2016/09/08

So what will Brexit really mean?

Theresa May’s ministers are carefully avoiding specific answers. But she is systematically disowning many of the Brexiteers’ promises









SOME 77 days have passed since Britain voted on June 23rd to leave the European Union. Yet this period has been strangely reminiscent of 77 years ago, after Neville Chamberlain declared war on Nazi Germany: a phoney war. Theresa May, the prime minister, has created a new Department for Exiting the EU and put three leading Brexiteers (pictured) in charge of the process. But little else has happened. Article 50 of the EU treaty, which would kick off negotiations, has not been invoked. And Mrs May’s mantra, “Brexit means Brexit,” has become a tired cliché.
David Davis, secretary of state for the new department, had another go in Parliament on September 5th. Brexit, he explained helpfully, meant leaving the EU. He added that this implied taking back control of borders, laws and taxpayers’ money. He brimmed with cheer about the opportunities it would bring. Yet when asked specific questions—Would Britain quit the EU’s single market? What migration controls would it seek? Would it stay in Europol? When would negotiations start?—he gave only vague answers.
That may be quite sensible, for a reason he also offered: that it is more important to get Brexit right than to do it quickly. His department is a work in progress. He has 180 officials and a further 120 in Brussels, but he needs more. As he spoke, he was flanked by his two Brexiteer colleagues, Boris Johnson as foreign secretary and Liam Fox at the Department for International Trade. The three men have been having the usual turf wars and squabbles over exactly what Brexit should entail. Tellingly, two hints at answers emerged this week in Asia, not Westminster. In China for the G20 summit, Mrs May disavowed several pledges made by Brexiteers before the referendum. She said she was against an Australian-style 
“points” system for EU migrants (though mainly because it might let in too many, not too few). She refused to back Leavers’ promises to transfer saved EU budget payments to the National Health Service or scrap VAT on fuel bills. The not-so-subtle message was that, though the three Brexiteers may be nominally in charge, the real decisions will be taken by her and by Philip Hammond, her chancellor, both of them Remainers.
These two may have welcomed a second Asian intervention: the unusual publication by Japan’s foreign ministry of a Brexit paper. Japanese companies, it said, were huge employers in Britain, which took almost half of Japan’s investment in the EU last year. Most of that came because Britain is a gateway to Europe. The paper advised Mrs May to try to retain full access to the single market, to avoid customs controls on exports, to preserve the “passport” that allows banks based in London to trade across Europe and to let employers freely hire EU nationals.
These interventions worry Tory Brexiteers, who fret that having won a famous victory in June, they could lose the war. Their fear is that, given the choice, Mrs May and Mr Hammond will lean more to staying in the single market than to taking back full control of migration, money and laws. Mr Davis said this week that having access to the single market was not the same as being a member of it, and added that giving up border control to secure membership was an “improbable” outcome. But he was slapped down when Mrs May’s spokeswoman said the remark was only Mr Davis’s personal opinion. He also talked of retaining as much of the status quo as possible, not least in areas like security and foreign-policy co-operation.
The case for staying in the single market is simple: economists say this will minimise the economic damage from Brexit. A “hard” Brexit that involves leaving the single market without comprehensive free-trade deals with the EU and third countries would mean a bigger drop in investment and output. Brexiteers claim that many countries want free-trade deals and the economy is proving more robust than Remainers forecast. Michael Gove, a leading Brexiteer and former justice secretary, scoffed that soi-disant experts predicting economic doom had “oeuf on their face”.
Yet Mrs May is less complacent, acknowledging that it will not be “plain sailing” for the economy. Domestic business and financial lobbies are pressing to stay in the single market. As for trade deals, although she won warm words at the G20 summit from Australia’s prime minister, Malcolm Turnbull, she was told firmly by Barack Obama and others that bilateral deals with Britain would not be a priority. The climate for free-trade deals is not propitious these days, and Mr Fox’s department is bereft of experienced trade negotiators.
Mrs May has ruled out an early election and a second referendum. She refuses to provide a “running commentary” on her Brexit plans. And she insists she can invoke Article 50 without a parliamentary vote. Yet she is being urged by some to delay, since it would set a two-year deadline for Brexit that can be extended only by unanimity among EU leaders. In a thoughtful paper for the think-tank Open Europe, Andrew Tyrie, chairman of the Treasury committee, says the government should first decide what sort of Brexit it wants, adding that its leverage is greater before it pulls the trigger. He suggests waiting until the French election in the spring or even the German one in September.
Yet Mrs May might not be allowed to wait by her own party, let alone by fellow EU leaders eager to get Brexit out of the way before the European elections in mid-2019. The phoney war may soon turn hotter.

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