Shadows of a deal
It is still too early to judge, but from the events of the last few days it appears to us that Brexit is going to be less disruptive to both the UK and European economies than many feared. It would be wrong to say that the new UK government has a strategy - but at least the new team seems to be converging towards what appears to be a perceptible line. Yesterday the new chancellor - or finance minister - Philip Hammond openly acknowledged that Britain will not be a part of the single market, but will only seek access to it - a request that Wolfgang Schauble described as "reasonable". We personally would have preferred an EEA agreement, but if this is not politically acceptable to the UK government, then we are looking at a series of free-trade agreements. Some, but clearly not all of those, can be negotiated in parallel to two-year Article 50 process. And, since the EU will not even start negotiating on trade deals before Article 50 is triggered, an undue delay in article 50 would not achieve much, except to generate doubts among some of the increasingly paranoid Leave supporters that Theresa May's secret plan is to sabotage Brexit. We note an article by Charles Moore in the Spectator, who draws parallels with the French leaving, and later rejoining, Nato.
We think this is very unlikely. We also disagree with the views expressed by several commentators yesterday that she put the three Brexiteers in charge of Brexit - Boris Johnson, David Davis, and Liam Fox - so that she has somebody to blame when things go wrong. Given the monumental importance of Brexit there is no way that May will be able to extricate herself from any mishaps. If Brexit fails, so will her government, and the Conservative Party will fall apart. May appears to us at least rational - if not cold blooded, judging by yesterday's appointments and sackings. We would deduce the game plan is for her government to agree a Brexit strategy, to agree a framework for negotiations with the EU partners, and for article 50 to be triggered with parallel trade negotiations. Since there is no hope of a trade deal with the EU within two years, the British government will also need to agree whether it wants an EEA-style transition period.
That said, the May government is clearly not yet up to its brief. The strategy outlined by Davis in his essay three days before his appointments seems to underestimate the technical difficulties the UK will have negotiating multiple trade agreements in time for Brexit. And we noted a statement by May that tells us that she, too, has a steep learning curve ahead.
“Ken Clarke says I am a bloody difficult woman. The next man to find that out will be Jean-Claude Juncker.”
Juncker is the least of her problems. She will not be negotiating Brexit with Juncker, but with the European Council.
There were many comments yesterday, of which we thought two were noteworthy for different reasons. Martin Kettle writes in the Guardian that May did three astonishing things. She brought in the three Brexiteers; she sacked George Osborne, thus signaling a clear break with past economic policy; and she gave an astonishingly inclusive speech in front of Downing Street on Wednesday. Kettle says the confluence of these three events will make a Brexit betrayal not theoretically impossible, but a lot less likely.
Peter Foster's comment in the Daily Telegraph is intriguing for a different reason. He tried to explain to his presumably bewildered Tory readers why those funny Europeans care so much about the free movement of labour - as though this was a really strange thing. He mentioned Schengen, workers who cross borders each day, and even invoked the post-nationalist European ideal. There is nothing wrong with any of this, except it misses the obvious. Free movement of labour has been a core principle of the European Economic Communities right from the beginning. The acceptance of free movement of labour is not a policy, let alone an attitude, but a fundamental right, deeply enshrined in the Treaty of Rome and its multiple successors. This is not something you can easily negotiate away at the European Council.
And finally, we noted this article on pre-referendum polling. We are not going into the technical statistical details, but the bottom line is that the internet polls performed better than the telephone polls - in other words, the opposite of what happened during the general elections. Another finding is that Project Fear, or at least some of the more outrageous instances, backfired. President Barack Obama's endorsement of Remain and his back-of-the-line threat may have boosted Leave support. By contrast, the murder of Labour MP Jo Cox had an effect that was more in line with expectations: it weakened the Leave vote. The bottom line of this research shows that Leave was marginally ahead of Remain during the entire period of the campaign.