February 13, 2019
What to make of the man in the pub - and other tales
When you try to make sense of uncertain events - as we do here - there are two different approaches. One is journalistic. You report what officials are saying to you, what politicians promise, or for that matter what you are hearing in the pub. This is the realm of daily journalism, but we find this method not very useful for our line of work because it generates too much noise. Just look at the sudden rise in predictions of a no-deal Brexit or the recurring reports on Theresa May's immediate political demise.
The alternative, our approach, is based on an analysis of incentives and of revealed preference - what people did in the past carries more weight than what they promise to do in the future. This is not an exact science, but we find following this approach gives more consistent results over time. It also means that, from time to time, our analysis is at odds with the conventional wisdom.
Yesterday's news developments are a perfect example of how the two approaches can lead to different conclusions. Are we paying attention to what Olly Robbins, Theresa May's most important Brexit adviser and chief negotiator, was overheard telling colleagues in a pub? Do we conclude, like the Guardian this morning, that Robbins gave the game away by framing the final Brexit choice as one between deal or a long delay - 21 months as the ITV anchorman put it? This would imply a choice between deal and no Brexit, as opposed to deal versus no deal. Such a long delay, without any concrete alternative plan of action, would be seen by many as an indirect way of revoking Brexit. We cannot see how this squares with May's strategic goals. It would politically be more catastrophic for her than signing up to Jeremy Corbyn's version of Brexit. It does not make sense to us.
Alternatively, we could pay more attention to another story. The journalist Nick Gutteridge writes that the stated aim by the UK to change the withdrawal treaty is mere smoke and mirrors, designed to get to the end of March. The EU will, of course, not re-open the treaty. But behind closed doors officials are discussing possible procedural changes to introduce a review mechanism, what one official was described as calling a "surgical keyhole operation". The difference remains substantive - there is not about to be any agreement at the moment. But it is important to understand that no discussions are taking place about dumping the backstop, or putting a time limit on it. This is about a way to make it easier to sell the deal to MPs who mistrust the EU's motives. The idea of an official side letter, lodged at the UN to give force under international law, is still discussed at least by UK negotiators. But UK officials appear resigned to the fact that whatever is agreed will have less legal certainty than the treaty text itself.
As regards the man in the pub, the more important thing he said regards the purpose of the backstop. He said the plan had to use the backstop as a bridge to a future trade deal. But it came out as a safety net. This would imply that May had been planning a customs union all along. So Robbins is quoted as saying privately that May is bluffing over no-deal, and she is bluffing over the future trade deal as well.
There are the following possibilities, not all mutually exclusive. As the prime minister's most persistent and most senior adviser, Robbins knows what she is up to better than we do; he saw the journalist and may have deliberately misled him; Robbins might be out of the loop - what he said might have reflected May's position at one point, but no longer; or it is all true but caused a backlash that will makes it untrue. We have decided to get some fresh air instead, and walk out of the pub.
What we do see very clearly is that May has an incentive to run down the clock. Her statement to the Commons yesterday clearly suggests that this is her strategy. Yvette Cooper postponed her planned amendment to the end of the month, when the next amendable motion will be discussed. Cooper does not have a majority right now, but various Tories have indicated that they might support a Cooper amendment at the end of February. Crucially, the new Cooper amendment will not have a specified time limit. The government itself could, in theory, support the request to ask for an extension which would only be triggered if the deal is rejected at the last minute. If a deal is not agreed, an extension would be required anyway.
Also consider that confusion is possibly useful to May as it keeps everybody else on their toes. The rise in no-deal expectation in the last couple of weeks could produce a backlash - just as this particular incident might still do.
With all of this in mind, our central expectations remains unchanged by yesterday's development: May will run down the clock, and the power of the House of Commons relative to the prime minister will weaken. We expect May to win the meaningful vote - possibly with a comfortable margin. And it could all happen in the last week of March - who knows? maybe even on the eve of Friday, March 29, itself.