The Brex-o-meter has swung!
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The Brex-o-meter has moved. To check it out click here.
The Government has compromised on its pre-election position and the ‘Official Position’ needle is heading softwards (softbound, squidgewise?). ‘Ah!’ You might ask, ‘how can you discern the official position when members of the government are fighting like ferrets in a sack?’
Good question!
I will explain the reasons for taking the view that I do. First, David Davis is the Brexit negotiator, not Boris Johnson or Liam Fox. Noises-off from this or that cabinet minister make good summer copy, but it’s what the person in the room in Brussels says that counts (irrespective of whether they have any briefing notes in front of them).
Second, it’s helpful to split things into the BE (before election) and AE (after election) eras when making an assessment of where we are. The difference is stark, not just in terms of ‘optics’ (yeah, I used that term), but increasingly in matters of policy.
The Before Election era – the best Brexit is a quick Brexit
The BE era was hard, uncompromising and (from a City perspective) semi-detached from reality. The strong language on immigration – from Cameroon Remainer Amber Rudd no less - at last year’s Tory conference was jarring to liberal Tories, the business community and to hypersensitive European observers and media alike. The Chancellor was slapped down for suggesting that the path to Brexit may be neither quick nor straightforward. The subsequent departure of Sir Ivan Rogers as Ambassador to the EU in early 2017 showed that Number 10 was not interested in the views of a long-standing EU insider telling them ad nauseam that Brexit would be a long and tough exercise. The business community was kept at arms’ length and, if we are honest, went to ground – still reeling from June 23rd. There wasn’t a great deal of detail on what the UK was seeking but it created a mood. Theresa May’s approach, when finally articulated in some detail in her Lancaster House speech back in January, was unequivocally one of a quick break. The ‘no deal is better than a bad deal’ soundbite encapsulated this period. Either give us a deal in short order, or we will walk away.
The After Election era – the new gradualism
The result on 8th June collapsed everything the Government thought it knew about the world and handed the architects of the Lancaster House position their P45s while empowering the opponents of what my boss Iain Anderson calls a ‘c**p Brexit’. Yet, until Theresa May went on her summer holiday, there had been little evidence that fundamentals of the Lancaster House position had been abandoned in substance. To be clear, even now there is no suggestion that the final destination - leaving the Single Market and EUCU - is up for discussion at all (though some of the more suspicious Brexiteers might think that a long transition is a Trojan Horse for Brexit reversal).
Nevertheless, the government has clearly softened its approach on citizens’ rights, immigration more broadly, the length and nature of transition and – it appears – is preparing to give ground on budget contributions as well. As an aside, my guess is we’ll arrive at a bill of a nice round 50 billion euro, not that it will ever be presented as such. This can, in large part, be put down to the way business-friendly, pragmatic Remainers (Philip Hammond, Amber Rudd) and like-minded Leavers (David Davis) appear to agree that the journey should be given as much thought as the destination. About time, because there wasn’t much evidence of this in the previous 12 months.
This view appears to recognise that a multi-year, fudge-tastic transitional period is necessary because at the very least the UK simply cannot build the institutions, systems and processes required to become a fully independent nation quickly enough. Moreover, a relatively smooth transition will protect the UK from an unnecessarily large economic shock. It is also the essential precursor to the bigger prize – which is agreeing decent framework for the UK’s future relationship with the EU. That cannot happen quickly – and it won’t happen in an atmosphere of acrimony and recrimination - so it’s useful to secure more time in which to agree this.
There appears to have been some resistance to this from some of the more ideological Brexiteers (Liam Fox and, it seems, Boris Johnson). They seek a quicker, less tapered exit. But I sense that this is a battle which is being won by the gradualists.
A note on Labour
Labour’s position on Brexit remains deeply ambivalent. At an event hosted at Cicero last week, Keir Starmer called for tariff-free trade with the EU and a close relationship and said ‘no options should be off the table’. Except, presumably membership of the single market (which his boss has recently ruled out in quite clear terms and enforced a three-line whip against). If anyone can explain to me in precise terms where Labour’s position actually differs from the Government’s at the moment, I shall be pleased to hear from you. The best piece of writing on this is from CER’s Simon Tilford, on the Limits to Labours Constructive Ambiguity over Brexit.
I hope you all have a restful and relatively Brexit-free summer.