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When we are over the line, Brexit happens, then what?

August 12th, 2019


Cartoon from Marf

Dramatic changes which might or might not have been planned for

One of the (perhaps inevitable) side-effects of the focus on the day when Brexit is going to, finally, happen is a sense that this is a project that just needs getting over the line for it to be largely concluded. The government will have done what the voters ordered. Boris will have delivered. Hooray! We can all move on, cast our eyes westward and concentrate on the wonderful new FTA to be imposed by our new best friend in the White House. (More expensive medicines and GM food: how wonderful!) And we will be free! It will all be gloriously exciting and all those frightful Remoaners with their Project Fears and predictions of Armageddon will be proved wrong.
Of course, there is concern that maybe in the first few days there will be teething problems: some traffic in Kent, a bit of nervousness on the financial markets, confusion over haulier permits and one or two aggrieved sheep farmers in some hills far away. French fishermen may make a nuisance of themselves, barricading ports and the like, but then they always do. The Irish will be annoyed but aren’t they always. And that border will remain open as promised. What was all the fuss about? And in any case there is time for steps to be taken to prevent these little hiccoughs happening; money can always be used to sweeten any difficulties. It will be like Y2K or the introduction of the euro: beforehand there were countless predictions of disaster but in the end all went smoothly. Or so the government will be hoping and planning for. It will certainly do everything possible to ensure that the first few days following Brexit are not about stories of lorry drivers trapped for hours, medicines being turned away at the border, empty supermarket shelves and cancelled flights. Those assuming dreadful problems assailing a government holed up in its COBRA redoubt while the papers are full of tales of woe may find themselves disappointed. There will be enough smug “We told you so’s” from relieved Ministers to fill any number of Brexit special editions.

But even making this heroic assumption, the very fact of viewing Brexit like a Y2K shows a level of worrying self-delusion. Once the Y2K issues were resolved (and there was an immense amount of planning and hard work in the years – not months or weeks or even the 82 days prior – to ensure that nothing happened) life went on as before. That was the point of the contingency planning: to ensure that there would be no change. This is emphatically not the case with Brexit.

This is not something to be got over the line and then moved on from. Life will not continue as before. Indeed, that’s the whole point of Brexit. Overnight, Britain will go from being a member of the EU to being a Third Country as far as the EU is concerned for all purposes: legal, regulatory, financial, tax, trade, everything. And as for non-EU countries, it will go from a country benefiting from its membership of the EU to one outside all existing agreements (save for the very few which have been rolled over on exactly the same terms). It’s not at all clear that the full import of what this means has been widely understood let alone fully prepared for.

Most businesses, organisations, individuals will have to live and operate in a significantly different environment. If the EU’s tentacles reached into every aspect of British life – as Brexiteers claim and use as their justification for why Britain should leave – then it follows that the effects of removing those tentacles will be equally far-reaching, and in ways which cannot all be foreseen, let alone planned for or mitigated or avoided. The consequences of a No Deal departure will exist and be much more acute than they would otherwise have been: a more complicated tax regime for companies with operations in more than one European country, non-tariff barriers where there were none before, export tariffs for exporters, business affected by import tariffs (whether in increased costs or competition undercutting businesses here), a different immigration system, exclusion from legal and regulatory systems in a wide range of sectors, data sharing, security systems, very different customs arrangements, different laws, different travel, employment and secondment rules and so on. The effects of these changes will not occur on one day only: they will have an impact every single day from 1 November onwards. Planning for and managing them will have a cost, in many cases, a very significant one.  That planning and management will have to be done on the basis of not knowing what will replace the current arrangements. Even the limited agreements with the EU are short-term and entirely within their gift. And that is without the unknown unknowns.

Brexit is not a one-off event: it is a very significant change to the way Britain’s economy and society has operated for the last few decades. Doing so without any transitional agreement on the basis of, at the very best, three years’ and, more realistically, a few months’ planning is a quite extraordinary undertaking for any advanced Western country to take. The focus all seems to be on getting it over the line not on what happens afterwards, a conspicuously short-term approach even for a political class that can normally only think as far ahead as the next election. A No Deal Brexit is not a race to a finish line but the start of a marathon in an unknown country without a map.

There is no precedent for such a rupture, outside perhaps the shift to a wartime economy. Possibly the nearest was Czechoslovakia’s division in two in 1993. That was relatively peaceful – certainly by contrast with the bloodier break-ups following the collapse of the Soviet Union and Yugoslavia – and without too much dislocation. Why was this? Well, the two countries entered into mutual negotiations, agreed financial compensation, agreed to honour existing treaties, shared a currency for a bit and allowed free movement between their countries. And then they joined the EU. Oh, the irony!

Instead, Britain is relying on…..well, what exactly?

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