March 12, 2019

Could this be Brexit breakthrough week?

Brexit jigsaw (photo: destina_fotolia)
Brexit jigsaw puzzle (photo: destina_fotolia)
If all goes to chaotic plan, we are now only days away from a potentially 'hard' Brexit. This will bring either freedom or Armageddon depending on your point of view. Many retailers didn't want to talk about such a divisive subject for their customers and staff, even off-the-record. This is understandable the UK's current torment is completely out of their hands.

Although we are convinced that Theresa May, Boris Johnson and Jeremy Corbyn secretly read German Retail Blog, we also couldn't find a politician who wanted to chat. This is most unusual for a generally loquacious breed, especially as we also offered them tea and scones.

On the eve of three House of Commons votes this week, we therefore turned to a prominent legal-eagle for some enlightenment. One well-known commentator in both media and academia is Thom Brooks, Professor of Law & Government at Durham University. So we asked him to get out his intellectual machete and hack a path through the Brexit jungle...

"It's a mess!"

Professor Thom Brooks (photo: Thom Brooks)
Thom Brooks
Professor Thom Brooks
Professor Brooks, is British premier Theresa May's Brexit-deal the best possible one under fiendishly difficult circumstances?
No. It is a plan that attempts to deliver on the Prime Minister's red lines. Different red lines would lead to a different deal and, I believe, a better one. I think the main issue is May took a number of options off the table and then wanted the European Union to simply accept this. The plan was never going to work.

Would it leave the United Kingdom at the EU's mercy as critics claim?
No. The UK has a choice. It does not need to have this plan, and it is not required by law to leave the EU. The referendum result in June 2016 was advisory only. Of course, there would be a huge political problem if the result is ignored – but there is also a huge political problem in the government's failing to address electoral laws that were broken and serious allegations of foreign interference in the campaigning.

Is it really her deal or no-deal?
This is how the PM wants to present the choice. There has been almost no planning for a no-deal. The consequences would be devastating, at least in the short to medium-term. However, Parliament has voted against accepting a no-deal outcome, so this is really off the table. The European Court of Justice has confirmed that the UK could stop its plans for Brexit and remain in the EU up to the final minute. Avoiding 'no deal' is therefore very possible.

There is also time to request an extension of departure from the EU. This might be granted if a referendum on May's deal or the chance to choose 'Remain' were put to the public.

Are the fears of the Democratic Unionist Party (DUP) etc. justified that a backstop agreement for Northern Ireland would compromise a fragile peace?
No. The irony of the Irish backstop is that the PM is the person who proposed it – later discovering it was the one idea least supported in the deal overall.

How likely is a hard Brexit on March 29?
I still believe there is only a very little chance of this happening. This is because there has been virtually no planning by government and even less preparation by businesses and private citizens for the consequences of No Deal.

Would a hard Brexit really lead to the type of chaos and supply shortages Remainers fear, or are they exaggerating the doom and gloom as scare tactics?
It could be worse. Britain is reliant on a number of imports. These would halt in the short-term causing significant disruption on a scale few have experienced before in their lifetimes. I think the fallout from this would be much worse than any fallout of holding a second referendum.

Brexit (photo: Sabine Schulze)
Sabine Schulze
What will be the likely effect of a hard Brexit on retailing? Presumably higher import prices, more price-conscious consumers, and greater wastage of chilled food along the supply chain?
It could be significant. Everyday items would become instantly more expensive and harder to find. This would all be because of a political choice – and a consequence that Leavers said would never happen. They will be proved very wrong.

Will this benefit German discounters Aldi and Lidl UK over local British retailers?

Sterling will probably fall again if it comes to a hard Brexit. Won't this benefit UK food exporters?
No, because the UK will be out of the EU and farmers will no longer have access to the funding support previously received. While the government promises nothing will change, this has certainly not been tested and will not be something they can do overnight.

What are the chances of a vote of no confidence against the government and of a general election? Would this solve anything?
The chances are increasing. If there was a general election, it would create a new mandate for change. This would be a reason to reopen talks. The problem is that talks have ended. Any extension will be in agreement with the EU. I cannot see why Brussels would agree to delay Brexit to see if a different government came to power and which would have a mandate to reopen negotiations and start all over again.

Will there be a second referendum or so-called 'People's Vote'? Would it be a good idea?
I believe so. Parliament is divided. A second referendum for May's deal or staying in the EU would provide the finality that both the UK and EU require – and I would expect the EU to agree an extension to when the UK might leave the EU to hold it.

If May wins, she will have a major boost to getting her deal passed, and it would pass. If she lost, the UK would remain in the EU and the prime minister could save face claiming she was merely following the will of the people. Most see a referendum as obviously benefitting Remainers, but actually it also obviously benefits the PM. The sooner she realises this and the parliamentary majority it creates, the better.

Brexit (photo: S. Schulze)
Sabine Schulze
Put out more flags
How likely is it that the UK will ask for an extension to the Article 50 negotiations?
Almost certain, but no one wants to be seen as the cause for requesting it. Expect a major blame game.

Premier Emmanuel Macron has warned that France, as one of the required EU27 signatories, might not sanction any Brexit delay unless Theresa May embarks on a completely new strategy. Other EU members demand negotiations on fishing rights, the sovereignty of Gibraltar etc. as a quid pro quo. How likely then is an EU agreement to an extension?
I think this puts huge pressure on the UK. I think the only viable extension is to hold a second referendum to secure finality by summer.

Should the extension be a short one until June or a longer one into 2020?
As short as possible.

Would it be possible to have Brexit and continue the customs union with the EU?
Yes. I would not be surprised if this happened.

How likely are Canadian, Norwegian, Swiss or WTO-style trade agreements, and are any of these a credible option?
If May cannot pass a deal, these will be likely options for any alternative deal.

Could the UK negotiate bilateral trade deals with the US, India, China etc. to compensate the loss of EU membership, and in what timeframe? Will these partners demand more liberal immigration rules to the UK for their citizens?
I doubt the UK will easily reclaim the existing benefits gained under EU membership. I expect more liberal immigration rules will be a necessary part of any trade deal.

If it comes to a hard Brexit, should the UK opt for the highest possible level of free trade, or should it actively protect farmers etc. via special tariffs?
I think some strategic protectionism the wiser course of action in the medium-term. The UK will be in new territory. It must be careful about managing consequences known and unknown.

Any other concluding comments which you feel are relevant to the discussion?
It's a mess!

Lebensmittel Zeitung with its online sisters (photo: LZ)
photo: LZ
Our German retail B2B newspaper, Lebensmittel Zeitung, in print & digital
Further material in German: Interview with Lord Mark Price, founder of Engaging Works, former Minister of State for Trade and Investment, and past CEO of Waitrose, by international editor Mike Dawson: 'Nur der Deal von Theresa May ist mehrheitsfähig' (paywall)

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3 Comments (Write a comment)

  1. Hans Stickel
    Created 12 March, 2019 13:19 | Permanent link

    Only a second referendum would be fair

    Thank you for this enlightening interview, although the insight I gained from this points to nothing but disaster!

    I agree completely that a second referendum would be the only fair solution because:

    - Only now are the British population in a position to understand the true consequences of what they voted for more than two years ago;

    - Only now is it clear what price they and the EU will have to pay;

    - Only now can the younger generation foresee the true consequences of Brexit for their lives and the lives of their children...and how ignorant it was not to participate with their full democratic power when they had the chance of making sure they could remain in the EU;

    - I really believe that, after all this chaos, the majority of British people would want to correct their decision and stay in the EU.

    Let's hope the unimaginable will happen and we will see a second referendum with more than 70 per cent of the Brits voting to remain in the EU!

  2. Theo Baal
    Created 12 March, 2019 15:56 | Permanent link

    No one wants to hold the 'disaster baby'

    It is clear now that the whole Brexit elephant was designed -- from the start -- as a way to exploit the political vacuum created by the introduction of the myopic, naive and outdated Corbyn agenda. It was also designed to move politics decisively to the right in a simultaneous and hopefully decisive attempt to eliminate the UKIP threat to the Tories.

    The plan overshot its target, so now it is damage-limitation time. No one wants to hold the 'disaster baby' that both Tories and Labour will be confronted with when we finally stay in. This is because we never had a clue what it meant to be out.

    In fine: It is better to remain a slice in the proverbial European apple pie than to become an autonomous cherry cake dancing to the tune of the USA.

    P.S. Brexit is also a very British way of protesting against an increasingly presidential Number 10, Downing Street as seen especially with Thatcher and Blair.

  3. Theo Baal
    Created 3 July, 2019 15:05 | Permanent link

    Brexit, past and future

    ....and there we have it. Clear for all to see -- at least for those who want to. To date the whole pro-Brexit argument has been put forward in a near perfect vacuum with ample references to the economic 'freedom' a post-Brexit Britain would enjoy...we have heard it all before...but...what the Brexiteers never really dared address openly was the fact that the Tory political infrastructure was under threat.

    The whole argument was presented in a nice 'neutral' political vacuum, which sought to hide the fact that the Tories at the time of the referendum perceived an opportunity to push the political debate to the right, thus ensuring that a Jeremy Corbyn worldview would never become a reality.

    The push for Brexit had become a necessity because Mr Blair had shown that it was possible for Labour to steal the Tories' thunder -- oh, how silly we were to go to war -- and not only that, Nigel Farage's retro-cohorts were closing in on the right, and, in order to cut them off at the pass, the Tories felt they just had to do something (largely for internal party political reasons). The country ....ah the country did not matter too much.

    Unfortunately, the referendum produced a surprising result as its campaign was too successful and overshot its target...the political challenge now was how to serve the famous British dish of a 'fudge' in such a way that no one would notice and no one who mattered would end up holding the disaster baby -- which, by the way, is the main reason why Mr Corbyn keeps sitting on the fence. He wants the Tories to be seen holding the disaster baby.

    Corbyn, however, appears incapable of acknowledging the fact that the majority of the UK does not share his outdated dream-like worldview -- which explains why he continues to trail Theresa May by a significant margin in the polls and why Labour's electoral prospects under his leadership continue to point south (which also explains why some of the party's internal rows fail to reach a conclusion).

    The withdrawal of Article 50 will, however, trigger a major realignment of British politics on both the right and the left as, after these tortuous years, it is just not possible to go back to business as usual -- despite the fact that things will look remarkably similar once the dust has settled. There may be Tory and Labour splits and perhaps even the centre will find its own separate voice.

    Brexit was the right question but never the right answer in today's globalised world, and the whole debate will also have profound consequences for the EU. Business as usual is also not on the cards -- but then again: the post-Brexit debates will also look very similar to what was before the same way as the German economy post World War 2 showed many of the same organisational features as existed before the war (only better)...France continued to be a centralised state run for the few and not the many...(sorry, a bit cheeky this) and Italy and Spain, let alone the eastern Europeans they all need to play catchup.

    As you can see, I am an optimist and convinced that Britain one day will rule the waves again although this time it will be in a paddling pool rather than on the open seas of old...…[nostalgia rules, OK?]

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