Brexit: out from the shadows

17/06/2020

If freedom of movement was supposed to be the jewel in the crown (or one of them) of our membership of the European Union, the inability to travel freely to EU countries after 31 December should be one of the most obvious disadvantages of our leaving.

In principle, though, this only applies to taking up residence in EU Member States, or to seeking work without a work permit, rather than tourism or recreational and business travel. But, with the advent of Covid-19, the distinction is beginning to be blurred.

This comes from Spain, home of the cheap package holiday, where foreign minister, Arancha González Laya, has revealed that her country was considering whether to impose a 14-day self-isolation requirement on all UK visitors, even though it is preparing to reopen its borders to EU and Schengen area residents.

Apparently, this is a tit-for-tat measure in response to the UK's demand that all international arrivals should self-isolate for 14 days. González Laya says they are keeping a close eye on what the UK will be doing, and then assessing whether to impose its own restrictions.

Of course, it would be rather convenient for the Johnson gang if Spain – to say nothing of other EU Member States – did impose Covid-related travel restrictions on UK citizens. Apart from the short-term effect of bolstering the UK tourist trade during the summer, if 14-day self-isolation lasted into next year, it could help conceal the effects of Brexit.

However – in theory at least – this could hardly affect those going abroad to seek work. A two-week self-isolation period would merely be an inconvenience. And, if we are heading for three million or more unemployed on the lines of the 1980s, we could be seeing some workers attempting to chance their arms, in the manner of Auf Wiedersehen, Pet.

That there could even be a theoretical attraction would, of course, depend on the employment situation in Member States. But since the OECD is suggesting that the UK will take a greater economic hit from Covid than any other EU Member State, the chances are that our relative employment situation will be worse than on the Continent.

Certainly, our economic situation will tend to dissuade European migrants from coming here for work – not that they will be able to, after Brexit. But the same will apply to UK workers seeking employment abroad.

Needless to say, that situation would not have pertained if we had opted for an Efta/EEA-type solution for our future relationship, and it will be rather ironic if, as Brexit bites at just the same time that the balance of employment advantage shifts, and we have UK workers seeking jobs abroad.

Interestingly – some might even say ironically – such restrictions on movement will not apply between the UK and the Republic of Ireland, so we could see the traditional flow of job-seekers reversed, with UK citizens crossing the Irish Sea to find work. That might especially be the case if a substantial portion of UK-EU trade is diverted to Ireland.

With the advent of Covid-19, the flow of workers has become confused in other ways. Some of the major US banks, such as JP Morgan Chase & Co, Morgan Stanley and Goldman Sachs Group Inc, have been considering moving some of their staffs to financial hubs in EU Member States.

Plans, it seems have been delayed by the pandemic, but now the relative health risks of the different countries may be an additional factor. If the risk of a "second spike" in London is judged higher than in other European capitals, staff could be transferred to the mainland, even though it isn't strictly necessary.

So far, though. Covid-19 seems to have had a delaying effect, which means – all things being equal – the banks will be playing catch-up. This is especially the case as the UK has made it clear that it will not apply for an extension of the transition period. If the UK only manages to broker a de minimis deal, then the banks may need to speed up their transfers.

To whatever grief awaits us though, there is another dark cloud on the horizon, brought about by the keenness of "team Johnson" to do a trade deal with the United States. The issue at hand is data protection – already a bone of contention between the EU and the US.

Closer ties between the UK and the US on data sharing, with an agreement concluded in October 2019, could find UK firms having difficulty demonstrating that their data protection systems are sufficiently robust to prevent leakage across the Atlantic.

Certainly, it is the case that the European Data Protection Board (EDPB) is watching the situation very carefully, and has said that the UK-US agreement will have to be taken into account by the European Commission when making its adequacy assessments.

Interestingly, we are told that the UK government estimates that the free flow of personal data between the UK and EU Member States has facilitated services exports worth over £100 billion in 2018. With the distinction between goods and services becoming increasingly blurred, the flow of goods could also be affected.

Coming out of left field, though, we have the news of the approval of Dexamethasone for treatment of Covid-19, a cheap steroid drug which is being described as "a major breakthrough" in the management of the disease. During trials, the drug was responsible for the survival of one in eight of the sickest patients.

What hasn't been factored in yet is the psychological effect of this drug. Effectively, it converts a "deadly" untreatable disease into one that is now treatable – albeit imperfectly. Even without a vaccine, management techniques are going to improve and the death rate is expected to fall over time.

One is minded, therefore, of the great "electric wire panic" in the late 1800s, over the use of electricity in America, arising from the risk of electrocution from overhead wires – leading to cartoon depictions of the most extravagent precautions (pictured).

And yet, while the public's fears about electrical safety abated, the deaths continued. By the 1920s - the decade when electricity finally became common in American homes - about 1,000 Americans died annually from electric shock. The panic over electrical accidents waned not because the deaths stopped but because they became routine.

As observed in this book, accidental deaths involving street railways - and, later, automobiles - also initially created great public alarm. But, as with electricity, people eventually grew accustomed to the carnage.

Sooner or later – more like sooner, to look at the lack of social distancing amongst shopping crowds, and the clamour to lift the two-metre rule – people are going to lose their fear of Covid-19. They will become accustomed to the carnage. And, as medical intervention improves, Covid will be looked on as just another of life's hazards.

That not only means that fears of a "second spike" are probably overheated – no matter what the banks might think – it also has political implications. If the fear has subsided sufficiently by the autumn, Johnson would have lost the "distraction" which has taken Brexit off the front pages.

Instead of being able to hide behind coronavirus as the cause of all our ills, the effects of a botched Brexit will emerge, rather like the drowned buildings in a dammed reservoir affected by drought.

While "team Johnson" can at least claim an element of force majeure with Covid-19 – and can still elicit some sympathy, having hijacked the NHS brand – the Johnson version of Brexit will be a home-grown disaster, from which it will be difficult to evade responsibility.

We might, therefore, start to see a ramping up of the blame game that we were seeing before Covid-19 took effect, with more of the "bully boys" of Brussels rhetoric. But if that had effect, it was when Johnson was still popular. In a post-Covid world, it may have lost its power.

When all is said and done, therefore, Johnson has probably more to gain from maintaining the Covid fear factor than he does by allowing it to fade, whence the Brexit agenda comes out of the shadows with a vengeance.

After all, if the government can hold out a hope for a cure – or a vaccine – for Covid-19, the same cannot be said of a botched Brexit.

Also published on Turbulent Times.