Theresa May’s ‘Brexit means Brexit’ slogan was meant to make it clear to Remainers that there was no going back on the Referendum result and the UK would indeed leave the European Union. Yet, like others have observed before (e.g. here and here), it becomes increasingly clear that the ones who are struggling to accept that Brexit does indeed mean Brexit are the Brexiters themselves. Recent developments show that they simply do not take Brexit seriously, with increasingly devastating consequences for the country.
A lot has happened since my last regular BIT, much of it supports this thesis. Thus, the Stormont Executive is on the verge of collapsing after DUP’s Paul Givan quit as First Minster in protest over the Northern Ireland Protocol (NIP), the head of the Metropolitan Police has resigned, the PM has reshuffled his cabinet in an attempt to convince the public that he is ‘cleaning up’ his operations in the wake of ‘Partygate’ – a reshuffle that led to the appointment of Jaco Rees-Mogg as minister for Brexit opportunities –,the government has published two reports about Britain’s post-Brexit strategy, one on levelling up and one on ‘The Benefits of Brexit’ (on which there are several excellent commentaries available, e.g. here and here), and the parliamentary cross-party Public Accounts Committee (PAC) has published a report that contains a strong warning that in trade terms Brexit is not going well. The direction of travel seems clear: we are headed towards rock bottom. And that is largely the result of Brexiters denying Brexit reality whose bite is increasingly strong.
Trade reality and the dream of exporting power
Unsurprisingly, the area where Brexit reality bites hardest is probably trade. New data released by the Office for National Statistics (ONS) for the whole year of 2021 unsurprisingly confirms that – net of the pandemic and world-wide supply chain issues – Brexit has very considerably affected the patterns of UK’s imports and exports. The headline figures are that compared to 2018 – the last stable year before Brexit and the pandemic – UK imports have declined by 4.8%, while its exports dropped by 10.5%, meaning the UK’s trade deficit has increased. Moreover, there seems to be a shift in trade away from the EU: 2021 exports to the EU have fallen by 12% on 2018 figures, compared to a fall of 6% in exports to the rest of the world. Moreover, for the first time since data is available imports from non-EU countries surpassed imports from the EU.
These figures may provide some motivation for the UK government to act on the Public Accounts Committees insistence that something needs to be done about the trade frictions. Yet, the committee’s report does not provide much cause for optimism. Thus, commenting on the government’s stated ambition to create the most efficient border in the world by 2025 the PAC simply notes that “we are not convinced that it is underpinned by a detailed plan to deliver it.” This may suggest that the only answer the government may have in the short run is to further delay the introduction of full border checks on imports from the EU so as to at least not make things worse. The PAC report mentions that government sources do not completely exclude that possibility. Yet, for UK exports such a move may “feel like a very inequitable settlement,” because they will face the full EU border checks, while EU businesses will continue being subject to a light-touch border.
Yet, despite the reality of post-Brexit trade patterns and although the PAC boldly concludes that “the only detectable impact [of Brexit] so far is increased costs, paperwork and border delays,” Brexiters continue to dream of turning the UK into an export economy.
Indeed, according to reports in several outlets, the Global Britain Commission – set up by Liam Fox in October of last year – is about to publish its first report setting out a plan for the UK to rival Germany’s export prowess. Contrary to the announcement, the report does not seem to be available online yet. So, it is impossible to know the details of the plan. The sound bites quoted in various pro-Brexit outlets do not allow it to get any sense of how exactly the lofty goal of becoming an export economy will be achieved in practice. But whatever the plan is, one fundamental inconsistency with the idea is that – as Chris Grey points out – Germany became an export power while being an EU member state. Indeed, Germany became an export power not despite EU membership, but very much because of EU membership. Thus the single market provided the country with access to cheap but well-trained labour on its doorstep (in Hungary, Poland, Slovakia notably) and the introduction of the Euro gave the country’s export sector an enormous competitive advantage by constituting a de facto devaluation of its currency compared to its European competitors. Therefore, if the goal is to imitate the German model, the most promising plan would be to re-join the EU and then adopt the Euro. More fundamentally, you cannot simply decide that you want to become an export power, but you need an industrial strategy that builds up the capabilities of the exporting sectors. Nothing indicates that either Global Britain Committee or the government are close to having such a strategy beyond the blind belief in free trade. (Another question is whether focusing as much on exports as Germany does is desirable, as it comes at considerable costs for non-exporting industries and creates dependencies, as German political economists like Andreas Nölke argue).
De-Regulating what?
Another sign of Brexiter desperation and continuing denial of reality concerns the government’s deregulatory agenda. Since the Covid excuse and the ‘teething problems explanation’ of negative Brexit impact have started to lose their clout sometime in the autumn of last year, calls for radical liberalisation and deregulation of the UK economy have grown louder in pro-Brexit news outlets. The past two weeks show that the government – in its desperation – starts giving in to those pressures.
The PM announced the so-called “Brexit Freedoms Bill” on January 31st, 2022. It promises to “make it easier for the Executive to alter or repeal retained EU law without having to pass primary legislation,” which means there will be virtually no parliamentary scrutiny of such decisions by the government. The reason for this short circuiting of Parliament is – according to the government – that this way “the UK can capitalise on Brexit freedoms more quickly”. Various commentators – such as Chris Grey and Hannah White – have pointed out the irony of Brexiters promising to re-establish full parliamentary sovereignty and the tendency by the Johnson government to increasingly by-pass Parliament. Indeed, the Johnson government is in the process of realising one of Friedrich A. Hayek’s nightmares. While he was a bit fan of the Anglo-Saxon Common law system and one of the fiercest critiques of anything continental European in terms of legislation, in The Constitution of Liberty he noted that ‘[I]t is a question whether the much praised flexibility of the common law which has been favourable to the evolution of the rule of law so long as that was the accepted political ideal, may not also mean less resistance to the tendencies undermining it, once that vigilance which is needed to keep liberty alive disappears” (Hayek 2011[1961]: p.298). Clearly, as the governing elite has lost any moral restraint – as Byline Times’s Hardeep Matharu convincingly argued a while ago – the absence of any formal constitutional constraints on the government has been one of the key factor letting the UK edge closer to a ‘flawed democracy’ in global rankings since 2019.
The tragic irony with the government’s power grab is the fact that the government seems to have absolutely no idea how exactly to use these powers to bring about those Brexit benefits. Rees-Mogg’s appointment as minister for Brexit opportunities illustrates this perfectly. Pro-Brexit outlets have told us for years that UK businesses were strangled by EU regulation and that we desperately need to cut ourselves free. Six years after the Referendum, the government has to turn to Sun readers to tell them which regulations exactly were so oppressive. We have gotten so used to Brexiter ideology and spin that some may interpret this move as a genuine attempt to let the people have a say. Yet, Rees-Mogg’s move is destined to fail for reasons Polly Mackenzie summed up perfectly on twitter. But more importantly what it really exposes is the reality that Brexiters still do not know what to do with the newfound Brexit freedoms and sovereignty. This is further illustrated by the fact that Ian Duncan Smith, Theresa Villiers, and George Freeman already provided a report on the opportunities of post-Brexit regulatory reforms back in May 2021 and yet we still do not know what/how to deregulate.
Levelling up
An interesting new dynamic in how Brexiters seek to bat away reality has emerged around the publication of Michael Gove’s ‘Levelling up white paper.’ Given the absence of any real Brexit benefits, Brexiters now push the realisation of these benefits into the future (2030 in the case of levelling up), while withdrawing further back into history to look for inspiration (into the 1500s in this case). Indeed, permanent secretary to the Cabinet Office Andy Haldane - one of the authors of the levelling-up report -, jettisoned the Singapore-on-Thames idea and turned instead to 16th century Florence for a model to follow. The suggestion was quickly mocked by twitter users pointing toward the realities of 16th century Florence.
To be fair, though, the basic point that looking at historical examples for the ‘raw ingredients’ of economic success is not absurd per se. Indeed many comparative economists and economic historians like Douglas North and Geoff Hodgson have done just that. The problem is, however, that Halden’s approach to identifying these ingredients in the ‘secrete sauce of success’ – (they cannot resist the temptation of a three word slogan, can they?) – is so unsystematic and general that it is ludicrous to believe it can replace a serious economic strategy. The ‘raw ingredients’ are so general that they leave open a million possible policies and strategies to try and achieve them in practice. Therefore, the ‘ingredients’ of economic success can only be the starting point for drafting a successful industrial policy, not its end point. Getting from the broad goal to the actual, practical policy is the difficult bit. There is no indication that the government has any intention of (or the capability to) addressing that. In fact the levelling up white paper defines twelve broad “missions” – eight of which were already present in Theresa May’s industrial strategy but then ditched by Business Secretary Kwasi Kwarteng –, which are high-level and aspirational but lack in policy detail about how they will be achieved.
Regardless, whatever one thinks of the twelve missions, the most fundamental flaw is that the levelling up agenda is rooted in a core assumption of Tory economic policy, namely that the state is already spending too much and government is inefficient. Therefore, no new money is needed to achieve these targets, but simply ‘ensuring [public money] is spent effectively on local priorities’ is sufficient. The way in which the government seeks to achieve this is by creating a new law that forces government departments to work towards the twelve missions. Most experts seem to agree that without extra resources and appropriate funding, there is very little chance levelling up will become a reality.
Therefore, the ‘Florence on Thames’ idea will remain just another half-baked, aspirational slogan without any policy substance. That impression is reinforced by the lack of seriousness of the levelling up white paper itself, most importantly the fact that it contains passages that were simply copy-pasted from Wikipedia. This illustrates once again that the Brexit government is simply not taking Brexit seriously.
Northern Ireland Protocol
A great deal has happened in Northern Ireland as well over the past fortnight. Agriculture Minister for NI Edward Poots ordered NI officials to unilaterally suspend boarder checks for goods coming into NI from GB. These directions were temporarily suspended by a High Court ruling two days later, but with First Minister Paul Givan also stepping down in protest over the NIP, the situation remains extremely delicate. In an attempt to provide some stability, the UK Parliament this week passed legislation to guarantee that the NI Assembly could continue work until the elections in May rather than being dissolved early.
Yet, despite the political upheaval in NI, the FT reported some progress in the talks between Liz Truss and Maroš Šefčovič over the NIP. Reportedly, the UK government has made a verbal offer to the EU to accept checks on GB exports that are destined to remain within NI. This constitutes the first concession made by the UK since the talks began and a rare signal of the government seeking a genuine solution to the NIP issues. The offer raises hopes that an agreement might be reached at the Joint Committee meeting on February 21.
With Johnson fighting for his political survival and therefore wary of a trade war with the EU and the EU side reportedly having suspicions that the UK government may have something to do with Poots’ decision to order a halt to border checks, Truss’s offer may be a strategy to avoid escalation right now. The UK’s concession may also have to do with the content of an audit of NI border procedure by EU officials which was completed in October last year, but has not been published while awaiting the response of the UK authorities. RTE’s Tony Connelly reports that the content of the audit will make the UK government’s claims that a bespoke model can be found whereby goods destined to stay in NI should not be checked, while goods going to the Republic of Ireland should be. The audit shows that the lack of preparedness and flaws in the border checks introduced by the UK are such that clearly such a bespoke model cannot work. This would imply that the NIP is the one Brexit-related issue where the government may start to partly accept reality. However, there are also reports that the Cabinet Office has ramped up preparations for a possible trade war with the EU in case the UK government does trigger article 16. Regardless, Friday’s third in-person meeting between Truss and Šefčovič ended with both sides reiterating the need to continue and intensifying talks over the coming days.
Reality bites against sound bites
Overall, then, Brexit related news were grim pretty much in all respects in the past two weeks. Yet, as with every crisis, there is some strange comfort in things going badly for a long time, because there is hope that eventually they cannot get any worse but will have to start looking up again. To me, the past two weeks had some of that hopeful flavour. Not so much because there is still a chance that Johnson’s premiership may soon be over. The PM has now received a formal legal questionnaire from the Met Police asking for “an account and explanation of the recipient’s participation” in events held at Downing Street during lockdown. If he is fined for breaking lockdown rules, some senior Tories say it will be difficult for him to continue. Yet, in the decency-free space that the Conservative party and Downing Street have become, it is equally possible that the PM will cling on to power despite losing any credibility, undermining the public’s trust in the Rule of Law and in the importance of pandemic legislation – and several Tory MPs clearly are still happy to support him in that endeavour. But with the Tory party firmly in the hand of the ERG and the pro-Brexit faction, Johnson’s departure would probably change the UK’s direction of travel less dramatically than some may expect.
What does give me some hope is something else, namely the fact that the government’s hyper-activism around Brexit opportunities, levelling up, and deregulation strategies increasingly reek of utter despair. After two years outside the block, Brexiters simply have nothing to show for their supposedly ‘no-downsides’ revolution. All they can do is try and sell damage limitation as success and blame on EU ‘punishment’ anything that cannot be spun in a positive way. Chris Grey has shown this week how that strategy leads Brexiters to spinning an ever more intricated web of lies. I feel there are signs that soon enough Brexiters will get caught up in that web of lies themselves.
Lying about Brexit was a cunning strategy to win the Referendum, and the 2019 GE, but it will soon reach the limits of its political potential. Even for people who are very conscious of the lies that are repeated ad nauseam, it is not always easy to resist engaging with them on their own terms, which means we spend time arguing about things that we should not be arguing about. Yet reality does not work like that. Reality is immune to Brexit lies and will not bend to them. You can lie all you want, the lorry queues at Dover will not get any shorter. You can lie all you want, the living standards of people in Coventry or Preston will not increase. Of course you can keep people voting for you and your ideas by selling hope, but the longer the queues get in Dover and at local foodbanks, the more convincing your explanation why Brexit hasn’t solved these issues will have to be. Brexiters are certainly masters of trying, but anyone who is not completely sold to their ideology will realise that the explanations become increasingly ludicrous in face of a stubborn reality. The best illustration of this phenomenon this week was provided by Natalie Elphicke – MP for Dover – who in all seriousness suggested in Parliament that the border issues at Dover were not a problem created by Brexit, but were Brussels’ fault. This denial of reality may provide political benefits in the short and medium-term, in the long run, however, the persistent discrepancy between promise and reality will have a political cost. That will be the point at which even Brexiters need to start taking Brexit seriously and to develop serious policy proposals that can help the UK move towards a more sustainable post-Brexit arrangement. While we wait for this to happen, Brexit reality keeps biting.