[Apologies for typos. It’s a bit of a rush job, but wanted to get some thoughts down to clear my head… ]
If you think this is grim, wait until you see Brexit. via @alldaycreative.
I am not just cooking up this story up because I’m a crazed ultra-remainer. I’d want to remain in the EU even if a great Brexit deal was on the table. At the same time, if I thought that the EU was a colossal affront to democracy, as many people do, then I would want to leave even if it meant a bad Brexit deal. I’d like to see lots of policy that isn’t GDP maximising, so I’m not complaining that Brexit might knock a few points off annual GDP growth. Even so, it seems to me the EU has every reason to annihilate the UK in the Brexit negotiation. The UK might be in for a shock – a shock that could set off a paroxysm of nationalism and unpleasantness.
The Brexit deal is going to be signed off by the parliaments of the 27 non-UK states in the EU. That means the deal is going to have to serve the incentives of those politicians. By proxy, that ought to mean it will serve the citizens of the EU, but it’s probably worth remembering in Europe Brexit doesn’t get saturation coverage like it does in the UK, so the pressure on politicians from voters is reduced. That’s the first of many asymmetries that seem to make it likely the Brexit deal – if there is one – will be nasty in a way that I’m not sure the British press is articulating.
For many European politicians, surely the breakup of the EU is the greatest fear. Right now the EU seems to be getting stronger, but there are plenty of reasons to think its future is still much less than certain. Many European politicians believe in the EU, but, from a less altruistic perspective, the political turmoil caused by a breakup might easily cause a shift in power away from the existing elite – so they will resist. What would do more to secure the future of the EU than a Brexit deal so bad the UK is forced to remain, demonstrating the impossibility of leaving, or – more likely – to leave and suffer traumatically, again serving as a warning to other potential leavers.
Leavers often point out that a bad Brexit would make the EU suffer too, and it would. But much less than the UK, and in less politically painful ways. If trade between the UK and EU dropped 10%, than would be a close to 5% of total trade for the UK, and 1.5% for the EU. So under ‘hard’ Brexit (or no deal at all), EU politicians win on stability of the EU and probably get to pick off a few strategic UK industries like finance, at the cost of a tiny drop in exports resulting from a negotiation that most Europeans didn’t really care about anyway. If you are the negotiator that gets the City to decamp to Frankfurt, you’ll be a hero forever. If it goes wrong and EU exports drop by some unmeasurable amount, who cares? The trade economics seem obvious – the EU wins by being aggressive.
What about migration? There are about 3.5 million EU citizens in the UK (5% of the UK population), and about 1.2 million UK citizens in the EU (0.2 % of the EU population). This situation is ambiguous in terms of negotiation. While Polish politicians will want to get a good deal for Polish people living in the UK, they will also know that the UK cannot possibly afford to send Polish people home exactly because there are so many of them and they are so important to the economy. Meanwhile, the EU can easily kick out Brits, who make up a tiny fraction of the workforce. The UK is also more constrained on this issue, with the Leave campaign strongly predicated on reducing migration – which surely must feature in the negotiation. Meanwhile, the EU could grant rights to Brits in Europe without it having a major impact. If the UK economy looks comparatively weak, economic migrants may leave anyway.
Theresa May is not playing her cards close to her chest, as many have been saying. She has no cards. There is virtually nothing she can do to control negotiations, even if they did find someone more competent that David Davies to run them.
The unknown variable is how the public will react. In my naiveté, I believed Tony Blair’s analysis that British people might turn against Brexit as the brutal reality becomes apparent. But the public might also turn against the EU for its bullying behaviour. As the government flounders in the negotiations, stoking up nationalism and evoking world wars might turn out to be the only viable PR strategy. If the negotiations become fiercely acrimonious, it is wrong to think the worst the EU can do to the UK is to end the two year negotiations without a deal. There’s a whole arsenal of humiliations for the EU to deploy, from expensive prosecco and long queues at airport immigration to sweetheart deals for Scotland and Northern Ireland to dismember the UK. Wait until the EU starts demanding an alternative to of the Permanent Security Council featuring the EU, US, China, India and Russia, or Germany starts spending 2% of GDP on defence, to see power really shifting around. Fun times!