Hard Brexit: a primer

by George Hatjoullis

The situation following Theresa may’s ‘clarification’ is as I predicted last October in my blog post A Hard Brexit is Gonna Fall. The government has drawn two red lines, one for immigration, and one for the European Court of Justice. It will regain control of the borders and it will withdraw from the jurisdiction of the ECJ. These are both non-negotiable. It will now seek the best possible relationship with the EU consistent with these two non-negotiable positions. If no satisfactory relationship can be agreed on exit, including a transition period, then it will leave the EU without any agreement. No deal, says the government, is better than a bad deal. In these circumstances it has implied that it might change the model for the British economy and make it a low tax location for corporations.

There will be a parliamentary vote on the proposed exit deal once the government has negotiated what it deems to be acceptable. Do not be confused. This does not return sovereignty to Parliament. If Parliament reject the negotiated deal it merely means the UK will leave the EU without a negotiated agreement. It guarantees a hard Brexit. If you doubt this then read the House of Commons Library blog primer. The UK will leave the EU once article 50 is triggered unless it recants and the 27 members unanimously allow it to recant whether there is a negotiated exit arrangement or not. Parliament cannot make the government of the day recant nor the 27 accept.

The Theresa May clarification thus amounts to an opening negotiating position. Give us what we want or we will walk away and set up an offshore tax haven on your doorstep and will offer no future commitments on co-operation. Quite what Mrs May’s just-about-managing-class will make of turning the UK into a corporate tax shelter I am not sure. I suspect it is not what they had in mind when they voted to Leave. Then again, I don’t suppose most Leave voters had anything in mind except people speaking a language they cannot understand on the bus. Prejudice has a high price.

The key issue is that, once article 50 is triggered, reversing exit is going to be very difficult if not impossible. The only prospect for not leaving the EU is for the Supreme Court to rule that Parliament must have the last say on triggering and for Parliament to vote not to trigger article 50. That is to say, for Parliament to reject the advice of the referendum. It is quite likely that the Supreme Court will rule to force the government to allow Parliament the last say on article 50. However, it seems unlikely that Parliament will directly reject the advice of the referendum despite the fact that originally most MPs favoured remaining in the EU. If put to a vote I fear Parliament will vote to trigger article 50. The only hope is if a coalition of Remain MPs can force a general election but this is unlikely, and in any event the outcome is hardly a foregone conclusion.

Once article 50 is triggered much of the resistance to exit will fade. A hard-core of the population ( I suspect about a third) will remain defiant but many Remain voters will become reconciled to the inevitable and look to make the best of the situation. It is similar to the Iraq war situation. Prior to entering the war 2/3 opposed (according to opinion polls). Following entering, the polls reversed and 2/3 supported based on ‘getting behind our boys’. This is a depressing thought for those that regard exit from the EU as a retrograde step (as I do) but there is no avoiding the reality.

Once (if) article 50 is triggered, everyone will start planning on the assumption that we will be leaving. Moreover, given the irreconcilable differences on freedom of movement and the ECJ I suspect the assumption will be that a hard Brexit is inevitable. It is at this point that the economic consequences of exit will begin to bite. We may yet be pleasantly surprised and pragmatism may rule the heart. However, don’t bank on it! Plan for the worst case.