Within hours of the media reporting of Mrs May's Sunday comments on the Single Market, the BBC was telling us that the value of the pound had fallen to a two-month low against major currencies, dropping about one percent across the board. The only currency against which it gained ground was the Turkish lira.
This was supposedly after the Prime Minister had signalled the UK would pursue a so-called "hard Brexit" from the EU – a meme picked up almost uniformly by the rampant hackery and broadcast to the world.
What we had seen though was "I want the best possible deal for trading with and operating within the Single European Market" being interpreted as meaning that Mrs May would not seek to keep the UK in the EU's Single Market. Unsurprisingly, this was thought, according to the BBC, to have "radical consequences for the country's economy".
The very same Monday morning the pound was nose-diving (if that's what you call a one-percent drop), Mrs May was taking questions after a speech on mental health, being asked by another egregious hack, Channel 4 News's Gary Gibbon, whether she was worried by the fall.
Mrs May's response was that she had said on Sunday what she had been saying for the last few months. This was indeed the case – as we recorded in yesterday's blogpost. Essentially, she was saying nothing different from what she had said at the party conference in October.
Following on from Gary Gibbon, Mrs May then took a question from the Sun's Tom Newton Dunn. Given that she had been saying nothing new, he averred that, either the markets were getting their interpretation of her Brexit stance wrong, or she was getting it wrong. "Which one was it?"
The Prime Minister replied:
Well, I'm tempted to say the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, [that] it's absolutely inevitable it's a hard Brexit. I don't accept the terms hard or soft Brexit. What we are doing is going to get an ambitious, good, the best possible deal for the United Kingdom in terms of trading with, and operating within, the Single European Market. But it will be a new relationship because we won't be members of the EU any longer. We will be outside the European Union, and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union.
So there we have it yet again: "the best possible deal for the United Kingdom in terms of trading with, and operating within, the Single European Market". How many times is it going to take before the media collective understand that "operating within the Single European Market" might just mean operating within the Single European Market?
If the media could set aside their enthusiasm for deciding that this meant exactly the opposite of what the Prime Minister is saying, some amongst them might even think of asking how this was intended to come about.
On the face of things, the only possible way that the UK can operate within the Single European Market, from outside the European Union is through the EEA Agreement, via membership of Efta. Yet no one seems to be putting this point to the Prime Minister.
On the other hand, if – as Pete observes
- she has something else in mind, we could be in serious trouble. Negotiating an entirely new deal from scratch is precisely what we need to avoid. Given the complexity – which Mrs May herself acknowledges – it is hard to see how an agreement can be reached in time to beat the two-year Article 50 deadline.
One wonders also whether Mrs May's aspirations (whatever they might be) have factored in the needs and wishes of the European Union – insofar as they have been articulated and communicated to her.
The point here is that the EU has consistently opposed the idea of another Swiss-type solution, on the basis that it is resource intensive, complicated and lacking in certainty. Moreover, the EU is concerned about the proliferation of deals relating to its "neighbourhood policy" and is looking to rationalise the agreements and reduce the number of different arrangements.
As a rule, therefore, the very last thing the EU wants is yet another resource-hungry "bespoke" agreement – with the UK or any other nation. This is going in precisely the wrong direction.
Thus, even if it is possible to negotiate a settlement which approximates the EEA Agreement – which itself took eight years to negotiate - the likelihood is that the EU will be reluctant to go down that route. Thus, at the eleventh hour, the UK could find itself adrift, with nothing available other than an enforced WTO option.
Currently, there are people who – for reasons of their own – are seeking to talk down the perils of this option. It is also clear that there is considerable confusion
as to what the term means. This is why I wrote Monograph 2
, explaining this complex subject. It has since been revised and some small errors removed. I stand by the current document.
Crucially, as I point out, the essence of the WTO option is its unilateral adoption without prior planning. If there are negotiations and an agreed settlement, however basic, this is not – by definition – the WTO option.
In the event of the option being adopted, trade with the EU has to function on the basis of the UK acquiring the status of a third country. Until new arrangements are made, no systems are recognised, no approvals exist and there are no mutual recognition provisions in place. In legal terms, it will be as if the UK had just been dropped from outer space across the Channel from France. As far as being a trading partner, Brexit would be year zero.
Many pundits, however, do not understand that "risk assessment" is used to determine border inspection frequency. They thus fail to appreciate that a "year zero" third country must be subjected to the highest level of checks. Currently, the UK has almost complete freedom from customs checks. Thus, even a five percent consignment inspection rate on UK goods exported to the EU would be enough to bring gridlock to the Channel ports.
As we reported earlier
, in terms of Border Inspection Posts (BIPs), the nearest available port (Dunkirk) has the facilities for inspecting 5,000 consignments a year. By comparison, the Eurotunnel and Dover ferry port handle between them 10,000 trucks per day
. That is equivalent to a single lane road train of approximately 100 miles in length, every day of the year.
It takes little imagination to realise that even minor perturbations can have a major effect. We have seen these for ourselves, and live with the knowledge that the Channel port facilities are on a knife-edge
, at the limits of their capacities. They function only as long as everything goes smoothly.
Problems are avoidable, but only if the right agreements are reached. To be concerned that there is an "orderly and managed transition" out of the EU is not, therefore, unreasonable. Neither is fear of the adverse consequences if we get it wrong. And, to that extent, we simply cannot afford a "hard" Brexit. Failure, as they say, is not an option.
Pete thus observes that, unless Mrs May realises that the EEA is her only real option before triggering Article 50, she will likely have to confront that reality later down the line. It will create an embarrassing mess for her. Politically she will lose face.
That, in a sense, won't be what the media insists on calling a "hard" Brexit. It will be a bungled mess that could have avoided from the outset. Our economy will once again be at the mercy of the markets as the media fails to comprehend what is happening.
This "accidental Brexit" is something that has to be avoided at all costs. We can only hope that, in the end, the nation – including the Brexiteer zealots – will be forced to climb down and accept that Britain is presently in no shape to pull out of the Single Market. It may be in the future, but not just yet.
If that lesson is not learned, we will pay dearly.