Cameron’s legacy of confusion

David Cameron didn’t expect to lose last year’s referendum and banned the Civil Service from devising any exit strategy. That became an excuse for a nine month gestation period by Mrs. May which delivered only repetitions of “Brexit means Brexit”. The official leave campaign, vote.leave, refused to devise an exit strategy either. The only serious research on offer before the referendum which charted a comprehensive exit strategy was Flexcit, which recommended the EEA/EFTA route as a transitional arrangement. Since the referendum, only one further independent, detailed attempt has been made to tackle the issues involved – the Bruges Group’s What will it look like? which claimed that another exit route was possible within the time limit, while recognising a number of potential obstacles.

A recent post by Sir Jeremy Heywood, the Cabinet Secretary and head of the Civil Service painted a very upbeat picture of the work being done by the newly-created Department for Exiting the EU but he didn’t go into any detail about exit strategy. This department has far more staff available than the Bruges Group so it is rather worrying that we still know so little.

As our Chairman, Edward Spalton, has pointed out, when we joined the EEC in 1973, businesses were being briefed over a year in advance about the forthcoming changes.  Recently, a number of businessmen  who  met with government ministers, including the Brexit secretary David Davis, were very concerned about the lack of  detail they had been given. Similar reservations have come from groups ranging from the chemical manufacturers and the Federation of Small Business – the latter including a number of long-standing Brexit supporters.

Mr Davis unquestionably feels very confident about the UK’s prospects outside the EU. In the long term he could well be right. To be free of control by Brussels and able to manage our own affairs will be an inestimable benefit – but only if we are able to chart a sensible course through the choppy waters of what are shaping up to be far more complex negotiations than many Brexiteers ever imagined.

The stakes could not be higher for Mrs May and the Conservative Party.  There will be no backing out of Brexit.  Even though only a minority of MPs campaigned for leave, the majority of her party’s activists are staunch leavers and would not countenance any sort of betrayal. The unexpectedly strong showing by Labour in last month’s General Election only adds to the pressure. Any failure to deliver a competent Brexit as good as guarantees Mr Corbyn the keys to No. 10 in 2022 – or perhaps earlier.

Leaving  the EU  is the biggest challenge Mrs May and her team will face. We do not know what is going on behind the scenes but  the government  needs to have sufficient known policies in view to reassure the public, to avoid disrupting  economic expectations  and to deny traction to the campaign to rejoin the EU. Advice to all industries concerning the effects of government plans needs to be given in plenty of time for them to adjust.

To put it another way, our EU membership has been like a malignant, cancerous tumour. Untreated, it would have led to certain death. That’s why we were right to vote to leave. However, the complex task of cutting it out should  be done by a team of top surgeons who not only know what they are doing but can communicate their knowledge and confidence to the people. At the moment, even though there seems to be a growing agreement that some sort of transitional deal is necessary, no details at all have emerged.

Membership of the Single Market, even as an interim arrangement, has been ruled out and significantly, it was the Chancellor Philip Hammond, one of the “doves” in government, who stated this explicitly on the Andrew Marr show last Sunday. So what will it include? Catherine McGuinness, the de facto leader of the City of London’s municipal body, says Britain and the EU must agree the outlines of any transition before the end of the year or as many as 15,000 banking jobs could leave London.

The sense of lack of concentration was not helped by a picture of Michel Barnier and his EU team turning up  for the second round of Brexit talks with  great thick folders of notes while David Davis and his associates had none.

So will some positive signal emerge to calm worried businesses  – and indeed, worried Brexit supporters? If so, the sooner the better, as the opponents of Brexit are gleefully cashing in on the  lack of direction,  communicated by default.   Most people just want to see Brexit done and dusted with reasonable assurance of that steadily performing  economy on which all our livelihoods depend.

 

E50bn EU Brexit bill request – or investing in European Democracy and liberation?

Is there a way the UK can negotiate the EU request for UK funds to help liberate Europe from the EU and boost economic growth? I believe so. What if the UK were to pay money but only in return for the restoration of democracy, self-government and prosperity in Europe?

The UK voted to leave the EU, and to end its net contribution to the budget, which hasn’t been signed off by auditors for over 15 years. Since joining the EU, the UK has contributed £130bn net to the EU and had a cumulative £400bn trade deficit with EU countries. The EU has spending plans for countries, since the people in these other countries avoid paying the taxes they are supposed to pay and then vote for corrupt and/or incompetent politicians who waste their money. These countries could easily afford the money if they had better habits – and also if there was no €uro, with  exchange rates reflecting the competitiveness of each economy and competence of each country’s politicians.

The areas the EU feels the UK owes them money

  • EU infrastructure projects, road and rail, in other countries
  • Other investment projects after Brexit, for less developed countries
  • Pensions for UK Eurocrats
  • Liabilities for loans that fail with other countries
  • Relocation costs of EU agencies to other EU countries

Firstly, adopting a fast track approach to Brexit could help, i.e. to get 70% of what the UK wants in 3 months:

  • During Brexit negotiations, switch to EFTA/Single Market from current EU/Single Market
  • Allowing the UK to freely negotiate trade deals with any country around the world
  • UK having a seat on the WTO and other world organisations and voting
  • Having a veto of any new regulations, for implementing in the UK
  • Amend and repeal any EU and EEA regulations that are unnecessary for the UK
  • Single Market regulations only affect the 9% of the economy that exports to the EU
  • Controlling agriculture, fisheries, home affairs and justice
  • No ECJ, with rulings and arbitration through the EFTA Court
  • No EAW (European Arrest Warrant)
  • Any UK aid goes to other EU countries directly, on a matched funds basis with the recipient country, i.e. no matching funds, no project
  • New Eastern European immigrants get a 1 working year visa, points system for staying longer
  • Other EU countries have free movement, unless unemployment over 7%, then only have a 1 year working visa, points system for staying longer
  • Similarity between EFTA and EU Free Trade Agreements

(For more information on this point, compare the EFTA FTAs with those negotiated by the EU.)

People may be wandering why the EU is asking for any money at all. After all, the UK has helped Europe over the last more than 200 years, saving it from the actions of French and German politicians taking away the self-government of other European countries in the areas of: political decision making, foreign policy, taxation levels, regulations, judiciary control, media control, currency control, movement of people across borders, control of military in other countries. So what has changed after each conflict? Have German – and to some extent – French politicians finally learnt to respect the self-government of other European countries? – freedoms which Britain played a lead role in restoring, paying dearly both in lives lost and also financially. And now they want the UK to pay for upgrading to a self-governing democracy? Pay for the incompetence and corruption in other countries? Pay funds to help with vote buying in corrupt countries, and give an electoral advantage to politicians in power and so distort electoral outcomes? Have they no conscience or moral compass? Clearly not. Appeasement doesn’t work.

The EU is a symptom. The problems are caused by the failure of political systems in the various countries and also the censoring media that covers up what is really happening, and side effects of policies. How about offering to pay the EU some money if they upgrade their political systems?

€5bn – each country which has the €uro to have binding referendums on switching to original currency, implemented within 3 months of a referendum result, starting with the Deutsche Mark being the currency for other countries to peg their currencies to, starting with +/- 3% band, for first 3 months, +/- 6%, next 3 months, +/- 10% next 3 months, +/- 15% next 3 months, +/- 22% next 3 months, +/- 30% next 3 months, then float freely. Worth remembering, that the currencies are indicators of how well a country is run.

€5bn – Denmark, Finland, Austria, Netherlands, Sweden, Ireland have referendums on whether to switch to EFTA/Single Market

€5bn – the Single Market/EEA (European Economic Area), now becomes  only an area for the free movement of goods, services and capital. The articles covering free movement, social policy and environment are repealed/deleted.  These  become each countries choice and also bilateral

€5bn – each EU country has a new law allowing petition/referendum for any treaty, agreement or any international laws, to do with other countries, e.g. trade in goods, services, capital and movement of people. Example 2% sign petition, binding referendum held within 2 months of petition, implemented within 3 months of result

€5bn – East Germany has a referendum to choose to become an independent sovereign nation, with own currency. Bavaria has a referendum to become an independent sovereign nation, with own currency, e.g. Bavarian Mark. Implemented within 3 months of referendum result.

€5bn – if all the above are done

Paid over 5 years. From a current £9bn net EU contribution per year.

What would the benefits of this expenditure be?

  • Re-implementing national currencies will remove the price distortion by having an overvalued or undervalued exchange rate, thus removing the misallocation of resources, and allowing for more productive investments. Currently Germany has an artificially undervalued exchange rate and is thus able to sell more to other EU countries, so denying other countries within the Eurozone the ability to grow and use funds to invest in more productive assets and improving competitiveness. A booming European economy can only help UK exports. A booming European economy is less likely to see mass immigration, as many immigrants move for economic reasons – not because of the colder northern European weather!
  • Britain’s traditional role has been in restoring self-government in European countries, after it has been taken away by other European countries. By having referendum processes in place, the root causes are being addressed – so reducing future possible problems.
  • The side effects of the EU are addressed, i.e. Eastern European countries losing huge amounts of skilled and motivated workers, who they have educated. Also the EU is about centralising power and we can see that also leads to centralising of wealth in many countries, at the expense of the low income people.

In summary, there is an opportunity to turn the EU request for funds into an opportunity to restore self-government in all European countries. If Germany, France and EU want UK money, then the UK can choose the terms, including restoring liberty and prosperity in Europe. Or no money.

Britain needs to play it smarter

There is some chatter on the web as to whether Brexit can be parked. Personally I don’t see that happening. Call it a hunch but I think the process has taken on a life of its own independent of the politicians and they lack the coherence to influence it in either direction. I can, however, see Brexit transmogrifying into something that is neither Brexit nor EU membership.

The repeal bill process is not an afternoon at the photocopier. It’s a major feat of legal engineering and it is going to take years. We can pass certain bills that technically mean we have left but the Brexit limbo could be of such a composition where making the final switchover in various sectors, ending EU supremacy, would be viewed as so destructive that it would go into some sort of review, much like TTIP has, where it exists as a concept but it’s not actually going anywhere until it’s taken off the shelf and dusted down.

We have heard much about the possibility of an accidental Brexit where we crash out without a deal, but there is also a possibility of “accidental remain” where our lack of direction and inability to agree on anything leaves it hanging in the wind.

The only way I see to avoid this fate is for the government to face the reality that the EEA is the fastest and most practical means of leaving the EU. It doesn’t matter if the EEA is suboptimal. It has the singular merit of being out of the EU.

We can quibble until the end of time over the various compromises the UK would have to make but since the advent of the WTO agreement on Technical Barriers to Trade there is little likelihood of reaching that elusive regulatory sovereignty. That issue we can address later. To my mind it is secondary to ending EU political union.

If we do not want to drift into a Brexit limbo then we need to see some decisive action from the government. All we are seeing right now is dithering, pretending it’s all there for the taking when what we’re actually doing is reinventing the wheel – and a poor copy at that.

The basic mistake is the belief that the Brexit process itself is the opportunity to do everything all at once. This is a classic misnomer. If anything the Article 50 process is a lengthy admin chore we must go through before we can start looking at systemic reforms. The only safe and sensible way to leave is by reverse engineering our membership and that means the first step has to be quite close to EU membership. It wouldn’t even matter if post-Brexit absolutely nothing had changed. What matters is that, having completed Article 50, we would have the power to start changing things on our own schedule.

This is the bit where us leavers need to get real. All of us have a strong dislike of the EU, but we cannot say that everything about economic integration is bad. What matters is that we preserve what is worth keeping and build on it. It would be a grave mistake to sacrifice any European trade in the belief that trading with the rest of the world will compensate. It really won’t.

That though, is going to require some adaptation to our ideas. Like it or not, the EU has us over a barrel. As the regional regulatory superpower it does call the shots, and since the EU has a number of other countries hooked into regulatory harmonisation by way of FTAs we are going to find the wiggle room for an independent UK régime will be next to nil.

Ultimately we are going to have to change our attitude to the EU in order to make a success of it. The hostile and confrontational tone is not doing us any good and it’s dangerous because we will need the EU’s extensive assistance in borrowing their third party cooperation agreements and trade deals. Secondly, since we won’t be going all out for regulatory sovereignty, our trade policy will have to be a collaborative and complementary policy to that of the EU.

As we have seen the EU likes to get bogged down in deep and comprehensive bundled deals which take a number of years and very often get tied up in technical detail at the last minute over soft cheeses or formaldehyde content in furniture. Despite this method causing a number of hang-ups for CETA and the demise of TTIP, they don’t seem to have learned. There are other ways.

What we can do is look at effects based trade policy. As a foreign policy objective we want to reduce the push factors that drive migration. In order to do that we need to get the poorest countries trading. We are told by Suella Fernandes that Brexit means we can reduce tariffs for Lesser Developed Countries. This fails on three counts in that for a long time the UK will maintain the existing tariff schedules, LDC’s already have tariff free access under the Anything But Arms agreement – and finally, it’s non-tariff barriers which stand in the way.

Ultimately LDCs struggle to meet stringent standards. Jacob Rees-Mogg and the likes would have it that we can trade away our safety standards but that invites a deluge of counterfeit and dangerous goods. Consumers won’t wear it. Our mission is to use our aid budget for technical assistance to ensure that they can meet regulatory requirements for export. Not only does that improve their ability to trade with the UK it gives them access to the European market as well.

Effectively we would be improving access to the single market for everyone. The benefit to us is the eventual slowdown in migration but also more trade means more opportunities for UK fintech and business services. Something our economy is geared toward in ways that France and Germany are not.

By acting in this way we have no real need to get bogged down in comprehensive bilateral talks as the EU does. What matters is we are enabling trade and paving the way for the EU to forge deals, to which we can be a party. Sector by sector we can improve the viability of African trade at a speed the EU is incapable of.

As much as this approach is in the cooperative spirit, little by little it removes the EU’s excuses for excluding poorer countries and in so doing we make allies and friends with countries with whom we cooperate. From there we can forge sectoral alliances to further pressure the EU into liberalisation and perhaps changing its stagnant trade practices.

All of this is quite futile though if we maintain an adversarial attitude to the EU. If we leave the single market we actually surrender an ace in the hole for our trade strategy while also losing the opportunity to expand and enhance it – and wrest it out of EU control. Moving entirely out of the EU sphere leaves us hobbled in Europe and pecking at scraps elsewhere.

I wish I could report otherwise but it’s time eurosceptics faced facts. The world got complicated while we were in our EU slumber. The beast we helped create is a power in its own right with its own gravitational pull. What is done cannot be undone. What we can do is leverage our position as an agile free trading country to strengthen the global rules based system and drag the EU out of its protectionist instincts. If we can do that we solve a number of problems not only for the UK but Europe as a whole.

Photo by (Mick Baker)rooster

Michel Barnier’s recent speech – some salient points

Either Michel Barnier, the chief EU negotiator for Brexit, is off his head or there are fundamental misconceptions being held by our government’s Brexiteer Big Beasts.  The following is a summary of the most salient points apparently made by Mr Barnier speaking ‘frankly and sincerely’ about Brexit recently in Brussels to the European Economic and Social Committee.  A more detailed analysis is provided on EUreferendum.com, Brexit: Barnier – “that is not possible”.

Point 1 – on being outside the Single Market and Customs Union

“There will be no business as usual. The UK will become a third country at the end of March 2019”.

Point 2  – on the UK cherry-picking (through negotiations)

“There can be no sector by sector participation in the single market: you cannot leave the single market and then opt-in to those sectors. You cannot be half-in and half-out of the single market”

Point 3  – on being able to ‘influence’ the EU from the outside

“The EU must maintain full sovereignty for deciding regulations: the EU is not only a big marketplace. It is also an economic and social community where we adopt common standards. All third countries must respect our autonomy to set rules and standards. And I say this at the moment when the UK has decided to leave this community and become a third country.”

Point 4  – on the British Side being out of touch with the reality of the EU

“I am not sure whether they have been fully understood across the Channel”. “I have heard some people in the UK argue that one can leave the single market and build a custom union to achieve ‘frictionless trade’, ……that is not possible”.

Point 5  – on the status of UK having left the EU – comprehensive free trade agreement (even if agreed before then doesn’t change this status)

“Whatever the outcome of the negotiations, at midnight on 29 March 2019, the United Kingdom will at the present stage be a third State, which will therefore not have the same facilities and rights as a State Member of the European Union. It’s its choice. Not ours”.

Point 6  – on trading from the outside being more difficult (e.g. customs duties and non-tariff barriers exist)

“A trade relationship with a country that does not belong to the European Union obviously involves frictions”.

Point 7  –  on no deal (trading under World Trade Organisation Rules) being a practical non-starter

“I therefore want to be very clear …to my mind there is no reasonable justification for the ‘no deal’ scenario. There is no sense in making the consequences of Brexit even worse”.

Point 8  – on cutting losses arising from the new relationship between the UK and EU

“Business should assess, with lucidity, the negative consequences of the UK’s choice on trade and investment. And prepare to manage them”.

To conclude

Mr Barnier has a conception of Brexit negotiations that is not shared (publically at least) by our government. The main takeway from M. Barnier’s speech (and assessment) is that he feels the UK is unprepared for Brexit or even to negotiate realistically based on the reality of dealing with the EU. A comprehensive free trade agreement finalised within two years isn’t going to happen, he claims, and would not solve all problems of seamless access to the Single Market. And it will not be all right in the end unless the UK’s Brexit negotiators understand what is actually involved.

Photo by EPP Group in the CoR

The great trade muddle

“We are leaving the European Union… We are leaving the Single Market… We are leaving the Customs Union.” Theresa May has repeated these phrases on numerous occasions since her Lancaster House speech in January.  Only last week, Steve Baker, the new Brexit minister, insisted that there would be no watering down of the Brexit strategy. “It’s like putting blood in the water to even talk about the EEA,” he said. “We don’t want to be a rule taker, for all the reasons that David Cameron gave during the referendum. We mustn’t take up some of those ideas.”

The Customs Union is a red herring. It never came up during the referendum debate last year and, one suspects, it has only re-surfaced recently because some people may well not know the difference between it and the Single Market.

The Single Market is another matter. It is not true, as suggested by a number of senior EU figures  including Michel Barnier, the chief negotiator, that the four “freedoms of movement”  – goods, services, capital and people – are indivisible.  They may be for EU member states, but not for the non-EU countries in EFTA. Iceland imposed restrictions on the movement of capital when its banks collapsed and Liechtenstein still imposes restrictions on immigration from the EU. Furthermore, no Brexit campaigner suggested that the “Norway Option” or even the “Liechtenstein Solution” should be anything other than an interim arrangement to get us safely through the EU’s exit door within the Article 50 timescale.

It is certainly not an ideal arrangement, and some leave campaigners, including CIB Committee member Ian Kealey, have offered a number of reasons why it should be avoided even as a temporary solution.  Carolyn Fairbairn, the Director General of the Confederation of British Industry, which represents large employers,  has nonetheless been pushing hard for us to adopt this approach. Some leavers are naturally suspicious of an organisation which campaigned for us to stay in the EU, arguing that the real motive of the CBI is to stop us leaving the EU at all. For all the objections to re-joining EFTA and accessing the Single Market via the EEA agreement, the fact is, countries which use this model are most definitely outside the EU as this helpful comparison by CIB Committee member Anthony Scholefield illustrates

Mrs May, however, has not shown any enthusiasm for this route, although she mentioned the possibility of an interim arrangement as far back as November of last year, without going into any details. Her  recent pronouncements have been very much about the long term, stating her desire to sign a “bold and ambitious” trade deal with the EU by March 2019 and only yesterday, at the G20 summit in Hamburg, she said she wanted a “deep and special partnership with the EU, a comprehensive free trade agreement with the EU, so that we can continue to trade with the European Union. That’s not just in our interests in the interest of the other 27 member states as well.”

Fair enough, but only two days ago, Michel Barnier said that “There will be no business as usual.” To underscore the point, he later continued, “I have heard some people in the UK argue that one can leave the single market and keep all of its benefits – that is not possible.”

It has been argued that many other countries trade with the Single Market without being members of it. This is true, but they do not get 100% access nor of the benefits. There will inevitably be obstacles. Most people who have looked at this complex subject accept that being outside the Single Market will involve some loss of trade access to the EU. The big question is whether or not they can be minimalised.  The Bruges Group has come up with an alternative which, its authors claim, can be implemented in eighteen months and which would address the main concerns of business, including non-tariff barriers. However, it does not deny the presence of significant obstacles.

We do not know whether or not this report is being digested by the Civil Servants of David Davis’ department. What we can say is that there has been precious little comment from the government on its  proposals regarding this important subject. To date, the Bruges Group proposal is the most detailed study of a non-EEA  solution to the trade conundrum which would avoid the need for any interim arrangement.  If it isn’t going to be adopted but something better has been produced, it clearly hasn’t reached the ears of the CBI or some other concerned politicians who advocate our remaining in the EEA.

What is worrying is the lack of a detailed response to these concerns. Could it be that even a year on from the referendum, the Government still doesn’t have any idea of what its Brexit trade strategy should be? When we joined the EEC (as it was) over forty years ago, businesses were given increasingly detailed guidance, starting over a year before entry. If the transition to independence is to be seamless, businesses need adequate notice to comply with whatever the new arrangements will be. Regulation has become a lot more complex since 1973 and the process of informing them of what needs to be done will surely need to start no later than March next year.

With some economists suggesting that the UK economy is slowing, some leave campaigners have expressed a concern that Brexit may not actually happen given the additional challenges which lie ahead. We do not believe this to be the case as any backtracking on Brexit would be suicidal for the government and the Conservative Party. Nonetheless, the Article 50 clock is ticking away and if the government is still in a muddle about trade, we may end up going down the EEA/EFTA route as an “off the peg” solution which, due to time constraints, could end up by default as the only way of preventing a “cliff edge” scenario in March 2019.

Drifting in Brexit Limbo

It is still government policy to seek a comprehensive partnership agreement with the EU as a third country. Already we are seeing lobbying for pharmaceuticals to continue participating in the single market. The government will concede on this if it does not want to lose our pharmaceuticals industry. No doubt our aviation sector will want to continue participating on more or less the same terms. We will be seeking to ensure manufactured goods and foodstuffs travel unhindered into the EU. The automotive sector will push for whatever it can get to avoid tariffs and rules of origin. And so on and so forth.

By the time this government gets as far as negotiating our future relationship, it will have a long list of things it wants to keep the same. We will also find that the practicalities of intricate policies mean that change is barely possible and largely undesirable. This sets the stage for a long and drawn out negotiation as to our future relationship.

But this time it will dawn on even the thickest of MPs that an interim agreement is necessary. That in itself would be a serious and lengthy undertaking. That is precisely why it is not going to happen. Why should the EU commit ever more of its runtime to negotiating two comprehensive and complex packages – one of which being time limited? The ultimatum will that be that we either drop out with no deal or stay in the EU on more or less the same terms until a future agreement can be concluded.

That is, of course, unless we move into the EEA/Efta position in order to expedite our exit. We will probably find this in itself is a major diplomatic and legal undertaking and once that is done we will find there is actually no point in reinventing the wheel, nor is there any particular obligation for the EU to bother. Moreover, Efta states have little to gain from the disruption for what is only a temporary arrangement. Their view will likely be that we’re either in or out.

It therefore seems obvious that the EEA should be our first port of call with a view to being a long term part of the single market, using the systems within the EEA agreement to tailor it to our needs. The alternative is to stay in the EU in a Brexit limbo, slowly bleeding from uncertainty only for us to pass some years later into an inferior relationship that we will have to rebuild over many years.

It would appear, however, that this realisation eludes the powers that be, and thanks to the power vacuum at the heart of government, we can expect this to drag on, feeding the uncertainty and eroding our choices. With all of our political capital spent, with our minuscule leverage squandered, we will be forced to take whatever we are given. That may even be a conversion of the interim EU membership into the permanent status of being a non-voting member. Precisely where we didn’t want to be.

It was always The Leave Alliance view that the EEA was suboptimal but it does have the chief merit of getting us out of the EU. We also took the view that the EEA, preserving most of the trade integration, would save us from the damage caused by uncertainty and the economic impact of leaving would be manageable. It seems, though, that this message, having met fierce resistance, will not get through.

Though the ultra Brexiteers share some considerable blame, it is as much the fault of the media who have been unable to grasp the mechanics of Brexit, along with a government which is impervious to messages from the outside. Ultimately this is the result of two factors.

The hard right of the Tory party are wedded to some woefully simplistic ideas as to how trade is done, taking their advice from Legatum Institute who will tell them pretty much whatever they want to hear if it means they get their feet under the table. Collectively they are fixated with tariffs and are unable to see the larger picture, treating non tariff barriers and regulatory systems as a mere afterthought.

In normal circumstances we would have a sufficiently competent media who could rip through this self-delusion, but having pruned their experience journalists, the closest the media gets to expertise is the Financial Times, itself incapable of bringing any clarity to the debate and largely tainted by a metropolitan bias. It has not earned the right to be heeded.

The second factor is that having deleted the discipline of trade from our political horizons by way of being in the EU we simply don’t have an institutional memory of it and our politicians haven’t in any way been connected with the real business of international trade negotiations. This is why we should never have joined.

Further still our post Brexit trade policy will be inept largely because it is viewed as a separate undertaking from politics, foreign policy and international development aid. It stands as an abstract pursuit, largely geared toward the maximisation of trade volumes, divorced from cultural and political objectives. It is an entirely technocratic domain.

Ultimately, Brexit is a mess of difficult choices and trade-offs between commerce and sovereignty. The EU is an elaborate and complex web of rules, many of them protectionist where moving to the other side of those defensive measures harms us considerably. As much as it is difficult to prove that new trade deals will compensate for lost EU trade, the EU has ways of making sure that they won’t. Rules of Origin being one of them. These are the realities we must face up to.

And herein lies the problem. For Conservative leavers who believe in “free trade”, Brexit is an economic venture and a chance to snub the EU. They fail to take account of the fact that the EU is a regulatory and economic superpower and the UK is not. They are working from a faulty definition of free trade and are failing to look at the bigger picture. This is why Brexit will hurt far more than it was ever meant to.

For us realists Brexit was never an economic silver bullet. The Leave Alliance was keen to point out that Brexit would be a process and that there would be an economic cost. The point though, was to end political union with the EU and to put the brakes on “ever closer union”. That is our first objective and the most important one. To end the supremacy of the EU in British affairs and to repatriate decision making. If we can make a good go of trade then that is a happy outcome, but that is more a long term concern. Our first priority is to get out of the EU with our hide intact and to ensure that we do not burn our bridges.

The chances of that now seem ever more remote. The appointment of Steve Baker as junior Brexit secretary, a man who calls for the EU to be “wholly torn down” is entirely the wrong message to send. Not least since he is a devotee of Legatum’s panglossian nonsense. Thanks to the obstinacy and ignorance of the ultra-Brexiteers, Brexit is going to hurt a lot more than it ever should have – if we manage to get out at all.

 

Photo by Smabs Sputzer