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Brexit
The Tory manifesto broadly restates the position of Theresa May’s government to date, with little additional detail.
Procedurally, the Conservatives will ‘enter the negotiations in the spirit of sincere cooperation’, acknowledging they ‘will undoubtedly be tough and there will be give and take on both sides’. The key phrase to be noted is that ‘no deal is better than a bad deal.’ As was noted prior to the election, this raises two questions: how will the government know, and what will be the consequence? While the latter is easily answered as the UK is ‘leaving the European Union’, the former is not detailed at all. The section does not set out red lines or tests for determining when a deal is ‘bad’.
Indeed, the only measurable commitment is maintaining the Common Travel Area with Ireland: in all other cases, there is less precision in language, with talk of ‘securing’, ‘pursuing’, or ‘control of our own laws’. Even language on any financial settlement is emollient, merely rejecting the idea of ‘vast annual contributions,’ suggesting that the party is trying to leave itself as much room for manoeuver in negotiations as possible. Equally, there is no mention at all of the jurisdiction of the European Court of Justice, previously a clear ‘red line’ for the Prime Minister, again indicating that the party is aware of the need for some flexibility. Final approval will be subject to a vote in Parliament.
Substantively, the party is seeking a relatively distant future relationship with the EU, outside the single market and customs union, but with a comprehensive free trade area. The section on the customs union provides more clarity than had been implied in the Prime Minister’s Lancaster House speech, which had hinted at some kind of (undefined) compromise.
In addition, the party would seek additional participation in specific programmes, which might incur financial contributions. There is no mention of transitional arrangements at all, even to rule this out, though the insistence on securing both an Article 50 and a trade deal within two years is retained from Lancaster House. This fits with the approach taken by the EU to date, and while there is much detail that would have to be addressed, there is nothing to suggest an inprinciple incompatibility of positions, at least on the terms set out here.
The Conservative manifesto aspires to have a smooth transition into Brexit. But there aren’t many specifics on what a transition arrangement would look like. Perhaps most importantly, there is nothing to indicate when any transitional arrangements might end which could indicate, for instance, when free movement might end (assuming it is included in transitional arrangements). Finally, the Tories also note the need for domestic legislative action, to address the gap produced by leaving the EU’s legal order.
This takes the form of the already-announced Great Repeal Bill, which will incorporate all of the EU’s legal decisions into UK law, pending a decision by Parliament on whether to retain, amend or repeal them. While this provides a stopgap solution, it neither addresses the new legislation that the EU will produce post-membership (on which any interim arrangement might depend), nor the very substantial accumulation of power the government would gain in managing such an extensive volume of law.
Labour provides text which is best understood in contrast to the Conservative’s. Procedurally, there would be a reformulation of the UK’s position, with the replacement of the current White Paper by a new document that will ‘prioritise jobs and living standards’. This document would ‘have a strong emphasis on retaining the benefits of the single market and the customs union’, although it does not commit to making membership of either an objective.
Importantly, Labour ‘will reject ‘no deal’ as a viable option – without making clear how our EU partners could be made to agree to this – and if needs be negotiate transitional arrangements to avoid a ‘cliff-edge’. “‘No detail is provided on why’ ‘no deal’ is the worst possible deal for Britain” and the claim neglects the procedure for Article 50: if no deal is reached after two years, then the UK will leave on that basis, unless all parties agree an extension of time.
This is not a ‘transitional arrangement’, merely an additional block of time to reach any agreement, and it is not something in the UK’s unilateral control. Similarly, the commitment on ‘legislating that Parliament has a truly meaningful vote on the final Brexit deal’, if it is understood as giving it the right to amend or reject that deal, also runs into the hard timeline that Article 50 establishes.
Substantively, Labour seeks a closer future relationship with the EU. It appears to include membership of the single market (see above) and cooperation in many areas of activity. However, the manifesto also claims ‘freedom of movement will end when we leave the European Union’, which would not be compatible with single market membership.
Equally, although the manifesto claims Labour would immediately guarantee EU nationals’ rights in the UK and ‘secure reciprocal rights´ for UK nationals in the EU, not only has the EU made clear that there will be no final agreement on any one area until there is agreement in all areas, but no detail is provided on how the very real administrative problems this would cause will be addressed.
On the domestic front, Labour would not pursue the current Great Repeal Bill, but instead publish an EU Rights and Protections Bill that will ensure there is no detrimental change to workers’ rights, equality law, consumer rights or environmental protections, as well as making sure that ‘all EU-derived laws that are of benefit…are fully protected.’
In substance, there is not much difference with the promise made by the Tories to make sure all existing social and employment rights are transferred into EU law. As with the Tories, there is no word on how this copes with the dynamic nature of the future UK-EU relationship, as well as the additional question of how the relevant categories will be identified, managed and overseen.
As with Labour, the Liberal Democrat manifesto is largely a response to the Conservatives. Unlike both the others, however, they nail their flag to the Remainer mast unambiguously: stating their passionate belief that ‘Britain’s relationship with its neighbours is stronger as part of the European Union.’
Procedurally, there is little detail apart from the commitment to a second referendum at the end of the negotiations. This appears to offer two choices: either the deal as agreed, or the UK will remain a member. The party’s position – they ‘believe that there is no deal as good for the UK outside the EU as the one it already has as a member’ – suggests that a Lib Dem government would be caught between negotiating a very close relationship (see below) and ultimately arguing that such a relationship would not be preferable to remaining. Substantively, the Lib Dems aim at ‘keeping Britain as close as possible to Europe’.
This includes prioritising membership of the single market (with freedom of movement) and the customs union, as well as participation in many programmes. There would be a unilateral guarantee of EU citizens’ rights in the UK, and ‘urging’ for reciprocity by the EU. Finally, on domestic impacts, there is little detail. The document is largely driven by the desire to maintain a very high degree of integration with EU policies.
The party does say it will ‘fight to ensure [EU-derived rights]…are not undermined’, but offers no specific mechanism on the lines of the Great Repeal Bill. Overall, while all three parties view Brexit as a major event, the manifestos treat it largely in isolation from other aspects of policy. There is thus no indication that the process and outcome of the Brexit negotiations might impact on the ability to act in other areas. This is true when it comes to the economic numbers (see trade section).
Trade
The Liberal Democrats would stay in the single market and the customs union. Free movement of goods, services, capital and people would continue, and trade policy would still be set at the EU level. The loss of market access that would follow from leaving the EU would be minimized. Labour are less specific, to the point of inconsistency – they retain the option of being in the single market and the customs union, but also say that Brexit will mean an end to free movement, which is inconsistent with single market membership.
The Conservatives’ plans are rather more detailed. Immigration controls are central to their Brexit plan, which means that we will leave the single market, while the aspiration to do new trade deals with countries outside the EU means leaving the customs union. Together, this means a “hard Brexit”. If there is no new deal with the EU after the two-year period – the hardest possible Brexit – the UK would revert to World Trade Organization rules.
As a WTO member, the UK’s exports to the EU and other WTO members would be subject to the importing countries’ “most favoured nation” tariffs. This would raise the cost of exporting to the EU for UK firms due to higher tariffs and higher non-tariff barriers like customs checks and divergence in product standards.
Trade in services would also be subject to WTO rules. Since the WTO has made far less progress than the EU in liberalising trade in services, this would mean reduced access to EU markets for UK service producers. The Conservatives are also committed to seeking “a deep and special partnership including a comprehensive free trade and customs agreement.” But there is no mention of the compromises that might be required – that the UK might effectively have to sign up to EU standards with relatively little input and accept the de facto jurisdiction of the European Court of Justice in some respects – to secure a genuinely comprehensive agreement.
It is notable that there is absolutely nothing that will reassure key UK sectors, like pharmaceuticals, the financial sector, and the automotive industry, whose regulatory position, access to markets, or supply chains are threatened by Brexit. So what implications would this have in economic terms? The resulting reduction in trade would reduce incomes in the UK. Estimates vary and are highly uncertain, but the consensus among economists is that these impacts would be large. For example, recent research implies trade with the EU would fall by about 40%, reducing GDP by about 3% (or 2.4% net of the membership fees) every year.
Foreign investment would also fall, perhaps by 20%, further reducing GDP; and reductions in migration (as discussed in the immigration section) would further accentuate the impacts. Outside the EU, the UK would be free to set its own trade policy, which might help make up for the loss in trade and investment with the EU. The Conservatives’ ambition is that the UK will be the “world’s foremost champion of free trade..a global champion for an open economy, free trade, and the free flow of investment, ideas and information.”
If the UK chose to unilaterally cut its tariffs to zero, consumers and firms would face lower import prices and competition among UK businesses would rise. But with tariffs already low, the gains would be small – estimated at perhaps 0.3% of GDP – and commitments elsewhere in the manifesto appear to rule this out. Instead there is an emphasis on continuity – as well as seeking a comprehensive agreement with the EU, the UK will replicate both the EU’s current WTO arrangements and its existing FTAs with third countries.
This appears to be a greater short-term priority than agreement with third countries, reflecting the reality that such deals are unlikely in practice to compensate. Even a trade deal with the US – an economy of comparable size to the EU – that gave us tariff-free access to the US market would only yield benefits of about 0.3% of GDP. This is because the US is geographically further away and because it operates a very different set of regulations that would be difficult to harmonize or mutually recognize.
Countries like India and China are difficult to negotiate with, and will have their own complications like demands for easing migration controls or reluctance to open up their services sectors to UK businesses. Outside the single market, the UK would be free to set its own regulatory standards, but all parties rule out reducing standards for labour rules and environmental protection below EU levels – indeed all propose to increase some employment rights – so any GDP gains here are likely to be minimal.
Indeed, despite the rhetoric, commitments elsewhere in the Conservative manifesto – for example, to increase protection from foreign takeovers for British companies, and to “set up new frameworks for supporting food production and stewardship of the countryside” [while maintaining at least current levels of financial support] point, if anything, to a significantly less liberal and deregulatory approach than is currently the case within the EU. [...]
The manifestos uncovered: immigration
The manifestos uncovered: repatriation of competences