“I could have made things more difficult but I didn’t because I felt a certain responsibility not to destroy the European Monetary System.”

George Soros

There are times when people look over the edge of the abyss and decide that discretion is a better form of judgement. Perhaps George Soros referred to that innate common sense when he made this quote, and perhaps the collected company of EU bureaucrats, Irish politicians of various hues, brexiteers and remoaners did likewise last week.

Following the DUP hitch in the Brexit discussions last Monday 4th December, I tweeted: “The solution is simple: the EU should back down on its insistence for the Irish border to be a pre-condition for trade talks. This is a trade matter and cannot be a proxy for the whole UK-EU relationship: so let’s discuss it all together.”

Last Friday it was clear that the EU had indeed backed down on the Irish border question, and all parties confirmed that they were content to include it as part of the overall trade deal. Here’s the important part of the final statement:

“The United Kingdom remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border. Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the allisland economy and the protection of the 1998 Agreement.”

A great sigh of relief could be heard all over Brussels, London and Dublin: we were even treated to Leo Varadkar quoting Winston Churchill (“not the end, but the end of the beginning”). The only direction from which relief was not to be heard was Jeremy Corbyn: but that’s understandable, as most of the relief elsewhere was that the UK was not about to be plunged into a huge experiment with Venezuelan-style Corbynomics. That anxiety was plain to see in the Telegraph’s headline on Thursday 7th December: “May will fall without deal, warns EU”.  

(Am I alone in seeing a mischievous parallel here with that classic little cartoon ‘For the Birds’ at the point 2’ 22” in, when they suddenly realise disaster is imminent unless they back off?)

However one or two commentators have spotted the ‘can being kicked down the road’ on Friday. Here’s Matthew Parris writing in Saturday’s Times:

“She has given the Republic of Ireland what it wanted: a promise that the whole island of Ireland remains effectively within the EU customs union. She has given the Democratic Unionist Party what it wanted: a promise that Northern Ireland remains within the UK customs union. In time some bright spark will hit on the consequence of combining these two assertions.”

So what we have done has clarified citizens’ rights and the payoff issues, but the Irish condition for Phase 1 has been moved into the Phase 2 trade talks. Meanwhile that trade deal is, as Matthew Parris puts it, looking increasingly like a Canada-EU free trade solution. He finds that concerning, due to the time it took to resolve, the rule-taking dimension and the threat to our financial services industry.

Personally I don’t share his pessimism:

  • if it is a Canada-EU lookalike, the fact that this deal has been concluded will allow both parties to ‘copy and paste’ - no need for long delays;
  • all countries wanting to trade with one another have to be rule-takers to some degree - it depends on the sectors and how strongly they wish to push their case;
  • at present the EU is anything but harmonised in its financial services challenge to London – Frankfurt, Brussels, Paris etc .. are all falling over each other in trying to woo firms separately, with no single competing alternative. Most businesses will therefore be content to tick the boxes by opening a branch or making a registration in the EU, and will keep their core operating businesses in London.

So I think we can genuinely breathe a sigh of relief after Friday’s news: well done to Theresa May! And well done to the EU for having the good sense to back down on the Irish question, and the foresight to do that free trade deal with Canada – thereby enabling us to be a second bridge between the EU and the United States.

Now perhaps we can start thinking about some of those priorities here at home …


Gavin Oldham

11th December 2017