It’s pretty seldom I agree with Larry Elliott in The Guardian, but the headline of his recent piece – “Britons seem relatively relaxed in the face of Brexit apocalypse” – struck me as about right. Because there is not going to be a Brexit apocalypse. Or at least not in the way that pretty much all of the UK commentariat thinks anyway. Elliot reckons that banks in the City of London think the chance of a No Deal Brexit are about 10% – I would tend to agree with that too. A couple of good Twitter threads by @Sime0nStylites and Brigid Fowler are worth reading for some more background.
So why is there not going to be a No Deal?
There are two possible avenues to a No Deal Brexit – either a breakdown in negotiations in Brussels, or a political crisis of some sort in the UK. And in both cases there are ways out of the impasse before the UK goes over the veritable cliff.
Let’s look at each scenario separately.
The first route is the negotiation breakdown route to No Deal. The agreed EU position (essentially a Canada-style trade deal for the UK, NI backstop, and Customs Border in the Irish Sea) and the UK position (the Chequers plan) are still a long way apart. No one really even believes the UK’s customs plan is even workable. So there is the danger that – come autumn – it is clear there is no way to come to agree a Withdrawal Agreement. Negotiations break down in acrimony, and No Deal comes into view.
Then what? Surely that would lead to economic and/or political panic in the UK, with politicians outside the Tory Party demanding that May returns to the negotiation table. Or, on the economic side, a run on the pound. In such circumstances either the UK side or the EU side would come to the view that extending the Article 50 period would be the only option to make sure the UK does not crash out (remember the EU side also wants to avoid No Deal Brexit as well). No Deal scenario averted.
I also do not buy the idea that all these headaches will crop up at the last minute. The EU side knows it needs a good 6 months, or 4 months at a push, for the Withdrawal Agreement to be ratified. The EU is not going to let this all boil down to a last minute cliffhanger of a summit in March 2019 to hammer out a deal. If there is no way to get to a deal among the current players then that will become clear this autumn, meaning there will still be time to step back from the No Deal cliff edge.
The second route towards, but not actually *to*, No Deal is caused by UK political dysfunction. May’s Chequers Deal pleases no-one, and it would need to be softened further to manage to make it acceptable to the EU side. Rees-Mogg has written to Tory associations rubbishing the deal, and Boris Johnson is supposed to be plotting a move against Theresa May during Party Conference season this autumn. Both Rees-Mogg and Johnson are happy about the idea of No Deal, but there the clump of Tories who haven’t entirely lost their heads (Soubry, Grieve etc.) and the DUP too that reject it; a No Deal Brexit results in a hard border in Ireland that the DUP expressly rejects.
So here too I cannot see how this ends up with a No Deal. Even if Johnson managed to oust May, he then makes other problems for himself, namely denying the government a majority in the House of Commons. Here too No Deal is not going to be the outcome, because Labour would side with (ex-)Tory Rebels to make sure the UK did not end up with No Deal, and instead seek to down the government and force a new General Election. Faced with political upheaval in the UK, what is the EU side going to do? Push the UK off the cliff? No, because No Deal also hurts the EU, and especially Ireland. Even if Rees-Mogg and Johnson keep their plotting on hold until late autumn there is then still another way – any time up until March 2019 Article 50 can be extended so as to prevent a No Deal Brexit.
Now there is a big question mark hovering over all of this – it assumes that there are enough people on both sides to realise a No Deal Brexit is foolish for everyone, and to step back from the brink. I am pretty damned sure there are enough people on the EU side that see this, and I even think there are enough on the UK side as well – Labour understands it, the SNP and Lib Dems too, as do a couple of dozen Tories and, for other reasons, the DUP.
When No Deal really looms into view, minds will be focused, and the UK will not go there. That is going to happen sometime this autumn – hold on for a bumpy ride in a meantime.