Have we “got Brexit done”?
When what seemed the last possible deadline for agreement of a new trading relationship with the EU had expired, I wrote a somewhat despairing post. Hindsight now reveals that, as I indicated to start that, I might be writing too soon. There is a deal (agreed on Christmas Eve and voted on by the House of Commons yesterday), and it has avoided some of the more awful consequences of “no deal”. Lord Adonis calls it the “Trade Reduction Deal”, and that seems fair to me.
Has it “got Brexit done”, as Boris Johnson pledged to do (and by doing so got himself an unassailable majority in parliament for the next four years)? Not by a huge margin. As Chris Grey comments in his excellent review of the current situation, this is not the end of negotiations – he calls it “never-ending Brexit”, and not for the reasons I gave in a 2019 post “This will never end”. Those reasons still, I think, hold good, but we need to add to them the fact that this is only a partial agreement – most significantly it doesn’t include services, and services constitute an unreasonable amount of our foreign earnings (and the only area in which we run a balance of trade surplus). In particular, it is a temporary deal – it is scheduled for complete review in 5 years, which among other things means that Keir Starmer may say that Brexit will not be an issue in the next Labour Party manifesto, but it has to be, because the agreement will essentially run out shortly after the next election. There is no chance that Labour will issue a manifesto which ignores such a major issue. Granted, he may think that he can forget the “Brexit” label and just have a policy on trade relations with Europe, but I fancy that the label will still haunt him…
Add to that the fact that it’s a partial deal – it doesn’t cover quite a lot of things, of which services is only the most prominent, and it anticipates other agreements and modifications on a continuing basis throughout that five years. We don’t even have (say) four years during which we can stop thinking about it – it will be prominent on the political scene within months, if not weeks, and we can never forget that it contains provisions which could scrap some or all of it if either side is radically unhappy about the way it’s progressing (as Ian Dunt expands on) . Dunt, to be fair, sees this as an opportunity to move closer together in small increments – and that really should be the case.
But it won’t be. There are just too many MPs at the moment who will rebel at any move towards a “softer” Brexit. The only thing I can see which would not attract such opposition would be “passporting” UK financial services into Europe, which I earnestly hope will be on the agenda immediately – not only does it constitute a large segment of our overseas earnings, but it also provides a significant slice of our tax base. While I agree with Chris Grey that we could do to rebalance our economy away from services (I said as much in the first post I link to above), doing it abruptly will be a “double whammy” and put us in a bigger trade deficit and a hole in our tax revenue at the same time.
And the only thing I can see coming from that from our current government is a new period of “austerity”, in other words removing by stages all the good things government provides, at the expense of those in our society least able to bear that.
I am only slightly less despairing, therefore.