CLARITY ON BRITAIN´S FUTURE RELATIONSHIP WITH THE EU IS A LONG WAY OFF / THE FINANCIAL TIMES OP EDITORIAL

Clarity on Britain’s future relationship with the EU is a long way off
 
Philip Stephens
 


Business craves certainty. Britain’s politicians and voters would like to change the subject. They are all about to be sorely disappointed. The outcome of the present set of Brexit negotiations between Britain and the EU27 remains uncertain. There is one immutable certainty. This is just the beginning. The sequel to these talks promises another protracted spell of, well, acute uncertainty. Oh, and the threat of another cliff-edge.

It was not supposed to be like this. Remember the glib assurances of cabinet Brexiters that waving goodbye to Europe would be a walk in the park? A trade deal with the EU27 would be the easiest in history. As Michael Gove pronounced with his customary self-confidence: “The day after we vote to leave we hold all the cards and we can choose the path we want.” More than two years have passed since the referendum. Mr Gove now holds high office in a government that has given way to Brussels at each and every turn. All the while, the real Brexit finishing line has receded.

After this week’s bump in the road about arrangements for Northern Ireland, British officials point to several possible outcomes of the talks with Michel Barnier’s EU team. There is still some optimism that a deal can be struck by the end of the year. This would see Britain formally leave the EU on March 29 2019, clutching an exit treaty and a political declaration about the future relationship. Transition arrangements would run at least until December 2020.

Strangely enough, prospects for a successful conclusion may have been improved by the impasse over a so-called backstop arrangement to guarantee an open border between Northern Ireland and the Irish Republic. Had a formula been agreed now, anti-European irreconcilables in the Conservative party would have had time to shoot it down. The best chance Theresa May, the prime minister, has of getting an accord through parliament is to present it at the last moment as a single, take-it-or leave-it package including both exit treaty and political declaration.

A second possibility, though one viewed as the least likely, would see the country crash out of the union without any agreement — perhaps because the Brussels talks had failed to resolve the seemingly intractable Northern Ireland question, or perhaps because a settlement signed up to by Mrs May had been repudiated by enough Tory MPs to deny its passage through parliament. Hardline Brexiters say the economic disruption would be shortlived. I wonder if Mr Gove is now quite so sure.

A third option circulating in hushed tones around the corridors of Whitehall is an extension of the two-year Article 50 negotiating window. The prime minister has ruled this out. And the idea is anathema to hardline Tories. But one can see the circumstances in which Britain would be forced to swallow its pride. The threat of a no-agreement, cliff-edge Brexit might well see parliament force the prime minister’s hand. An extension would also be needed were paralysis to result in Mrs May’s departure and/or a general election. That, in turn, would open the possibility of a second referendum. Such a standstill would require the consent of the 27. It is difficult to see why they would withhold it.

Peer through all this fog and the future beyond March 29 holds as many uncertainties as now. The present negotiations will be extended or Britain will step out of the EU into an economic no-man’s-land. An exit treaty would settle only immediate issues about money, citizenship and Ireland. The big economic questions would be unresolved.
     
The joint political declaration promises fine words devoid of hard substance. It does not free the government from the question it has ducked and dodged since the referendum vote: where precisely does Britain want to strike a balance between a desire to repatriate notional “sovereignty” and the economic imperative to retain ready access to its most valuable markets?

Should it break entirely with the EU customs union or seek an arrangement as close as possible to the status quo? How much access does business need to the single market? How important to Britain’s economic wellbeing are the present, friction-free supply chains that criss-cross the channel? Does anyone really imagine that Britain has anything to gain from diverging from most EU standard-setting? And why would it want to? Does parliament want a Norway model of close alignment with the EU27 or a Canada-style free trade agreement? Whatever happens during the next few months, business, politicians and voters will be no more certain by March 29 as to the scope and depth of future ties.

The referendum asked none of the questions; and ministers, who do not agree among themselves, have failed since to provide answers. A 20-month transition period, Mrs May has now acknowledged, will not be enough to hammer out an accord on permanent economic arrangements — holding out the threat of another cliff-edge in December 2020. Officials in Brussels say it will take three, probably four, years to strike a bargain. The transition phase will have to be extended — and with it the uncertainties.

There is, of course, one other certainty about Brexit. It will leave Britain a poorer, inward-looking place — a nation prone to bouts of populism on the streets and blood-letting at Westminster. On one narrow point Mr Gove is right. This is not what Britain voted for.