Richard North, 18/08/2017  
 


Not for the first time, and doubtless not the last, I'm having to point out that the conclusions we came to in Flexcit were not arbitrary. In particular, the "Norway" (aka Efta/EEA) option became our choice not for its specific merits but after eliminating the less favourable alternatives.

There was a brief period when it became fashionable to list as many variations and sub-variations as possible but, in truth, there were only ever three: the unilateral (WTO), bilateral (Swiss) and the multilateral (Norway) options.

The great advantage of our choice – which makes it the least-worst option – was (is) that the systems and infrastructure already exist. That gave us something that could at least be implemented within the two-year time span afforded by Article 50, buying us time for a longer-term solution.

In fourteen months or so since the referendum, it looks as if our Government has been going through the same process, eliminating choices one by one until it ends up with what it believes to be the only available option.

Interestingly, when the Treasury published its evaluation in April 2016, it came to roughly same conclusion that we did. The net impact on tax receipts, it concluded, would be £20 billion a year in the central case of the EEA, £36 billion a year in the case of the negotiated bilateral agreement, and £45 billion a year in the case of the WTO. By that measure, the EEA was the "least worst" scenario.

What we have seen from the last two days, though – with the publication of the first two "partnership papers" – is that the Government has come to a different conclusion. At least, it is now favouring a different outcome, opting for a messy series of bilateral deals, roughly following the Swiss model.

We are not privy to the Government thinking on this matter – assuming that "thinking" is one of the processes involved – but it seems to have come to this different conclusion by employing a different filter.

While we chose practicality – i.e., that which was practically possible – the government test seems to have been one of political acceptability, defined in terms of notional "red lines". For entirely political reasons, which have a lot to do with internal Conservative Party politics, it has rejected the Efta/EEA option.

Having then been forced to walk away from the idea of relying on the WTO (also known as the "no deal" option) on the grounds of practicability, that has left it with nowhere to go other than the messy compromise of seeking multiple bilateral deals to cover the territory.

Then, because the Government has quite evidently concluded that these deals cannot be finalised within the two years allowed, it is talking of a transitional or "interim" deal, despite not having the first idea of how to go about achieving one.

As for the end game – the longer-term solution - this exists in name only, the fabulous, all-singing, all-dancing "bold and comprehensive trade agreement", the like of which no man's eyes have ever seen (or probably will see). Despite its pivotal importance, the Government has not seen fit to publish any details – or even tell the European Union what it wants.

This is a mad situation. There is no other way of putting it. We have a government that has rejected – by its own estimation – the least-worst option, in favour of a less attractive scenario, and one that it can't possibly deliver. It is doing so in order to buy time for an end game that it has not defined and is now arguing for an "interim" deal that is almost certainly unattainable.

Still though, the chatterati don't understand. We've long given up on the media, academia (if we're allowed to generalise) has lost the plot and the think-tanks are engaged in the detailed exploration of their lower intestinal tracts – without the aid of equipment.

Latest in a long line of dereliction is the Institute of Government, which is still talking of a "single market and a customs union arrangement" as if it was an option worth considering.

If endless platitudes were the answer to our problems, then the IoG would be our saviour, but it offers the idea of Single Market as the option that would lead to the least impact on supply chains, putting us back to where the Treasury report was in April 2016, with the EEA as the least-worst option.

Beyond this fictional "bold and comprehensive" free trade agreement, for which there is no substance, no draft on the table, or even a scoping report to work with, no one seems to have the faintest idea of what Brexit really looks like. Apart from the ideas set out in Flexcit, there is not the slightest attempt to address the end game in any realistic sense.

All we have to go on therefore, is the Commission pouring cold water on the UK Government's ideas, insisting that its "phase one" housekeeping matters take precedence over the aspirations published in the last few days.

Meanwhile, as Mr Barnier keeps telling us, the clock is ticking, and will keep ticking. This is ironic, in a sense, given that Big Ben has lost its "bong", but then life relies on such symbols to send us a message.

The trouble is that, there are only the platitudes left. The Government has managed to make such a mess of Brexit that there is no obvious (or any) way forward. To keep the conversation going, we must keep churning out more and more extruded verbal material, with meaning long departed.

Right from the beginning, of all the short- to medium-term options, Efta/EEA was not only the best but the only way forward. We offered as a fall-back, the "shadow EEA" which, while less acceptable, could have at least been workable, had we sought from the very beginning to put our resources behind such a plan.

But, as we see time is dribbling away, with the media talking of only ten months being left for trade talks – assuming the "housekeeping" issues can be resolved.

Not only can't we do a trade deal in that time, we could not even produce a working draft of a transitional deal within that period. Already, we have run out of time, and there is no turning back.

The real test for analysts, therefore, is to identify the point at which business will wake up to the coming disaster and start bailing out. Every now and again, we see reports of businesses preparing contingency plans – led by the banks – but there must soon be a realisation that Government is set to deliver only chaos.

There are, however, concerns for small- and medium-sized businesses that may not have the capacity to conduct detailed contingency planning, but these will have to go down with the ship like the rest of us. But the "big boys" will jump ship, leaving only skeleton crews behind.

That may just be sufficient to jolt the Government into taking emergency action, although such is the air of unreality in Whitehall that even with the "rats" pouring down the sides of the ship, the likes of Mr Davis will be reassuring us that everything is under control.

Whitehall, however, looks to be in the final stages of a Laurel and Hardy comedy film, where we all await the predictable punch line that everybody but the actors must know is coming. But this is not comedy - it's tragedy played out on a vast scale. The results are not going to be pretty.






comments powered by Disqus













Brexit - the first year - New e-book by Richard North
Brexit - the first year - New e-book by Richard North
Buy Now





Log in


Sign THA
Think Defence





The Many, Not the Few