13 December 2018

Financial Times: The nightmare of a no-deal Brexit looms and must be prevented

The UK and the EU are sleepwalking towards a no-deal Brexit. Theresa May’s survival as leader of the Conservative party does not alter that fact. This outcome would be a disaster for the UK, but also bad for the rest of the EU. The alternative, writes Martin Wolf, is a second referendum.

The prime minister may still be in office, but she is not in power. The opposition in her party (and the Democratic Unionist party) will prevent her from passing her (admittedly ghastly) deal, without support from the opposition. That would demand either a Pauline conversion by Labour leader Jeremy Corbyn, or a big split in his party. That split would also need to be durable enough to pass the accompanying legislation. An alternative would be for Tory Remainers to split from their party and put Labour in power, to stop a no-deal Brexit. Finally, Mrs May might agree to a pact with Labour on an alternative, such as joining the European Economic Area, or a second referendum. [...]

The costs of a no-deal Brexit would be huge, politically, as well as economically. The UK would become an outlaw: a country that had discarded its legal commitments. The ability of the UK to exercise any sort of voice in the affairs of the continent would be destroyed. Its reputation for reliability and reason would perish. The lives of millions of EU citizens in the UK and UK citizens in the EU would be plunged into painful turmoil, as would the operations of countless businesses. Co-operation in vital areas, such as policing and counter-terrorism, would be impaired. A hard border would surely return to Ireland.

Brexiters regard all this with blithe insouciance. Their irresponsibility is breathtaking. As for dealing with the economic disruption, they trust in the World Trade Organization. This faith is mistaken in at least three respects.

First, the WTO does not offer effective coverage of extremely important areas of trade, notably services. Nor does it protect the UK against the need to comply with EU regulations in its trade with the latter. Nor does it permit the UK to waive tariffs against imports from the EU, as some now suggest, without doing the same for all other WTO members.

Second, contrary to claims made by Brexiters, trade does not flow as freely for countries trading on WTO terms as within the EU. It is a remarkable fact that the UK does as much trade with the EU as either the US or China. There are only two explanations: the power of proximity and lower barriers to trade. Brexiters often deny that the former matters much, if at all. They are largely wrong. Yet, if they are right, the absence of trade and regulatory barriers inside the EU must be the crucial factor.

Finally, why should the EU take seriously UK claims to protection from the WTO, once it has repudiated its commitments to what EU members think are still more important treaty obligations? Brexiters despise the EU. Surprise, surprise! EU members do not.

What is going on defies rational explanation. Fanatics, masquerading as Conservatives, have decided to impose a radical experiment on their fellow citizens that is sure to be highly disruptive in the short term and is likely to be seriously damaging, both politically and economically, over the long term. Such experimentation is wrong, in principle. It is not what responsible politicians do.

This outcome must be avoided. But how? One possibility is for the EU to act as the grown-up. At a time when the EU’s relations with Russia and, alas, the US, have reached new lows, it hardly makes sense to allow a deep rift with the UK, too. The EU also must want the money the UK has agreed to pay and the protection of EU citizens resident in the UK. The EU must also wonder whether upholding the principle of the Irish backstop is worth the looming cost of a hard border in Ireland. Are the pleasures of blaming the British for the disaster sufficient consolation? Why not, instead, move the decision on how to avoid such a hard border into the negotiation of the new trading arrangement?

The alternative is for a sizeable number of parliamentarians to sacrifice the interests of their party for those of the country. If so, they should choose another referendum. We now know that Brexit means either crashing out or Mrs May’s deal. Both are intolerable. Let the people, wiser now, choose again. 

Full article on Financial Times (subscription required)

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