EU Referendum


Brexit: uncertain times


06/06/2019




Well, at least that dreadful man has gone, but that doesn't mean that politics are back to normal. Normal doesn't seem to belong to UK politics any more. The media will simply move onto its next obsession.

On the other hand, things are getting interesting with the intervention of Tory peer Lord Hayward. Injecting a little bit of rationality into the Tory leadership process, he warns that "turd-giver" Johnson is a turn-off for millions of floating voters.

Hayward has a reputation as an expert political analyst, having correctly forecast a Conservative victory in the 1992 general election, based on his evaluation of the opinion polls and election results in 1991.

Now, according to his analysis of recent opinion polls, a "staggering" 23 percent of people who voted Tory in 2017 - around three million voters - think he would be a "very bad" prime minister. This makes it highly unlikely they would support the party at the next general election.

In order to win an election, he argues, the Tories need a leader who is "transfer friendly", one who is able to attract swing voters who are neither committed leavers nor remainers. He adds: "The polls show that a Tory prime minister or leader can't win without Brexiteer votes, but you also can't win without this middle ground, the people who are looking for good government".

Johnson's pitch to MPs at the moment is that 'I am the one who will win', but Hayward asserts that "you can't stop at Brexit and win an election. You need Brexit voters, but you need the transfer-friendly voters as well". Johnson may not be the right person to pull those voters in because many have a "distinct antipathy" towards him.

He is, Hayward says, the classic "Marmite politician" – you either love him or hate him. He is popular with Tory members, but with non-aligned voters, not so much.

There, writ large, is the Tory dilemma. While they need to resolve Brexit – and feel Johnson is the man to do the deed - the Conservatives face "destruction" if they appeal to Brexiteers without winning the support of floating voters as well, says Hayward.

Since the likely outcome of the "no deal" scenario is so dire, if the new leader engineers an exit without a deal, these voters will be looking elsewhere. They will undoubtedly blame any prime minister who took them over the cliff and, with Johnson so firmly associated with this scenario, he would very rapidly become an electoral liability.

However, that is not to say that any other candidate would fare any better, given that the no-deal scenario is beginning to take on the mantle of inevitability. There is simply no way the Withdrawal Agreement can be re-presented to the Commons, and the revoke option is simply not practical politics for any Tory leader.

The only other option, therefore, would be to appeal to the European Council for extra time, but the Member State leaders would be looking for evidence of a plan that could resolve the Brexit impasse. And, so far, the cupboard is bare.

Neither are things being helped by the Farage Party, which is fighting the Peterborough by-election in the polls today. In the event that its candidate, local entrepreneur Mike Greene, wins the seat, it will doubtless trigger tsunami-level panic in the Tories and whatever passes for brains – what's left of them – will fly out of the window. Johnson is almost certain to be a shoo-in for the leadership contest.

There is a possibility, though, that we could see a variation of the Ukip effect, where the Farage Party takes more votes from the Tories than it does Labour, allowing the Labour candidate to claim the seat even though they poll fewer votes than the combined total gained by Farage and the Tories.

Much may depend on the turnout, and whether Farage can motivate his supporters to trek to the polling stations to cast their votes. Opinion polls are one thing but, despite all the hype, only 12 percent of the electorate could be bothered to turn out for their man at the European elections.

In a separate corner of the news agenda, though, the expected closure of Ford's Bridgend engine plant, putting at risk some 1,700 jobs, is sending shockwaves through the system.

Few journalists are able to write about the UK car industry these days without adding the adjective "embattled". And while it is not possible to say that any action by Ford is directly Brexit-related, the uncertainty cannot be helping matters.

At some stage, there may be an accumulation of closures, cut-backs and the transfer of business to mainland Europe that drowns out the "project fear" noise, and people start to realise that the lack of a Brexit resolution is causing serious pain.

So far, stockpiling has made a contribution to keeping the UK economy buoyant, but that effect is wearing off and the only direction for the economy now is down.

It is all very well for that dreadful man, Trump, to make glowing references to a "phenomenal" trade deal, but deals alone do not directly generate value. They simply create the conditions where trade can be conducted, or improve the economics of transactions.

The essence of modern trade deals, though, is regulatory alignment. And if a trade deal with the US is to succeed, it will require a significant element of reorientation of the UK regulatory code. That necessarily means divergence with the EU's rules, damaging UK access to EU markets.

Not only this, but the concern is that the reorientation will have political strings – pace Trump's comments about the NHS. To some, it looks as if we are escaping the clutches of the "evil empire" dominated by Brussels, only to be sucked into the gravity well of the United States. In those terms, we leave the frying pan for a roaring inferno.

Moreover, talking about regulatory alignment and actually achieving it is not the same thing. After decades of working within the European system, we have developed a regulatory code which is based on philosophical principles which are wholly different from those which prevail in the United States.

One crucial aspect is the reliance in the UK on a system of government mandated prior approval before many types of goods can be sold – enforced within the criminal code. This contrasts with the US tendency to allow self-certification by producers, with greater reliance on civil liability and a legal system which uses exaggerated penal damages to enforce regulatory conformity.

I discussed this issue on this blog in November 2017, from which it is very clear that regulatory alignment with the US will require more than rewriting a few laws. We will need to change the very fundamentals of our regulatory system. The effect of that will be to distance ourselves even further from our European trading partners.

Politically, this has some interesting implications. While the Tory ERG "ultras" are strongly pro-US, there is a significant vein of anti-Americanism in the Tory party, resident mainly in the "One Nation" group. Thus, to have the overt support of Trump, as a leadership candidate, is not necessarily advantageous. There are those who would be wary of close ties with the US.

Whatever the advantages or disadvantages, though, we are talking about a major transition, and that has a cost. Yet we are hearing very little of this, and even less of whether any potential gains will be offset by the losses.

The thing is, there will be losses. And while we can resort to the cliché that there is no gain without pain, the people who suffer the losses will not necessarily be those who take the gains. That too has political implications.

As we dig deeper, therefore, this current political environment is beginning to look more and more complex. The wonder is that anyone would want to be prime minister in such uncertain times.