Brexit: uncertainty intensifies

25/02/2020

When I think about it – I've been a Eurosceptic for longer than most people have been alive on this planet. And in all those years, I cannot honestly say that I've ever found the study of the EU boring. But I can quite understand why so many people do lose interest, and especially now when there is a lot of noise but very little hard information to go on.

Here we are, with only weeks before the start of what will perhaps be the most important treaty negotiations with our European neighbours since our accession to the EEC and yet, still, we have no firm policy statement from our own government as to what its intentions are.

All we have of recent effect are two speeches, one from the prime minister and the other from his chief negotiator. Neither can be taken as indicating where the UK is likely to be at the end of the year, or what the real intentions are of HMG in respect of our relations with our neighbours – or indeed with the rest of the world. Such things we are not allowed to know.

For a short time – and possibly much longer – we will be better informed as to the intentions of the European Union and its (now) 27 Member States. This will come today when the General Affairs Council authorises the opening of the negotiations with the UK, publishing the definitive version of the negotiating mandate.

The UK government, we are told, will publish its response later this week – possibly on Thursday. But experience warns us not to expect too much. Our governments have a habit of being less than forthcoming when it comes to declaring their intentions, treating us mere mortals with a degree of condescension that borders on contempt.

And whatever we might be told, we will never know for sure whether Johnson truly intends to cut short the negotiations by refusing an extension to the transition period, or whether his declared determination is simply a ploy to keep the Europeans off balance. We know what he says he intends, but from a man who is a congenital liar, nothing can be relied upon until it actually happens.

The truly worrying thing about all this is that, if Johnson is truly a man of his word – and for once in his life is actually telling the truth about something that matters – then we are in for a torrid time. There is no possible way the EU can achieve what it claims to be its objective, - an "ambitious, wide-ranging and balanced economic partnership with the UK" – in the time allotted. Simple logic, based on the comparison with other deals, tells us that December of this year can bring us nothing more than a "bare bones" agreement.

The trouble here is that, while such a description may have its own literary merits, no one actually knows what it means in practice. Most likely, it will amount to very little more than the "no-deal" we were schooled to expect in lieu of a withdrawal agreement. But, given the determination and cooperation of all parties, even in the ten months left to us, a great deal can be achieved. Even a worst-case scenario could surprise us all.

On the other hand, there could be other surprises in the works, which take us in completely unexpected directions. Since an outbreak of coronavirus (or the disease Covid-19 as we must now call it), has been reported in northern Italy, we must reconcile ourselves to the fact that the epidemic has lodged a toehold in Europe and is thus that much closer to our shores.

When the EU-UK talks have got underway - alternating as per the agreement between London and Brussels – imagine what might happen if an outbreak is declared in either of those capitals, especially if it was in one but not the other.

Although the UK authorities have indicated that they are unlikely to emulate the "lockdown" strategy adopted by China and other afflicted nations, could the talks really continue, with the movement of personnel and the media circus that this entails? There are many advocates of freedom of movement, but that does not amount to an acceptance of the free movement of disease.

Should the talks be suspended though – or even delayed for a while – will Johnson feel bound by his commitment not to extend the transition period. And even after the cut-off at the end of June, when the extension decision must be made, would the EU claim force majeure and go into extra time, despite there being no legal base for so doing?

And then there are the economic implications. Already, global trade has taken a hit and the finances of airlines and travel companies are in freefall. But, with the spread of the virus to Europe, we see reports that global stocks have had their worst day in two years.

The benchmark S&P 500 index plunged 3.4 percent, erasing its gains for the year "in its biggest fall since trade tensions rattled markets in February 2018" and the FTSE All-World index lost three percent. Investors flocking to government debt pushed the yield on the US 10-year Treasury bond down 10.2 basis points to 1.369 per cent, just above its record low, as expectations grew that the Federal Reserve would be pushed to cut interest rates by April.

Expectations of a global recession had been on the cards before the coronavirus hit, but much more of this and the expectations might become a reality. And should that then transmute to a depression – which is not beyond the realms of possibility – will European leaders be wanting to engage with the UK over the minutia of a trade deal, when their own economies are on life support?

Back home, where we have come to expect incompetence from the Johnson administration as a matter of course, can we then say with any confidence that it could handle a full-blown Covid-19 epidemic any better than it has handled the routine functions of government? And, should the population be caught up in dealing with a rampaging disease, will there really be the same degree of concern about the progress of trade talks?

And then there is another leg to this dynamic. The Johnson administration has expressed its enthusiasm for negotiating a trade deal with the United States. But should the coronavirus lodge itself in North America, with the primitive and predatory healthcare system in the States, some pundits argue that an epidemic there would be unstoppable.

With an excess mortality rate ranging from 750,000 to a million-plus, in an election year, the very last thing Trump will have time for is complex negotiations with the UK, over issues that will have very little relevance to the more immediate emergency.

Nothing of this, of course, might come to pass, but the one thing already with us is uncertainty. The prospect of an epidemic in the UK, as we merge into a global pandemic, adds immeasurably to the level of uncertainty that we have to confront. The world in three months' time could look a very different place, and not one where the changes are for the better.

The one consolation is that the human race seems infinitely adaptable, and we have been here before. The 1918 influenza pandemic – the so-called Spanish flu - which lasted until 1920, infected 500 million people, when the world population was only between 1.8-1.9 billion. The death toll is estimated to have been 40-50 million, although it may have been as high as 100 million – a case fatality rate of 10-20 percent, up to ten times higher than Covid-19.

But a much higher population, greater population densities and the lower severity of the disease could deliver an higher overall number of casualties, in excess of 600 million. Perversely, the relatively mild nature of the disease (and the fact that it is communicable before signs of illness become apparent) ensures that it is able to spread more widely.

If the human race can survive Spanish flu, though, then it most certainly can survive Covid-19. But, last Century, when the world was emerging from a devastating war, and censorship prevailed in many countries, the psychological and media impact was less than it might have been.

This is, potentially, is the first global pandemic to affect a world where the 24-hour news cycle coincides with a fully-developed social media, grabbing headlines in a way that even the 2009 swine flu pandemic did not, despite over 700 million cases.

It is ironic though that, when the UK should be uniquely focused on its future as a nation, we may well be preoccupied with more basic survival issues. Who amongst us might then dare call it Brexit flu?