Liberal Brexit, not hard nor soft
This morning Interel hosted one of our regular Brexit Breakfasts. This month’s event was addressed by Labour MP and Treasury Select Committee member Wes Streeting, and UKIP MP Douglas Carswell.
Rather than repeating the arguments set out in the referendum, both speakers struck a forward looking approach. Carswell outlined his positive vision for a “liberal Brexit”, rather than a hard or soft Brexit. His is a vision for a Britain with a strong EU trade deal, continued free movement of labour, companies able to issue NI numbers to workers from the continent, and mutual standards recognition between Britain and Europe as well as further afield. This is a Brexit carried out “in good faith… not a divorce or a zero sum game”. It would be the forging of a new relationship between amicable partners.
Carswell’s optimism, though encouraging for businesses, perhaps plays down the sheer complexity of what he is proposing. His penchant for fluid movement of labour may not be the vision for Brexit that many voted for, including most in his party.
Furthermore, as Streeting pointed out, there are those who believe the EU cannot afford to let Britain have a good deal, since to do otherwise would give a signal to other countries that there would be minimal consequences of leaving – and possibly paving the way for the entire European project to unravel.
That said, Carswell was keen to make clear that Brexit alone would not fix people’s “gripes with modernity”. He warned that “those that had problems with modernity in 2014 will not doubt still have problems in 2019”, pointing to what he perceives to be deeper problems in society that cannot be resolved solely by leaving the EU.
Deal or No Deal
Much of the discussion centred on the statement laid out by the Prime Minister in her Lancaster House speech, that “no deal is better than a bad deal”. For Carswell, this was a positive move. The fact that she is willing to walk away from a bad deal means she will not repeat the mistakes of her predecessor, who entered into EU renegotiations without any credibility behind his threat that he could walk away from the table and campaign for Brexit.
Streeting however saw little distinction between the two. In his view, no deal is in effect a bad deal. He argued that leaving the EU and ending up on WTO trading rules would be a “disaster”. Doing so would put Britain on a different path by changing from a social economy grounded in a commitment to welfare, to a neoliberal one. Where there was agreement was over the need for short term transition deals, such as on customs. Carswell suggested that his was something “the pragmatist” May would try to deliver. This would be welcome news for business, but there was a warning that a failure to lobby effectively on the necessity of these transition deals now risks them being overlooked by Ministers in 2019.
Multiple and Multifaceted Risks
With both panellists certain that the we are on an unalterable route to leaving the EU, the main concern for businesses and politicians should now be mitigating against future risk. Carswell warned against complacency, and cautioned that gloating by Eurosceptic politicians, and treating the battle as already won, might blind them to legitimate threats to making Brexit a success.
Streeting said that future risks will emerge if the UK prioritises immigration over economic interests. He said that a key priority for the Treasury Select Committee was safeguarding against financial instability; rising inflation and a weak pound means that the economy is weak in some aspects, and monetary policy must focused on heading off future economic threats.
Although Carswell agreed on the need for economic watchfulness, he differed on what this would entail. He warned that “Os-Brown economics” or “clever-dicks throwing cheap credit at the economy since 1971, giving “the illusion of wealth” has been to the UK’s detriment. This course was storing up problems with the future – which some would attribute to Brexit, but which would be the result of a loose monetary policy and prioritising consumption over production.
Risks beyond the financial realm were also mentioned. European concerns about refugees and immigration and the statements of “out of touch” policymakers like Guy Verhosftadt, could unsettle Europe, according to Streeting – potentially altering the nature of negotiation.
And what if Le Pen wins the French Presidential election in May? “Then Brexit will be the least of our problems” said Streeting. For Carswell the most decisive factor in the negotiations will be what emerges when Theresa May and whoever is German Chancellor go into a room together. Who that will be is yet another thing on the long list of Brexit uncertainties.