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Brexit: The Summer of Concession
In the land of Brexit some has been lost while much has been gained in this, the summer of concession.
Thus far, UK Prime Minister Theresa May has passed the EU Withdrawal Bill, held a firm but fair meeting at Chequers where she stopped prevaricating and demanded a ‘For’ or ‘Against’ decision from her Cabinet on her Chequers Brexit plan — which resulted in the day-after resignations of two of her most powerful ministers and four others — and she has since met European officials where she received cool support for her super-diplomatic, uber-polite and overly soft Brexit proposal.
How Very British!
In some ways those recently resigned MP’s (who will now sit as Conservative backbenchers) might as well be sitting on the opposition side because they possess deep knowledge of May’s inner circle and have the inside scoop on how Brexit is to proceed.
Yet, it was a polite affair with Boris Johnson making a gentle resignation speech in the House of Commons while still urging the Prime Minister to pursue the kind of Brexit UK citizens want. Boris Johnson never looked so principled or gentlemanly in his life (struggling to sound almost deferential to May) and good on him for doing so. Of course emotions were high, and no doubt, he was extremely disappointed that (in his mind) the Chequers Brexit plan surrendered some amount of UK sovereignty to the EU politburo. Five stars for Boris.
David Davis, who is more of a moderate Brexiteer than Boris, tried hard to contain his deep disappointment and published a polite and informative resignation letter outlining his position. As Brexit Secretary (but Brexit-lite when compared to Boris Johnson or Jacob Rees-Mogg, for example) it appears he thought he could convince May to move to a slightly more robust Brexit plan only to have his hopes dashed. If she was going to be swayed by anyone it would’ve been him. We understand his disappointment too, but that’s politics. Well done, David Davis!
The problem with forcing Cabinet members to declare support or non-support of her Chequers Brexit plan is that she has lost some of them who now sit as backbenchers and are free to hold the government to account.
Theresa May imagines herself to be an experienced operator but if they choose to make her look bad, they could. Therefore, she should not be looking for a fight with them nor should the Prime Minister default to her previous ‘slapping-down’ behaviors or she will get tossed around in a 30-month-long-storm completely of her own making. (Approx. 9 months to go until the official Brexit date of March 29, 2019 plus the 21-month implementation period, equals 30 months of potential hell for Theresa May if she handles her former Cabinet ministers harshly)
Even with all of that said, it’s better to head into the final Brexit stage with a unified team who are fully committed to her overly soft Brexit plan instead of a team that’s pursuing several different Brexit versions at once.
Now that May has asserted herself she seems to be gathering respect from all sides, resignations notwithstanding. Since Chequers, she’s twice the Prime Minister than when she first took the job. Theresa May marque une victoire!
Notes on Theresa May’s Chequers Brexit Plan
- The Prime Minister’s plan suggests a ‘common rule book’ with the EU so that trade in goods and agricultural products won’t be impeded by conflicting sets of rules. ‘Red tape is the eternal productivity killer and the less of it the better’ said every business person ever. Of course, adopting EU standards could make it more difficult to export UK goods to non-EU countries with their different standards, or so the argument goes. Yet, every other country seems to master this, so why not Britain?
- The Chequers plan suggests a common rule book on state aid for industry, and harmonized environmental and climate-change standards, social policy parity, and protection for employees and consumers.
- Formerly one of the PM’s “red lines” was the jurisdiction of the European Court of Justice (ECJ) which will end after Brexit although UK courts would consider ECJ rulings and/or even consult with the ECJ in certain cases. Which seems a wise idea for any country to consider.
- An FCA (a Facilitated Customs Agreement) where the UK and the EU would operate as a combined customs area — which some might call a customs union of sorts — where the UK would collect tariffs on goods shipped from outside the two countries destined for Europe, and presumably the EU would do the same for Britain.
- A mobility framework agreement to formally end the free movement of people between the continent and the UK. Unregulated immigration from the EU caused the number of EU nationals in the UK to rise to 3.8 million in only a few years, which was a significant contributor to the Leave victory. The mobility framework would allow freedom of movement for persons — such as students that are actually enrolled in college, for retired persons that can afford to live in the UK, for workers who have a guaranteed job waiting for them in the UK and streamlined entry for tourists from any non-terrorist country. One would hope the EU would reciprocate on all of this.
The problem with the common rule book approach is that MP’s of any party may see it as a ‘BRINO’ (Brexit In Name Only) and consequently lower their level of support for Brexit — at least Theresa May’s version of Brexit. And if BRINO fears take root, Conservative MP’s could decide to vote for a different leader should a leadership contest arise.
Parliamentarians have very long memories… so the caution flag is out for Theresa until the UK crosses the Brexit finish line.
Summary
Although progress on Brexit seems agonizingly slow Theresa May is an accomplished bureaucrat who realizes she can move forward only as fast as the other participants in the race, and if she moves too fast her government may lose support in Parliament, in the public space, and in Brussels (where she has precious little support to begin with and doesn’t want to suddenly find she has even less) and if she moves too slow, even worse may happen to Britain and to her political career.
Therefore, the race she’s really in is an OJ Simpson-style slow vehicle police chase to the official Brexit date with every camera rolling and catching every step and misstep.
Not very exciting to be sure, but if she gets a reasonable Brexit all should be forgiven.
At worst, the next British Prime Minister will have a firm foundation upon which to Build a Better Britain. Let us hope!
- View or download (PDF) the Chequers cabinet meeting Statement from HM Government here.
- Iain Mansfield: May’s new plan isn’t perfect, but it’s practicable. However, it can only work if treated as her bottom line. (ConservativeHome.com)
Will a ‘No Deal’ Brexit Harm UK Manufacturing?
Certain pro-EU commentators paint a picture of either a catastrophic Brexit crash-out (Hard Brexit) or a ‘non-Brexit’ where the UK would retain few of the rights gained by a full Brexit but would still be chained to the responsibilities of EU membership (Soft Brexit) whether via the so-called ‘Norway’ model or the ‘Norway-plus’ model, or via any other model such as the ‘Canada’ model.
Those same commentators excitedly cite potential UK manufacturing job losses in the post-Brexit timeframe even though the UK is primarily a service based economy (80.2% in 2014 and rising) and they forget to factor-in the astonishing changes occurring every day in Britain’s manufacturing sector.
UK Manufacturing = Less Than 10% of GDP
Manufacturing in the UK accounts for less than 10% of GDP (2016) and provides jobs for 3.2 million workers (2016) but a recent PwC report says that by 2030 half of all UK manufacturing jobs could be automated. That’s less than 12-years from now. And it could happen much faster and on a much larger scale than that.
Repeat; Up to half of all UK manufacturing jobs will be lost within 12-years. It’s uncertain whether British workers are aware of these looming changes.
The economic impact of artificial intelligence on the UK economy. Image courtesy of PwC. Click on the image to view or download the PDF report.
What’s Great for UK Businesses Won’t be Great for Foreign Workers
In 2018, of the 3.1 million UK manufacturing workers (a stat that falls with each passing year as automation increases) we find that over half of manufacturing workers in the UK are citizens of other countries — primarily from eastern Europe, but also western Europe.
So, expect UK-based eastern European workers to be replaced by automation.
Increasing automation and Artificial Intelligence (AI) will cause UK companies to choose between UK-born workers and eastern European workers, and it’s likely that hundreds of thousands (perhaps millions) of eastern Europeans will be returning home with plenty of UK coin in their pocket. (And why not, they earned it)
I hope you didn’t expect the UK to lay-off its own British-born workers in order to protect the jobs of eastern European-born workers as automation proceeds, did you? Would EU companies show that level of courtesy to UK workers in the European Union, were the situation reversed?
Profits for UK manufacturing companies are projected to rise significantly as automation and AI become one with the system, while UK-born manufacturing workers should find themselves at 100% employment.
What’s not to like?
UK Manufacturing Job Losses Due to Automation – Not Brexit
If you’re one of the EU elites who fear that hundreds of thousands of eastern European workers in Britain will lose their UK manufacturing jobs due to Brexit you couldn’t be more wrong.
Let’s be perfectly clear; Half of all UK manufacturing jobs will be lost to automation by 2030 — and it won’t be on account of Brexit!
Summary
The narrative that says the UK economy will be severely damaged on account of manufacturing job losses due to a Hard Brexit is a complete and utter fantasy.
Every day from now until 2030, automation and AI will replace eastern European workers, Brexit or no Brexit. Meanwhile, British-born manufacturing workers will find themselves at full employment.
It’s all good!
Related Articles:
- How will artificial intelligence affect the UK economy? (PwC)
- The economic impact of artificial intelligence on the UK economy (PwC)
- What would be the cost to the UK of regulation by a foreign power and major competitor? (BrexitCentral.com)
Brexit Committee says ‘Not Enough Time to Execute Brexit’ by Target Date
“The Brexit Committee has warned that even under the most optimistic scenario, there may not be enough time to complete all necessary work before the UK is scheduled to leave the EU. The Brexit Committee report also calls for an extension to the exit timetable if a deal has not been finalised.” — The Express
What *Have* They Been Doing?
Two years on from the June 2016 Brexit referendum and with almost one more year to go before the stated target date of March 29, 2019 and the Brexit Committee says that “even under the most optimistic scenario, there may not be enough time to complete all the necessary work before the UK is scheduled to leave the EU.”
That’s the definition of ‘Low Ambition‘ right there.
Whether the fault lies in Brussels or at 10 Downing, or even because of the infighting that happens within the Conservative Party itself, governments need to remember that the people have spoken (and quite apart from that) sentiment continues to grow among the UK voting public for the government to ‘just get on with it’.
Even people who voted Remain now think the best thing for the country is for a quick and streamlined Brexit agreement — one that is fair to citizens and industry on both sides of the English Channel.
If two years and nine months isn’t enough time to get it done, what is?
Do the politicians in London and Brussels think they have carte blanche to spend the rest of the decade and part of the next to arrange a suitable Brexit deal? If so, that’s very telling… and not in a good way.
Citizens on both sides of Brexit need to know and industry needs to know what to expect so they can prepare for life after Brexit. And they needed to know a year ago.
How Hard Can it Be?
Most of the existing EU laws will simply continue unchanged following Brexit, therefore, more will stay the same than will change.
FISHERIES
It was originally thought that the UK would be leaving The Common Fisheries Agreement by March 29, 2019, or at the latest, by July 2019.
Therefore the UK had been negotiating with the EU in good faith so they could make some basic decisions about how to manage UK fisheries after Brexit. Micheal Gove is surely an able enough minister to easily handle it, yet, the EU indicated that the Common Fisheries Agreement will remain in place until 2020 and there will be no negotiation about it. And that was the end of that.
Read this important article about UK fisheries policy between March 29, 2019 and January 1, 2021: Brexit: Michael Gove shares fishing industry ‘disappointment’
Actually, the EU might’ve done the UK a favour by sidelining fisheries policy until after Brexit. Imagine that!
As off-putting as that sounds, it dramatically lightens the load of UK government negotiators because it’s one less sector that needs to be debated with EU negotiating teams. All of which should have conspired to put both the UK and EU six months *ahead* of schedule on the Brexit negotiation timeline!
So we can’t blame Brexit delays on Micheal Gove, the Common Fisheries agreement, or the EU for delays to that timeline.
DEFENCE
Both the UK and EU will remain members of NATO post-Brexit and as the UK already operates its own defence infrastructure there isn’t much change expected there.
Apart from arranging the return of any non-NATO-dedicated Royal Air Force jets presently in EU countries, or removing Royal Navy ships from EU waters (unless there by invitation of an EU country or while taking part in a NATO exercise) there isn’t much for Gavin Williamson the Secretary of State for Defence of the United Kingdom to handle for this part of Brexit. A few phone calls before the Brexit date should cover it.
So we can’t blame the lack of progress on Gavin Williamson or his EU defence counterparts for agreements not reached in time for Brexit.
CUSTOMS and SINGLE MARKET
Thus far, the EU seemed to be in denial that the UK was actually leaving the bloc, so quite logically from their point of view; Why would they want to entertain UK negotiations allowing the UK to leave the customs agreement and the EU’s single market architectures?
But now that the UK Parliament have voted in favour of the EU Withdrawal Bill you’d think the EU would accept the UK is leaving the bloc and that it is time to begin crafting an agreement setting the dates and terms to allow Britain to leave both the Customs Union and the Single Market.
But since the Withdrawal Bill passed last week, some in the EU suddenly began saying that negotiations with the UK can’t continue because the UK’s ruling Conservative party is ‘deeply divided’ and that ‘the EU can’t be certain who it is dealing with’ — yet, the UK government easily passed the EU Withdrawal Bill which it said it would do all along.
Full marks here to Prime Minister Theresa May for shepherding this bill through and making it look easy. Brilliant!
Read this important article about: How MP’s voted on the EU withdrawal bill amendments
Until the Withdrawal Bill was signed into law, any Brexit timeline delays were the fault of UK Conservative Party MP’s and the EU bore no particular blame for its lack of enthusiasm regarding the furtherance of Brexit negotiations.
However, now that the bill has been made into law, negotiations must begin in earnest.
FREE TRADE BETWEEN THE UK and THE EU POST-BREXIT
Almost everything that applies to the delays in the customs and single market negotiations (see above) applies here too.
To reiterate: Until the Withdrawal Bill was signed into UK law, delays to the negotiation timeline are to be blamed on the UK side and not on the EU side for the simple reason that until the UK side got serious about Brexit, why would the EU get serious about it?
Fortunately, and better late than never, PM Theresa May got the job done and now things must advance in the interests of industry and citizens on both sides of the Channel.
Not that the UK can suddenly afford to make Brexit ‘the EU’s emergency’ as the UK pursued the Withdrawal Bill in a most leisurely fashion over the past 32 months.
“A lack of planning on your part doesn’t necessarily constitute an emergency on my part.”
Yet because trading arrangements will benefit business on both sides of the Channel things must now move smartly along or delays will hurt business on both sides.
I wouldn’t want to be the German Chancellor or the British Prime Minister (for example) who failed to get a trade agreement ready in time for Brexit, or the leader who failed to make the necessary modifications to their respective departments to allow trade to continue uninterrupted.
IMMIGRATION and FREE MOVEMENT
It looks like this is a non-negotiable for the UK government. Too many British citizens spoke too loudly and too clearly for any UK Prime Minister to dare overrule their wishes.
Each EU citizen wishing to remain in the UK after Brexit will pay a nominal annual fee (about the price of a passport) and will be required to provide an up-to-date address and telephone number for the Home Office. Simple enough.
EU citizens wanting to move to the UK after Brexit will face the same requirements as EU citizens who’ve elected to stay on in Britain.
Non-EU citizens can probably expect about the same, although emigrating to the UK *after* Brexit will be much easier if you’re an EU citizen or Commonwealth citizen.
Now that the EU Withdrawal Bill Has Finally Passed It’s Time to Lift Those Anchors!
For industry, change is always negative but still doable. But late changes are lethal to business on both sides.
And UK leaders and EU27 leaders must remember that!
Industry needs clear and timely regulations (with a long lead time) that must rank higher than the ideological differences between the heads of European states (including the UK) higher than the (occasional) personality conflicts between politicians, and must always rank above the partisan politics within a country.
From the day the Withdrawal Bill was finally signed into law, every day must now count, be counted, and be accountable — or the UK and the EU27 will be racing with ‘their anchors still in the water’ against every other ‘ship of state’ in the world.
And that’s not how you win races, whether nautical or economic.
Letter to Britain 