• Development Intelligence

Brexit: half term report

As all property types know only too well, with any difficult and protracted negotiation, the deal often looks hopeless at the halfway point and only comes together at the eleventh hour when tough compromises and the decision must actually be made. And so it is with the current Brexit FTA negotiations.

If you still bother to read Remain Central, aka the media, then all is lost. The UK is alone. The mighty EU has iron principles which it cannot bend. Boris’ Barmy Brexiteers are once again leading us over the cliff edge, to use the media’s jargon. Except that’s all just rubbish.

First off, should we get there, any no deal pain will look like a rounding error on the utterly stratospheric Covid-19 impact just unleashing itself on the UK, European and global economies. We are all well past the cliff edge and floating in the air waiting to find out how deep the water is we are about to land in. Furlough will shortly unwind into mass unemployment. UB40 will be dusting down their ‘I am a one in ten’ 1980s hit to swell their pension pots. We are heading towards 3 million unemployed. And some. Retail, travel, and the hospitality sectors – which employ very large numbers of lower paid staff – are going to shrink massively. The arts, cinemas, the theatre industry…well who knows how much of that will actually survive. Nine weeks after lockdown has lifted in China, there are reports of only 30% footfall in public spaces. Sobering. And in the new post Covid-19 economic reality, where all nations will have to completely re-engineer their economies to a lesser or greater extent, being independent and free from EU regulation could look like quite a happy place – and that’s coming from an almost 100% Remain-voting DI team.

Second, a deal will only be possible once the June meeting of the European Council has revised Monsieur Barnier’s negotiating mandate. His flexibility is entirely set by the EU27. In the first half of the FTA negotiations, he was given a purposefully robust and extreme mandate in order to flush out the UK’s position. They knew full well that the UK could not and would not agree the terms on offer, that we should accept swathes of EU regulation and any future changes to them in perpetuity. No country would. The situation is the equivalent of a canny developer adding some sacrificial layers to their tall building proposal at the pre-app stage. Both sides having seen the other’s arguments can now, during the negotiation break in June, piece together their real negotiating strategies.

So once again dear friends of DI, please ignore almost all of the media. And as we keep saying, delete Twitter entirely unless you really enjoy the shouty echo chamber of the Left.

The real risk is that the EU27, traveling at the speed of the most anti-Brexit embittered member states, can’t give Barnier enough flexibility to agree something that could work for the UK. And that is a possibility. If the EU is not rational, then we will find this out pretty soon, after the June European Council, and the ensuing negotiation rounds will all be about what the shape of no deal looks like – ie lots of individual mini deals ranging across multiple areas of interest, how planes can move back and forth from UK to EU airspace, EU governments’ access to the City of London, UK involvement in various EU programmes etc. If the more rational EU governments can mollify the more excitable ones, then the deal will be done around October. Neither side will get all that they want, but enough to make it worthwhile. Enjoy the ride.

Interestingly, whilst Keir Starmer is being lauded by the moderate Left/media (same thing?), more because it’s a pleasant change having a normal person in charge who can actually ask a decent PMQ question, Labour’s position is still as confused as ever. Once the most ardent of Remainers, the architect of Corbyn’s previous ‘point in both directions’ vote-losing Brexit policy, when Starmer became Leader he began pushing for a delay to the negotiations, but now seems to be saying he will be holding the Government’s feet to the fire for a deal in December. At the same time various shadow cabinet members are asking for delay and a Rejoin strategy. Sensibly Starmer has concluded now is the time to take a leaf out of Cameron’s playbook and stop “banging on about Europe”.