January 17, 2019

Seeking an exit to Brexit

Brexit caricature (photo: Alexandra Thompson_Fotolia)
Alexandra Thompson_Fotolia
New fishing rights?
It is strange how a country that gave the world the gentleman's club in all its sedate glory is itself so eminently unclubbable. But the fact remains that the Brexit referendum in June 2016 has polarised a normally phlegmatic UK electorate. Not since the days of the Cavaliers and the Roundheads has the nation been so divided.

After Theresa May's failure to obtain parliamentary backing for her Brexit agreement with the EU on Tuesday, a no-deal scenario looks increasingly possible on March 29. This alarms many.

The Confederation of Business Industry (CBI) has warned that a hard Brexit could shrink GDP by up to 8 per cent and put thousands of jobs at risk.

Supply-chain concerns now weigh on many industries and on few more so than food retailing, which relies heavily on imports from the European Union.

Brexiters claim that such fears are exaggerated or deliberate scaremongering. In a post-factual world where truth is often hard to ascertain, one inevitably turns to the experts. But, if only they could agree! As this blog has almost exclusively hosted Remain views to date, in the interests of fairness, we asked David Collins, Professor of International Economic Law at The City Law School in London and a prominent Leaver, for his view of the current impasse. 

"The British people do not want
to be ruled by Brussels"


David Collins, Professor of International Economic Law, The City Law School (photo: D. Collins)
D. Collins
Professor David Collins
Professor Collins, after nearly two-and-a-half years of negotiations, Theresa May's Brexit withdrawal agreement with the EU was voted down by a historically large margin in the House of Commons on Tuesday. The EU stresses that the agreement is non-negotiable. Do you believe that the British Prime Minister obtained the best possible result?

It appears to me that she was a weak negotiator. Theresa May never made preparations for a 'no deal' a priority; conceded the £39bn payment from the outset; and agreed to put the Free Trade Area negotiations off until after the withdrawal arrangements were made. So she gave up on the UK's 'Big 3' negotiating strengths.

One of the stumbling points is the so-called backstop in order to avoid a hard border between Northern Ireland and the Republic of Ireland. Can it be that the EU doesn't understand the complexities of recent Irish history?

No, quite the opposite; I think the EU has attempted to exaggerate the problems in order to use Northern Ireland as a bargaining chip. By this I mean that the EU is attempting to scare the British into thinking that it (the EU) is essential to prevent another civil war. This is entirely disingenuous.

What options does Premier May now have?

As an individual, she could resign (unlikely); try to obtain additional cosmetic concessions from the EU, so as to trick MPs into accepting a revised withdrawal agreement; ask for a vote to extend the negotiations period under Article 50; or robustly embrace a no deal and spend more money on preparations.

Opposition Labour party leader Jeremy Corbyn failed in a vote of no confidence against the government on Wednesday. But further such motions could be tabled, potentially leading to a general election. Would this help resolve the situation?

Labour is even less organized than the Conservatives on Brexit. It would be a waste of time.

Will there be a second referendum, and could a so-called 'People's Vote' be arranged in time?

A second poll would be a disaster. The UK's reputation globally would be completely devastated; it would be an affront to democracy; there would be riots, endless debates about what the question should be, and then, finally, the result would be the same – a vote to leave.

But the same agitators would try to undermine it and demand a third referendum, much as they are doing now, having promised to accept the result of the first one.

What would happen if the turnout was lower than that of the first referendum? Which one would count?

The result would probably be the same. But, if a second referendum led to a result in favour of Remain, then the elites who run the country would want it to count over the first one. Most MPs are Remainers would support such a result, no matter what the circumstances were and regardless of the legitimacy of the original referendum.

What would happen if a majority of the British people again voted for Brexit?

Carneval scene from a Remain demonstration (photo: Beate Hofmann)
Beate Hofmann
Emotions run high on both sides of the Brexit divide: Here a carneval float from a Remain demonstration
No change. The same people (MPs, civil servants, former prime ministers, loud-mouthed athletes and celebrities, mayors etc.) would refuse to accept it and ask for a third one. These people cannot admit that they did not win and never will.

They are lying when they say they will accept the result of a second referendum because they said this the first time. Their main strategy would probably be to blame Russia.

There was no referendum before Premier Edward Heath took the UK into the 'Common Market' in 1973, and the result of the referendum under Prime Minster David Cameron in June 2016 is not constitutionally binding. Why was such a major historical decision as Brexit based on a straight majority vote rather than on, say, a two-thirds one?

I don't know the answer to this, but I would argue the other way around. I think a two-thirds majority should have been required for the UK to stay in the EU because being in the EU was a surrender of constitutional authority to begin with.

The default option should be independence, i.e., outside a supranational organization, not inside one.

How likely is a temporary extension of membership? 

I suspect that an extension of EU membership under Article 50 is now likely. However, it will require a vote of parliament. It might be a favourable outcome to many MPs as a compromise position.

How likely is a hard Brexit on March 29?

It is still probably less than 50 per cent. There has been such a horrendous scare job put out by the media and designed to terrify everyone that it's unlikely MPs would accept it – meaning that they will probably accept the EU's awful deal instead, once a few fake improvements have been made to it.

Presumably higher import prices and greater wastage of chilled food along the supply chain would be the likely result of a hard Brexit on retailing?

Probably the answer would be "yes" to both of these questions. However, the prices on some things will be cheaper (goods from outside the EU's tariff bloc) like fruit from Africa and South America. There will be a short-term supply shock, which should upset prices for a month or so.

Will this benefit Aldi and Lidl UK as German discounters, or will higher import prices affect them just as much as local retailers?

No, it won't benefit them because they have to source goods from the EU as well, passing through the same borders to get into the UK.

Remainers paint an Armageddon scenario in the event of a hard Brexit, but won't the EU want to continue to export a huge volume of goods to the UK?

The Armageddon scenario is a fabrication intentionally designed to cause panic. It was cooked up by Remain fanatics who will stop at nothing to achieve their ends, no matter how much mayhem it causes. This doesn't mean that preparations shouldn't be taken – they should.

Brexit calendar (photo: Kange Studio/Shutterstock)
Kange Studio/Shutterstock
Only 70 days to go! (photo: Kange Studio/Shutterstock)
Are the various Canada-, Norway-, Switzerland- or WTO-models touted by Brexiters really viable options?

Not at this point – there isn't enough time. A Canada-style Free Trade Agreement, which was the best option, could possibly be in place by late 2019 or early 2020, if there is enough enthusiasm.

Could the UK negotiate enough major trade deals with the US, India, China, the Trans-Pacific Partnership (CPTPP) etc. to compensate for the loss of EU membership?

Yes, but it will take time, and Brussels has insisted that these deals cannot be pursued until after the UK has left the EU (another concession which Theresa May made without a fight).

Sterling is likely to continue to fall because of Brexit. Should UK business fear this?

I doubt whether the pound will fall much more, possibly a bit. The euro will also drop because of it. These declines should benefit UK exporters.

Whatever happens now, few would deny that Brexit has become a big mess. Haven't politicians on both sides failed by not making voters adequately aware of the benefits of EU membership?

There was clearly much ignorance among the public regarding the role of the EU in people's lives. But the sad reality is that many of these issues are highly technical, and people simply are not interested enough to examine the details closely.

The 2016 referendum was decided as much emotionally as it was practically. Meaning that, even if being in the EU was better than being out, which it probably isn't, people would have voted to leave anyway with their hearts.

Perhaps we could explore some of the emotions involved. Many Brits regard Westminster as corrupt and point to the 2009 MP expense account scandal etc. Is Brussels less corrupt?

One layer of corruption is better than two. Many EU laws are created by unelected bodies. Throughout history people have resisted being ruled by centres of power that are far away, either geographically or symbolically. The British people don't want to be ruled by Brussels. It's fairly simple.

Remainers praise the EU because it is 'rules-based'? Does this make it superior to the UK?

The EU is overly rules-based and too proscriptive. It reflects a continental style of government distinct from the UK's more pragmatic, flexible style.

Brexiters claim that EU rules are tilted towards the interests of dominant continental lobbies, such as French farmers or German automakers. Are these criticisms of the Common Agricultural Policy (CAP) etc. fair?

These claims are largely true, and EU rules are not really fair. It is a mistake to hold the EU out as a bastion of fairness and equality. It is a trade bloc controlled by the Germans and the French, and they are the largest beneficiaries. This is why there is so much resentment towards it in southern Europe.

The UK has long been the second-largest net contributor to the EU. Are Brexiters right to emphasise this?

Yes, they do have a point. The UK was paying in more than it was getting out. People have had enough.

Are there any other concluding comments that you would like to add?

Simply that the whole thing is so tiresome and draining. It has consumed so much of the government's efforts. When the dust finally settles, the UK will be better off out of the EU, but the process of leaving has been horrendous. I suspect Brussels intentionally made it this way to scare other countries from doing the same thing.

Lebensmittel Zeitung with digital sister (photo: LZ)
photo: LZ
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: "Britische Händler bereiten sich auf Chaos-Brexit vor" and "Die Briten wollen nicht von Brüssel regiert werden" by international editor Mike Dawson on page 10 of Lebensmittel Zeitung, no. 3, 18.01.2019

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Comments for this article are closed.

  1. TB
    Created 17 January, 2019 20:55 | Permanent link

    Brexit, but not as you know it

    The Brexiters remind me increasingly of the hordes of theoretical international economists who have a thesis to prove about social context and value-free economic free trade. They argue that what worked for start-up economy Singapore would work as well in the mature economies of Europe.

    In my view, they fail to see the wood for the trees. The wide range of benefits the EU has brought since its inception has not been shared equally -- that is most certainly true -- but that is not necessarily the fault of the set of rules the EU is. The EU is not a state, it is a rule book which some inside the club mistake as an excuse for ever greater political union as well.

    The EU is ripe for a massive overhaul, but leaving the Union in pursuit of some economists' dream is more likely to result in a nightmare for the poorest in the various societies that make up the Union than anything else.

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