Why UK is Best to Remain - What should Theresa May do next?
What Theresa May does next is how history will judge her. So it is time to reconsider why the current deal the UK has with the EU as a member is better than anything that could be agreed as a non-member, and why there should now be a #PeoplesVote.
THE UK’S ECONOMIC POSITION
The USA, EU and China are in a league of their own economically. The UK is only sixth, far smaller in population and economic might. The expectation is to fall rapidly to 11th, as other larger populations overtake us.
We’ve seen how the USA has bullied China. Can you imagine how the USA would bully the UK? Forget the ‘special relationship’.
Likewise the EU has already shown they will dominate any negotiations with the UK. Article 50(2) states “…shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union".
That implies the future relationship would be fundamentally agreed before or in parallel with the withdrawal agreement. But the EU has insisted on doing the withdrawal agreement first, and has dominated negotiations. To the EU’s advantage.
To be fair if the UK had been part of the EU27 with say Spain leaving, we would be adopting a very similar approach.
As a result the fundamentally best position for the UK is to be is a member of one of the big trading blocs. The EU on our doorstep is the obvious choice. Protecting the UK from all three of the big economies. Otherwise to be kicked around like a mid-Atlantic football. That would be the reality. Who wants that?
COLLABORATION
Much of the media discussion is about trade. But the UK’s close proximity to continental Europe means we need to collaborate on a whole host of other matters too.
Aviation, medicines and security are just three critical matters. These all need agreement.
EXTRA COSTS OF DUPLICATION
A lot of areas where we collaborate with the EU are done by joint agencies which spreads the cost. For the UK to set up separate, duplicate agencies will cost significantly more.
A cost that the £350m on the side of the bus failed to reflect, let alone deduction of monies that flow back to the UK, .
THE UK NEEDS THE EU MORE THAN THEY NEED THE UK
For trade, we need the EU more than they need the UK.
Brexiters have said it is the opposite, because the EU exports more to the UK than vice versa. The argument was that the EU would flex their rules to protect that net trade. Whilst this is important for the EU27, with maybe a million jobs at risk, it is more important to maintain the foundations of the EU. Something the EU and their relevant trade bodies have consistently stated, and every indication is they will not budge. Indeed realistically they can’t budge.
A key reason is that exports to the UK are a small part of the EU27 economy, and certainly a smaller part than the UK’s exports to the EU.
In 2017, the EU exported £67 billion more in goods and services to UK than it imported from us. In the UK’s case, around 42% of UK’s exports go to EU27 customers (net of the 2% estimated ‘Rotterdam effect’).
Now let’s imagine the net balance represented 0.1% of the EU27 economy. It would be absolutely clear that the UK’s exports were more important to the UK economy than the EU’s to the EU economy.
As it is, the best estimate of the EU’s exports to the UK represent just 8% of the EU27 economy, well below 42%. That is also clear that the UK’s exports are more important to the UK than the EU’s exports to the EU’s own economy
Furthermore, the UK’s dependency on imports from the EU for basics such as food and medicines makes the UK’s trade with the EU far more important than vice versa.
“No Deal” would be Lose-Lose for the two sides, but effectively far more severe to the UK.
IRELAND
Prior to the referendum, it had become increasingly clear that the Irish border was far more significant than just affecting the few people who live near it.
A friend involved in Anglo-Irish trade tells me that food can cross the borders between Ireland, Northern Ireland and mainland Britain up to seven times from farm to supermarket. That’s a multi-stage process of processing and packaging. A real practical issue.
Then there is the Good Friday Agreement, and the threat of a return to the Troubles of decades past. Brexiters who trivialise this are dangerous.
The Republic of Ireland stands to lose significantly if there was a hard border with Northern Ireland. The idea of a border down the Irish Sea instead would split the UK, and is an absolute no-no to the DUP and the British government. The EU27 are backing the Republic as one of their own.
Indeed the EU27 have just rejected the latest suggestion from the UK government, and no agreement appears feasible
SERVICES ARE JUST AS IMPORTANT AS GOODS
The Irish border is actually very similar to the sea border with continental Europe. Modern supply chains with the continent for the likes of car parts and perishable food rely on quick, frictionless borders. No tariffs and no red tape. That becomes a problem with any Brexit option, hard or soft.
But just important are services. Indeed many products are tied up in a combined products and services deal. Restricting freedom of movement of people restricts the ability to export services, by companies or individuals.
Currently Brits can work freely in EU27. Conversely there are some 3 million EU27 citizens in the UK. And they are starting to go home. Walk into any hospital, and you will see the staff are multi-national. News stories of Europeans already leaving the NHS to work elsewhere in Europe is already deeply worrying for their affects on health provision.
Extend that to the hospitality sector like your local coffee bar, and news of foodstuffs rotting in the ground for lack of continental workers, and the drawbacks of Brexit are quickly apparent.
Restricting freedom of movement of people is cutting off our nose to spite our face.
ANTI-EU SENTIMENT
Whilst control of immigration is important in the minds of some Brexiters, a significant number of others voted to Leave primarily because of a dislike and distrust of the EU. “Corrupt” is just one of the words used.
I don’t count myself as a EU fan, and you won’t find me waving EU flags. Indeed I am glad the UK is out of the Euro, and is not committed to “ever closer union”. In fact I would prefer a proper 2-tier Europe consisting of the Eurozone and the others, where the second tier including the UK is a stepping stone both into and out of the Euro. But I digress.
The problem is that if the UK leaves and then applies to rejoin, the normal process would apply which would require a commitment to the Euro and what goes with it. So leaving is not a sensible step to take.
As it is, a key complaint about the EU is that manufacturing jobs are being taken from the EU to Eastern Europe on the back of EU subsidies. This is much like such jobs moving to the Far East. The UK leaving the EU will not of itself stop those moves.
IMPACT ON JOBS
Indeed the risk of the UK leaving the EU is that jobs in the service sector will move to EU27. We’re already seeing it happen with City jobs moving to Dublin, Frankfurt and Paris.
A key part of Jo Johnson’s statement was the impact of Brexit on his constituency on the outskirts of London. Many of his constituents work in the City, or are dependent on those that do.
IN SUMMARY
I’ve explained above why I believe it is in the UK’s best interests to preserve the UK’s current deal with the EU. Each reason is arguably enough in its own right to Remain, though I would highlight my top three groups:
- The UK is far better off to ally with a big trading bloc, the EU, than be kicked around like a mid-Atlantic football. The UK is too small in population to do as well alone.
- Maintaining the various collaborations such as aviation, medicines and security is just as important as trade
- Trade in both products and services is important. There is no "jobs-first" Brexit. For a variety of reasons, restricting freedom of movement with EU27 is biting off our nose to spite our face.
In aggregate these reasons certainly outweigh any reasons to Leave.
DISTRACTION TO CIVIL SERVICE
But there is one other reason. The Government and the Civil Service are working flat out on trying to avoid going backwards with Brexit, with little time left to deal with the usual matters that would take the country forward. Brexit is a ridiculous distraction and must be enormously demoralising.
SO WHAT NEXT?
It is clear that the Deal that the UK currently has with the EU is better than can be negotiated, if any deal can be reached, and that “No deal” is not an option.
Whilst tendering the Article 50 notification to Leave was madness without a feasible Deal being in mind, history will judge Theresa May by what she does next.
It is looking increasingly likely there will not be, and cannot be, a deal with the EU27 along the lines of Chequers. [Update 12/11/18: Michel Barnier has advised the EU that no progress has been made towards a deal in the last few days, though efforts continue. The Irish border and various other issues remain unresolved, A deal remains unlikely.]
Even if there was a deal, it is clear a significant number of Leavers and Remainers would vote it down in Parliament.
As Jo Johson said “To present the nation with a choice between two deeply unattractive outcomes, vassalage and chaos, is a failure of British statecraft on a scale unseen since the Suez crisis”
Theresa May now has only two realistic options:
- #StopBrexitNow on the basis that we have run out of time for a Deal
- Convene a #PeoplesVote on the actual situation, with an option to Remain. Not the fiction of 2016, where the referendum result was no more than an instruction to start the Leave process. The EU27 would also need to be asked to delay the March 2019 exit date by a year, say, so everyone can plan 2019 with better certainty.
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