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July 20, 2018

Why preparations for no-deal Brexit are a positive development

The fact that both sides in the Brexit negotiations are preparing for a no-deal scenarios gives us hope. This may sound surprising at first, but in a negotiation the certainty that no-one is bluffing is a necessary prerequisite for both sides to strike a deal, and for such a deal to be ratified. We still believe that a deal is the most likely scenario but, if it happens, it will happen at the last minute - or beyond. 

The Guardian reports this morning that Theresa May will today reassert the position that she would never accept a customs border inside the UK. In doing do, she reiterates the content of the recently agreed amendment in the Commons. We think this is a genuinely unsurpassable red line. We also agree with her that no British prime minister would ever accept such a border, and also that it would be a violation of the Belfast Agreement just as a hard border inside Ireland would be. This point, we think, is not sufficiently appreciated in the EU.

The Times reports further that the UK government will step up its preparations for a no-deal Brexit, with a regular series of public briefings about the impact of leaving the EU without an agreement. Consumers and companies will be given detailed advice in weekly dispatches from next week onwards. Internally, the UK government has prepared 70 technical notes on no-deal contingencies, which will be released over the next months.

What is the politics of a no-deal Brexit? We keep hearing commentators who assert that parliament will never vote for it. These commentators seem to be unaware of the rather limited options parliament has to prevent a no-deal Brexit. Parliament cannot impose an extension of the Article 50 deadline. It may at most force the government to ask for it. The EU would have to agree, unanimously, and it already laid out the limited sets of conditions under which it would do so. Parliament can instruct the government to change its negotiating mandate, or it can pass a vote of no-confidence which in turn may trigger new elections. It could legislate for a second referendum, but it is far from clear that the EU will be a colluding partner in this. 

One should also not underestimate the potential political attraction of a no-deal Brexit. It might unite the Conservative Party, as Fraser Nelson writes in the Daily Telegraph this morning. There may be no parliamentary majority for May's Chequers plan right now, but a rejection of her plan by the EU could well lead to an expression of indignation in the UK parliament, and it might tip the balance.

As Chris Giles argues in a comment in the FT, there is still a path towards an agreement, despite the amendment that made a customs border inside the UK illegal. His idea is to separate the customs union from the VAT administrative system and the single-market laws. The whole of the UK would piggy-back on the Northern Irish backstop and stay inside the customs union, but the mainland would be opting out of the EU’s VAT system and the single-market laws. This arrangement would technically fulfil the requirement of no customs border inside the Irish Sea. It would push all the border friction on to the Dover/Calais border, which is a big hassle and clearly not sustainable, but a possible stop-gap.

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July 20, 2018

On confirmation bias in the Brexit commentary

We find that the best Brexit commentary in the UK media generally stems from those with a degree of emotional detachment. Matthew Parris once remarked with disarming honesty that Brexit had driven him literally mad. We can concur that this may have indeed been the case at one point, but note that he has since regained his usual composure as one of the UK’s wittiest political commentators. 

This is unfortunately not the case with many of the pro-Leave or pro-Remain fundamentalists, who are occupied with only the two most-extreme Brexit solutions: a reversal of Brexit through a referendum, or a hostile no-deal Brexit. The extremists on the Remain side got themselves into a frenzy in the last few days when they convinced themselves that a second referendum was now inevitable after the Chequers imbroglio. They still owe us an explanation of how a parliament that keeps on failing to outvote the government on controversial amendments would find a cross-party majority to legislate for a second referendum, or pass a vote of no-confidence in the government.

Both sides will revile Simon Jenkins, who writes in his Guardian column this morning that the EEA/customs union is the sane and most probable outcome. A no-deal Brexit is possible but unlikely. And, even if it happens, it would not be the end of the world because a no-deal Brexit would imply deals on customs arrangements and transport. Trade will continue. Airplanes will fly. Ferries will sail. He writes that the most likely outcome is for the UK to head towards a customs union/EEA style agreement. A customs union between the nations of Europe cannot be avoided because of pure trade geography. And yes, Brexit will happen in March next year for a very simple reason: it is the law. 

We agree with this position, and in particular the importance of legal procedure. We noted that the more extreme Remainers and Leaveres have persistently underestimated the legal issues involved, and in particular the position of the EU itself. Some of the commentators in the Daily Telegraph are very good at venting their anger, but seem unaware of the EU’s own interests. We also find that Remainers are often ignorant of EU law. We doubt that most have read Article 50. They take revocation for granted when it is neither specified in Article 50 nor referred to in any actual court rulings. Whether it is possible, and how it is possible, should be regarded as uncertain. They also take it for granted that the EU would extend the negotiating mandate. We have read commentary from a rabid remainer who argues that the EU would end up colluding with those in favour of Brexit reversal, and refuse a withdrawal deal on the grounds that this would trigger a parliamentary revolt against the government. The stuff people are writing about Brexit is astonishing.

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