October 12, 2017
Panicking in London
The Brexit debate in the UK is going through predictable motions. We are now at the stage where people inside and outside the government are panicking over the possibility of a no-deal scenario. Some commentators are needlessly hyperventilating over Theresa May's refusal to say how she would vote in a Brexit referendum today, and over Philip Hammond's statement that he is not budgeting for the possibility of a no-deal scenario. There is a row inside the cabinet, as Robert Peston tells us, but this is more about tactics. Some Brexiteers feel that the looming possibility of a no-deal scenario might create panic as the Brexit date nears. Peston argues that much of this dispute is hot air. Crunch time for the Brexit talks is December. By then we will have a good idea whether there will be a deal or not. And, if not, then Hammond will have no choice but to start funding the additional infrastructure a hard Brexit will require.
Ambrose Evans Pritchard notes that the EU's hard negotiation position will confront the UK with a traumatic decision very soon. He cites the Bank of England saying that the banks and finance houses will activate their contingency plans by Christmas unless they know where Brexit is heading. He quotes David Owen as saying that the time is approaching for a "unilateral declaration" stating how the country will proceed.
We acknowledge that there is the possibility of an accident at some point in December, but we should also note that the French and Germans must be aware that a continued refusal to discuss the trade relationship could easily trigger a no-deal Brexit. It is possible that they want to wait until companies relocate, so that they garner the fruits of a hard Brexit, but the quid-pro-quo would be a sudden loss of UK contributions to the EU budget from March 2019 - if not earlier. The biggest danger is a political miscalculation - which is entirely possible given the persistent lack of good judgement about UK politics on the continent, and vice versa.