The latest European Council has come and gone. No progress was made on Brexit. Indeed no progress has been made for months – at least since February. Tusk and May repeated the tired soundbites that progress had indeed been made, but no-one believed it. Meanwhile news emerged that Davis has spent a sum total of four hours with his counterpart Barnier since January, but did manage to find time to sign a pile of commemorate EU (Withdrawal) Bills.

Fiddling while Rome burns.

And burn it will by 29th March 2019 – the end of the Article 50 period – unless there is progress.

So what is happening?

The Government is drafting and redrafting a further White Paper about Brexit that cabinet is due to approve on Friday 6th July (background from Channel 4’s Gary Gibbon here). It is nevertheless not clear if this paper will indeed actually agree which approach the UK is to take to the core questions – what the future trade relationship ought to look like (and if goods can be separated from services), how customs arrangements should work (May’s proposed Customs Partnership or Johnson’s Max Fac – the two of these are explained at the bottom here), how much freedom of movement the UK can tolerate, and – by extension from all of that – how to deal with the issue of the Northern Ireland border issue. May is also due to meet Angela Merkel the day before the crunch cabinet meeting (Bloomberg background on that here).

The chances of any of this working? Slim to none.

If Tom Newton Dunn’s report of where the cabinet is going on all of this is to be believed (note: it’s in The Sun – sidebar of shame), then even hammering out something on 6th July looks a long shot. And then if that were possible, it is likely to be a proposal for single market for goods but not services (something the EU will reject), a restrictive take on freedom of movement, and the Max Fac rather than Customs Partnership system for customs – also something that the EU has already repeatedly rejected because of its implications for Northern Ireland, and even then if the EU were to accept it, actually doing it in time is impossible.

Try as they might, but the UK government is not going to make progress in this way. At some point they are going to have to accept no progress along this route is possible, and decide what to do.

They have 3 options.

The first would be to capitulate to EU demands. The EU’s backstop for Northern Ireland (essentially putting the border in the Irish Sea), and some Canada-style deal for the rest of the UK. Both Theresa May and the DUP have rejected this one, but could they reconsider? Or contemplate a major softening of the UK government’s Brexit position, moving swiftly towards a Norway / EEA style arrangement? But then the Brexit hard core like Fox and Johnson would surely freak out. And this route has been neglected for so long it would take some serious and swift work to resuscitate it. And even the proposed Brexit transition period is not going to smooth all of this.

The section option would be then to move towards No Deal – essentially crash. The UK government could conclude it cannot find a solution to the outstanding issues, and the stated position of the government then becomes leaving the EU without a deal. Sooner or later that would lead to panic in some quarters – economically at first, but also potentially politically. Could Hammond stay as Chancellor in such circumstances? This would then become a battle of nerves – who will blink first? Considering that such a route damages the UK more than it damages the EU, I would bank on it that the UK were to blink. Having stared into the abyss, might the UK government pull back?

Or both sides realise they are not going to make progress as time until the end of the Article 50 period is simply too short to strike a sensible deal, and hence there could be an agreement to extend the negotiation period – this requires unanimity of the EU-27. Neither side really wants this option – May is determined she wants to do Brexit, but cannot see how., and the EU wants the UK out sooner rather than later and for the process to not drag, but even the EU would prefer a delay to No Deal. Plus May begging the EU for more time would surely lead to some political revolt in the Tory Party.

So which is it to be? Because now with just 9 months to go until the UK leaves the EU I cannot see how any other option but extend is actually workable.

 

2 Comments

  1. YellowSubmarine

    Germany has not prepared for a no deal Brexit, despite the real possibility that Britain could walk away from the negotiating table.

    German deputy foreign minister Michael Roth announced that Merkel’s cabinet had no contingency plans if Britain crashes out of the EU without a deal.

    This admission suggests that Germany are ultimately resigned about the need to secure a comprehensive trade deal with the UK at the October European Council summit, despite the ongoing deadlock.

    Roth also acknowledged that a so called hard Brexit could also cripple the European Union and damage the German economy.

    This admission contradicts the European Council’s own recommendation to member states to prepare “for all outcomes”.

  2. Colin Stephenson

    A no-deal would seem to be the obvious conclusion as Theresa May is between a rock and a hard place in not being able to agree with the EU demands as her own colleagues would oust her and not being able to cherry-pick as the EU won’t allow that to happen nor can she make any more concessions as the nation will be on her back, as if they aren’t already?
    A no-deal then must be the obvious outcome and this would please Brexiteers who want all things EU gone but businesses won’t like it and economists will no doubt see the Pound in freefall, at least initially.
    The UK though would finally be free of the shackles placed upon it by the EU and the freedom gained would see the nation able to negotiate its own trade deals, control the fishing grounds and decide what it wants to do without being subjected to EU rules and regulations.
    What will May do?
    What she has been doing all along, trying to pacify everyone and remain friends but she won’t succed!
    Either way, she has a decision to make but whichever one it is she will not be PM for much longer afterwards!

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