Richard North, 04/04/2017  

Late in the day, the Policy Exchange think-tank is waking up to the prospect of a "no deal" scenario, where Theresa May either walks out of the Article 50 talks, or the talks themselves collapse.

On this blog, we've been looking at this prospect for months, at a level of detail that no think-tank can match, and certainly not Policy Exchange which is nowhere near grasping the range of issues on which we would crash and burn.

But, just as they're belatedly realising that no deal would be a "bad thing", neither they nor any of their fellow travellers have understood that this particular ship has sailed - along with any chance of implementing the Efta/EEA option. And neither do we need the name-dropping, prestige-obsessed site to tell us something is going on.

The change of pace is written into the European Council draft guidelines. These set the parameters for the eventual Article 50 settlement and, in terms of a deal, make it quite clear that talks on a free trade agreement are only going to be concluded "once the United Kingdom has become a third country".

The meaning of that phrasing is abundantly clear to anyone who understands the terminology. Sadly, that means it remains opaque to the bulk of the politico-media nexus, who have not begun to take on board the significance. Spelling it out in plain language that even the writers of Conservative Home might understand, we now have a situation where the talks on a long-term trade deal will not even start until we have left the EU.

Thus, the only substantive issue on the table after the exit terms have been settled is the shape and scope of the transitional arrangements - and the price we're going to have to pay for them.

Looking at the enormity of the issues to be covered, the only workable solution here is for the UK to opt for the status quo - continued implementation of the acquis communautaire under the jurisdiction of the Commission and the ECJ. But from outside formal membership of the EU, and bereft of the institutional architecture of the EEA, we will have no direct representation, nor facility to influence the rules, or their implementation.

In effect, this will be EU-lite, for which privilege we will undoubtedly have to make payments to the EU budget.

The problem for Theresa May is that she has left herself without a choice. Faced with a plane crash Brexit, which is the necessary consequence of the "clean break" that the right wing of her party says it wants, and no time to seek a credible alternative, Mrs May is being led to down the path to capitulation with the same certainty of a truck full of cattle arriving at an abattoir.

With the result decided for her, Mrs May's only real problem is how to spin the result. Tactically, the most obvious course of action is to use the Great Repeal Act (as it will become) as the cover, allowing the UK Government faithfully to shadow every EU enactment, without it being obvious to the incurious and indifferent that that is what we will be doing.

It will be made to appear that we are implementing "British laws", promulgated as Statutory Instruments, notionally approved by the Westminster Parliament. But this will be in theory only. Parliament will be told that it cannot reject any of these laws because it will put us in breach of the "transitional agreement" which will form part of the Article 50 settlement.

On the other side of the Channel, the "colleagues" will have to build in a special, if temporary "associate status" into the Treaties, so that for all but the deepest elements of the integration process (from which we are largely opted out anyway), we will become non-voting members of the European Union, in all but name.

That should, at least, muddy the waters sufficiently for Mrs May to avoid an economic plane crash and get us past the general election, with a deal so opaque that the media won't have the first idea of what is going on. The Tory politicians, on the other hand, will not rock the boat with an election in the offing.

The deal will be that much easier to sell to a gullible (and largely indifferent) public, bored into submission by the lacklustre media coverage, if the "colleagues" offer easy terms on the financial settlement.

As it stands, the figure of £60 billion has taken root, on no grounds other than as a figure which the Financial Times plucked out of thin air. If the true figure is closer to £30 billion and we are offered annual payments, then £4 billion a year (subject to a review before the end of the next MFF period) should not raise too much squealing.

The thing here is that payments were always going to be phased. That is the way the RAL works. Furthermore, there was never any question of the "colleagues" slapping a bill on the table. That isn't the way RAL works. The precise figures isn't known until after the end of the current MFF period. But then, one would not expect incontinent hacks to attend to such details. 

Whatever the figure, dolling it out in bite-sized instalments can be "sold" as a hard-won concession for Mrs May to bring home to an adoring Party conference in late 2019. Delegates and a brain-dead media will make drooling references to the Thatcher "handbag", without the sense to realise they have been well and truly "had", giving their new-found heroine a prolonged standing ovation.

From thereon, I see the spin machine seeking to make the transition agreement permanent. This will be done by accentuating the problems in reaching a satisfactory free trade agreement and by stressing what a poor deal it will represent. Neither will be difficult to do, especially as UK negotiators will be working to another artificial deadline which will give the EU negotiators the whip hand.

There are two possible breakaway scenarios from this point. In one, we see just enough economic damage for a shocked nation to pull back from complete withdrawal, settling for an uneasy, half-in, half-out arrangement, renewed on a periodic basis.

In the other, the EU itself launches another treaty, offering a newly devised form of associate membership, with easy entry terms, set to attract the UK back into the fold. We thus end up exactly where we would have, had there been no referendum.

One or other of these is almost certainly the outcome of negotiations. Having looked over the precipice, those in high places have realised that "no deal" is simply not an option, while completion of an agreement inside two years simply isn't going to happen. Beyond that, "Team Brexit" has little idea of what it wants to achieve, so it will get as close to the status quo as is possible.

In devising a presentation strategy, though, the inadequacy of the media will work in its favour. With so little clarity and even less genuine knowledge, the Government can rely on confused and ignorant journalists missing the point. They will give the final settlement their approval because they will not understand what has happened.

For historians, the breakdown will be traced to a year before the referendum when the putative leave campaign set its face against promoting a coherent exit plan. With no ideas of its own, it was in no position after the unexpected victory to demand any particular outcome, leaving an equally unprepared Government to flounder for nine months, before handing over the initiative to the "colleagues".

That is what we've just seen. As soon as the text of Mrs May's "surrender letter" was released, it was obvious she was handing the initiative to the European Union. Then to demand the unattainable does not qualify as a plan – it is just wishful thinking. That political vacuum had to be filled, and that is precisely what the European Council has done.

In the final analysis, the outcome was inevitable. If people have no idea of where they want to go when they embark upon a journey, it can hardly be a surprise if they end up with a journey into the unknown.

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