28/06/2019
Any rational analysis of the current situation will tell you that both Tory leadership candidates would, with their current policy proposals, head us directly towards a no-deal Brexit on 31 October.
So when Alexander Boris de Pfeffel Johnson blithely declares that there is only a "
million to one" chance we'll leave the EU with a no-deal, as he expects to conclude a new deal with the EU, one has to take this as just another example of the mindless rhetoric which is currently dominating the Brexit debate.
But even his fanboys are divided. One
of them reckons he can pull off a renegotiation by mounting an "energetic charm offensive". Another one
complains that the only way out [of the EU] is via a no-deal, which in turn requires an early general election â something which Johnson has spurned.
As for pulling off a renegotiation, the theory is that, although the Irish backstop is "a problem", the "alternatives are there". And this, supposedly, means that agreement is "tantalisingly close".
If nothing else, this is a testament to the power of self-delusion where the commentator, evidently convinced that these "alternatives" will work, is taking it for granted that the EU is similarly impressed and will accept them in lieu of a backstop. All they have to do is add a few sentences to the end of the Withdrawal Agreement and the clouds will part to reveal the sunlit uplands.
Meanwhile,
The Times has been bitching from the comfort of its paywall about the consequences of a no-deal Brexit, arguing that too many senior Tories have for too long been scared to tell the public the truth about them. If we are headed that way, the paper says, those Tories "owe it to their party and their country does so with its eyes wide open".
It is a bit rich of this paper to take this view, having pushed via its
star columnist, Matt Ridley, the canard that "a future under World Trade Organisation terms looks bright". But that's the legacy media for you â never having to say sorry when it changes its mind.
Partially atoning for its previous omissions, the paper has sought to explain the consequences, with an
A to Z of what it means. The article is of such staggering superficiality, though, that you wonder why they bothered.
For aerospace, for example â the first of the entries â their "worst case" is that, under WTO rules mean there are no export tariffs, but "non-tariff barriers such as customs rules persuade manufacturers to relocate production to Europe, decimating UK aerospace, which employs 95,000 people and turns over £31 billion a year". For the "best case" scenario, we get:
A fall in sterling outweighs border trade friction and Britainâs aerospace manufacturers and component makers - BAE Systems, Rolls-Royce, GKN and others - continue to thrive entrenched in Britain that it is almost unthinkable that big global manufacturers would stop working with UK suppliers but no-deal could accelerate the move of the supply chain to China and southeast Asia.
Then, the entry for "trade deals" tells us:
Worst case A failure to replicate certain agreements means British exporters endure higher tariffs and trade barriers in some markets, putting them at a significant disadvantage to European rivals.
Best case Whitehall officials manage to replicate a large number of the EU's 40 or so free state agreements with 70 nations.
Unknown factor Britain would immediately assume full control of an independent trade policy for the first time in four decades. It is unclear how long any negotiations with countries like the US would take. The capability and capacity of Britainâs fledgling negotiating operation has also yet to be tested.
These entries typify the whole of the piece, where the vagueness of the outcomes and the range of predictions is such that one could conclude that the paper has very little idea of how we would actually be affected by a no-deal Brexit.
To an extent, this is fair enough. In truth, no-one can accurately predict the outcome, and much will depend on the post-Brexit politics, and how the economies of the 27 EU Member States are affected. These uncertainties, in themselves, could give rise to an enormous variability in the effects experienced, and have an impact on the duration of those effects.
Even with the sensitive issue of the Irish border, there is considerable uncertainty as to the immediate response of the Irish Republic. In theory, on day one of a no-deal Brexit, Irish officials should be manning the barricades on the border, subjecting traffic from the North to the full range border checks.
So far, though, we've had no hint that the Irish government is prepared for such a draconian move. If I were to guess, I would expect no immediate action to be taken, with the Irish hoping for an emergency deal, where the UK and the EU come together to patch together a working arrangement which will enable both sides to muddle through.
What might happen also is that the EU-26 (the rest of the EU minus Ireland) might start imposing checks on goods imported from Ireland, and checks on Irish lorries using the land bridge via Dover. Then we might see the progressive imposition of checks on commercial traffic over the Irish border â small scale to start with â gradually increasing in intensity. Only after some years might checks apply to private vehicles.
All this, of course, is pure speculation but, in terms of the bigger picture, I think the one certainty is that trade flows between the UK and the EU-27 will slow. It is probable, though, that this effect will be asymmetric, and we will lose proportionately more exports than will the EU-27. Equally uncertain is the effect on trade with the rest of the world, but my guess is that the shorter-term will also bring a downturn in trade flows, again largely asymmetric to our disadvantage.
The net outcome of this, almost certainly, will be a massive increase in our trade deficit (on reduced trading) and pressure on the pound. It will be back like the old days in the 70s, with the monthly deficit making front-page headlines, and increasingly desperate governments mounting "buy British" campaigns.
The overall effect may (and in my view probably will) be severe enough to trigger a recession. One might expect inflation to re-emerge as a serious factor, and some rise in unemployment seems inevitable. Property prices will take a hit (as they already are) and, with personal debt already at unsustainable levels, we might see a record surge in bankruptcies and a sharp drop in consumer spending.
My great concern is that any such recession will not be part of the cyclical economic process, but a response to a downturn in economic activity. The effects of recessions, themselves, are to depress economic activity, so it does not take much to postulate that we could see a self-reinforcing phenomenon, where the economy takes a permanent hit, from which we do not recover in the foreseeable future.
Returning to the current
cri de coeur of
The Times, we can hardly therefore disagree with the view that those who are currently so casual about the prospect of a no-deal should be far more candid about the possible effects. Those who are intent on a no-deal Brexit should at least be fully apprised on what they are letting themselves (and us) in for.
But it is here, more than anything, that we are taking a reality break. With a fundamentally unserious person such as Mr Johnson, we can't expect any reliable detail from him, and Mr Hunt isn't proving to be any better. Yet, even the mighty
Times isn't really up to the job.
Faced with such uncertainty, more sensible politicians might steer away from courses of action which might exacerbate the situation but, instead, we are hurtling at breakneck speed into the unknown, with fantasy solutions rolling off the presses.
The trouble is, as is evident from my piece
yesterday, the normal mechanisms for sorting truth from fiction no longer seem to be working. Lies have become the normal currency of politics and reality has taken the back seat. How long, one wonders, before reality looks like the picture above.
