“If we reject Barnier’s Brexit, we could hurl all Europe into existential crisis.”

Business comment headline, Daily Telegraph 15/11/18

This Telegraph headline provided a salutary warning for those wanting to rush for a hard Brexit. Those who think Theresa May has sold the birthright of British independence with her Brexit deal should look more closely at the early stages of Henry VIII’s break from papal authority in the 16th century. It didn’t start with a ringing declaration of independence - quite the opposite. 

History teaches us that breaking free is never an easy process, and often requires patience. But independence can be achieved, and so it will be with Brexit. Michael Gove and his Cabinet colleagues are to be applauded for hanging on in there: we will achieve independence and a relationship of equals with the European Union, and much faster than Henry VIII did with his break from Rome, but let’s not fall at the first fence.

This week our commentary not only looks at the current Brexit tumult, but also looks forward to the right outcome for the United Kingdom.

A week may be a long time in politics, but it’s hardly the blink of an eye in the timescale of our 40 year membership of the European Union. If there’s one word which both hot-headed politicians and frustrated voters should hear, it’s patience.

After two years hard work, we have a draft Withdrawal Agreement: when you are turning round an oil tanker of this size, that’s an achievement.

t’s important to remember that the referendum result wasn’t 70:30 in favour of Brexit: it was 52:48. Sufficient to give a clear result, but not to justify a hard Brexit at this stage. The General Election which followed a year later allowed all parties to exert some influence on the process, and the draft Withdrawal Agreement reflects both these results. While it holds to the Brexit result, it also contains the ingredients for a strong relationship with the EU going forwards. Meanwhile the prime driver for the referendum result - immigration - is fully recognised in the Withdrawal Agreement, by ending uncontrolled migration following the transition period.

Meanwhile it ensures that large numbers of people don’t lose their jobs in a business bloodbath after 29th March 2019: that’s crucially important. This might also explain why, when a meeting of 25-30 Conservative business leaders and entrepreneurs were asked last week whether they would vote against Theresa May as leader if they were Conservative MPs, no-one said yes. And it was clear from the media ‘Vox Pop’ interviews last week that this view is widely shared among the general public.

As our commentary predicted on 8th October, we have reached Base Camp in our ascent of Mount Brexit. So let’s hope the House of Commons will exercise some common sense for a change, and let’s look at ways of dealing with problems going forwards rather than start retreating down the mountain.

The ‘Backstop’ appears to be causing most of the grief: few are raising complaints about the transition period to end 2020, which is good because it does provide for two years’ stability. Personally, I think more could have been made of EU hypocrisy over open borders: on 15th October we commented on the Irish question, with an image of the French Guyana (part of the EU customs union) border with Brazil, which is as open as everyone wants the Northern Ireland border to be. I am reliably informed that our Brexit team are making full use of this precedent, although it would have been good to see more of it across the media generally.

Nevertheless the key question is whether the Backstop will ever apply and, if it does, what we should do about it. It won’t apply if a Canada-style free trade agreement is agreed over the next two years, and I see no reason why that should not be the case. Not only is the Canada precedent there for all to see, but unlike them we start from the point of free trade with the EU. So let’s tell Ollie Robbins and his team to get on with it.

But if we do find ourselves confronted with no long-term agreement, and the Backstop is about to cut in, that’s the point at which we should make our Unilateral Declaration of Independence: not now. The lawyers may cry ‘foul’, but we’d only be paying the same disregard for legislation that European Union countries have been doing for years. Ask any investment firm how many countries had even ratified MiFID (the ‘Markets in Financial Instruments Directive) by the time the UK had it in full operation: very few.

So that’s the real backstop - declaring UDI at year-end 2020 if no long-term deal is in place. And we have a 500 year-old precedent: that’s what Henry VIII did when the Pope, notwithstanding Henry’s support for the Catholic Church, refused to gives way on his requests. By end 2020 we will have done our bit of working to accommodate our EU opposite numbers - that will be the time to dig our heels in and open up to the world. In the 16th century it was that resolve which laid the foundations for the British empire.

No-one can claim the next few years, let alone months, will be easy: however we have already given the European Union the lifeline they need for Eurozone stability: they are now free to go for political integration without our veto. As Ambrose Evans-Pritchard’s headline made clear in the Telegraph last Thursday (our quotation at the top of this newsletter), that is the most important gift we can give them and, as we proposed on 5th November, they need to get on with that political integration without delay.

This is really important for us all, because the turmoil we are seeing in UK politics will be as nothing compared with the spectre of a Eurozone collapse, which is dangerously close now. We may yet be providing that safe haven for Europe which we envisaged back on 16th July, and that could even be while the ink is still drying on the Withdrawal Agreement - if we get that far.


Gavin Oldham

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