Had Enough of Brexit? How About 10 More Years of it?
(Bloomberg Opinion) -- When moments of political drama capture the national attention, one at least expects some clarity to result. Alas, that would be setting the bar too high for Tuesday's Brexit votes in the U.K. parliament.
The decisions are, of course, important. Britain is conducting a painful negotiation with itself over what kind of Brexit it wants, and that means eliminating certain options. Much of the battle in parliament is about avoiding leaving the European Union without a negotiated settlement. A no-deal outcome – which even proponents struggle awkwardly to defend – would maximize the economic pain, and be the height of irresponsibility for any government.
Beyond ruling out no-deal (something the government has avoided doing publicly), Speaker John Bercow's decision of which amendments to select for a vote on Tuesday, and how the House decides, will provide clues as to whether an extension to the two-year Article 50 timetable is inevitable, or whether Theresa May will return to Brussels to demand further concessions. It might also provide some indication as to whether the hard-leave and remain sides of the Tory party can live with each other.
But when those options are whittled down to a single choice – which is unlikely to happen until much closer to March 29 – the hard part won’t even have begun. That is the part of Brexit that is so easily forgotten in these moments of high drama: the British government is entering an era where the only certainty is a semi-permanent state of negotiations.
We continually hear (and some of us have repeated the mantra) that Brexit is a process not an event. But that's not quite right. Processes are orderly and have an endpoint. There is, as yet, no order to Brexit and no endpoint. A sense of chronic impermanence is virtually certain whatever path parliament takes, according to trade specialists and analysts.
“It has the look of a many-years long exercise, however you look forward from here,” says Tony Travers, a professor of government at the London School of Economics. “We are in the rolling foothills of an enormous mountain.”
A no-deal scenario would bring the most uncertainty, leaving the Irish border question unresolved, no trading relationship in place and a great many sore feelings. Since Ireland itself will hold a veto over any future EU trade agreement with the U.K., Britain can't simply pretend the question of how to maintain an open border between the two countries is Dublin's problem.
May's negotiated deal at least sets out a transition period during which the work on a future trade relationship can begin. And yet exactly what shape that takes will be a matter of bitter internal debate and long, iterative negotiations.
If Brexit gets delayed, or May's deal morphs into a softer customs-union type arrangement, or a Norway-style one that leaves Britain in the single market but with no say in EU laws, extensive negotiations will be required to work out the details of the new relationship and their interpretation – all in a fractious domestic political environment. Likewise, a second referendum or a general election might sate the public's wish for a say, but the decision must then be implemented – again, via more negotiations.
Even then, notes Sam Lowe, senior research fellow and trade policy expert at the Center for European Reform, it wouldn’t be over. Another government may want to tweak what its predecessor agreed. He cites the experience of Switzerland, which has been locked in acrimonious negotiations with the EU for years. “One of the main things we should take from the Swiss is that it will never end,” he says. “When one negotiation finishes a new one begins.”
Even if there was a vote to reverse Brexit, life wouldn’t return to its pre-2016 settled norm. There would be attempts to appease leavers, perhaps with promises of a new political settlement with Brussels (something that has already started). There would be a fierce battle to whip up new forms of euroskepticism too, with unpredictable consequences.
We have an idea of what the economic costs are from the uncertainty generated by the Brexit vote. How a country of Britain's size deals with a prolonged period of multi-faceted, multi-front negotiations, however, is impossible to predict. How will 10 or more years of up-and-down, publicly scrutinized negotiations affect domestic spending decisions and taxation, impact elections, reshape the civil services, determine investment decisions and impact consumer choices and voter preferences? We don't know.
Brexiters blithely claim the impact will be benign – but that is pure guesswork. Their logic is also tortured: If free trade is so desirable that Britain needs to get out of the customs union, leaving the closest possible free-trade deal with your largest trading partner in favor of greater friction and uncertain future relationships has to be acknowledged as a backward step.
And yet, the era of perpetual negotiation doesn't portend economic doom either. Britain has a robust, diverse, (modestly) growing economy with low unemployment; and for all the talk of constitutional crisis, its venerated democratic institutions appear able to handle the knocks. There is no danger of cardiac arrest if an orderly Brexit can be engineered.
Radical uncertainty – when no historical data or statistics are useful for mapping the outcome – seems axiomatic with Brexit. Maybe it's more apt to describe the best-case scenario as one of prolonged “insecure stability,” a term Pacific Investment Management Company's global economic adviser Joachim Fels and former Pimco executive and now Fed Vice Chairman Richard Clarida circulated in 2016.
“It's with us for another half-generation,” Travers says. “If pro-Brexit MPs feel that we didn't properly leave, they will go on campaigning for a more determined form of Brexit.” Remainers, too, will be on their toes. “Whether we leave with no deal or not, I'm absolutely sure that a campaign will be set up on March 30,” he says.
We'd better get used to it.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.
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