to fishing rights - which while important to fishermen, only have a marginal effect on the British economy as a whole - may just create more problems for Britain's fishing industry. And as has already been established, Britain's laws are and have always been sovereign. Indeed while the UK does follow and implement and incorporate EU law into British law, most such regulations are to do with trade. In addition it also has to follow rules and regulations outside the EU in order to trade elsewhere. Outside the EU the UK would still have to follow such rules but would have less say and no veto on such laws, rules and regulations.

All this uncertainty, the headaches of negotiating with the EU let alone the subsequent months if not years of wrangling with the WTO member states, growing signs of slowing - if not failing economy - plus the downsides of being outside Britain's biggest trading bloc may well create a climate where Brexit will be abandoned. It may not happen by implicit declaration. It is unlikely that one will hear May declare something along the lines of, "Sorry it's too difficult and not good for the country so we're abandoning this project!!"

But it might come about through, as Heseltine suggests, another election where the Tories lose to a party which declare they will abandon Brexit and renegotiate a better position for Britain within the EU. Of course any subsequent 'renegotiation of Britain's place in Europe' will likely be a fudge, and things may just continue as they were. But it may be the better option than continue along the path on which the former PM David Cameron sent Britain down.

Even if Brexit is abandoned, there has already been much damage done that will need repairing. Deep division have been carved in society by the EU referendum, wounds that will take many years to heal.

Some companies, particularly financial institutions, have already made shifts, and winning back business may be difficult especially if they find their new homes in places like Frankfurt and Paris just as comfortable.

And there is the issue of EU workers, on whom Britain is reliant. A great many have already upped sticks and left the UK and it might take a while before the xenophobic atmosphere - perceived or otherwise - diminishes enough to encourage them to return.

Whatever side of the argument one stands, there are not many who would stake a bet on what will happen in March 2019. Even staunch remainers will only utter phrases such as 'probably not happen' or lay down odds of a 1 in 4 chance of Britain remaining. There needs to be a far clearer picture of how disastrous Brexit will be before those odds swing the other way and public opinion shifts.


tvnewswatch, London, UK

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