There
are so many moving parts when it comes to Brexit; how will it work, what will
Germany and France to, what will the EU do, what kind of a deal do we want,
what might we actually get and was it the right decision to vote leave?
To my
mind everything comes down to negotiation, anything else, especially at the
moment, is hot air. The referendum, in my opinion, got it wrong. It would have
given us a much stronger negotiating position with 52% in favour of remaining,
but apparently it’s wrong to rig these things. A 52% remain vote would have
allowed us to continue to be the stroppy spoiled child in the room demanding
toys and treats and kicking up a fuss. There would be future concessions, the
odd rebuke, but generally we would have got what we wanted.
Any
Brexiteers reading this they will say that in voting out, we have regained
control – of borders, migrants, laws and sovereignty with Elgar’s greatest hits
drifting in behind them. It is true to an extent, but we lose influence, which
I feel will have more of an impact over the long term.
The
truth is we trade a lot with the EU, like it or not. It follows the same
pattern everywhere – you trade more with your neighbours than those further
away and so all parties should want to agree a trade deal between the UK and
the EU quickly, a drawn out painful affair would harm everyone. Some EU
officials / Eurozone countries say that the UK should be punished for leaving
and that we have to be punished to dissuade anyone else from doing the same.
Others say how ridiculous this punishment talk is given how the EU 27 are our
allies and trading partners and it would be an act of self-harm to do so…
though making that argument means the UK voting to trade with the rest of the
world is an equal and opposite act of self-harm among trading partners and
allies.
That
aside, I think, this initial deal take too much of the focus. The results of
Brexit will be felt over decades rather than days and coming back to the loss
of influence, it is that loss which will be more keenly felt and more
demonstrative of why it’s a bad idea to leave the club.
The
reason is that the EU project is a slow moving behemoth, not a one off
negotiation. If the UK “wins” this negotiation it will not, and cannot, force
the EU into stasis, never changing again. It will change again soon – new laws,
regulations, members, directives will continue to flow from Brussels, the
important point from the UK’s points of view is that we will have no influence
over those future decisions. So, the EU should agree a reasonable deal quickly
for two reasons. Firstly to facilitate ongoing trade and not putting an
unnecessary brake on the EU’s economy, because goodness knows it doesn’t need
that… no one does. Secondly, post deal they can change some things that the UK
would have always vetoed and move on to demonstrate that you have to be at the
table to best protect your interests.
In a
Brexit debate recently David Davis stood up and said that he thought the trade
talks should go more quickly than with other countries (Canada, 7yrs and
counting) because of the current common regulatory regime, which all sounds
good David, but let’s extrapolate a little. What happens on the next round of
regulatory discussions? The UK will have at best a vastly reduced influence, at
worst, no influence; we will be outside the room waiting to be told what to do.
Those regulations will be brought into force and UK firms will adopt them in
order to keep on trading. We could choose not to follow them (hurrah for
Brexit!) but where would be the sense or logic? Maybe India is a bigger market in general,
or China, but they will have their own rules – are we going to follow all of
them separately? No, you follow the one which will net you the best result,
which will be lowest cost to the biggest client, which at the moment, and
following generally accepted trading patterns, is and will continue to be, the
EU.
The
same would apply to services, especially financial services which France and
Germany would particularly like to make a fairly sizable land grab. The
passporting which allows us to transact in the EU could be withdrawn the moment
our regulations don’t meet EU ones at the potential loss of jobs, tax and the multiplier
that provides.
It’s not a zero sum game, jobs lost from London
wouldn't move directly to Paris, New York would probably benefit the most, but the power
of incentives is ever present and the French, German and Luxembourg leaders
would be trying their best to coax as much of that work to their shores away
from London and that means actively trying to worsen the UK's position.
Before we take the holier than thou attitude Remember when Boris said he would lay out the red carpet to
Parisian entrepreneurs and bankers when their 75% tax rate was about to be
introduced, well it’ll be the opposite from now on.
Moves
will generally be slow and steady, a bank here, a decision not to increase
capacity of a factory there. Changes will take time so the power shift
represents the other reason why the EU should do a quick and ‘nice’ deal now.
It will show where the power really lies – not in this one off negotiation, but
in all the little ones coming up over the years where the UK will lose out
again and again because we’re not at the table. It will impact on manufacturing
and services, but hey, at least the twenty thousand odd UK fishermen will be
free from the yoke of EU tyranny…
