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Schrödinger’s Brexit

Image: Paul Anglada

In Erwin Schrödinger’s thought experiment, the famous cat can exist in an unresolved state – both dead and alive – until an observer finally opens the box; at which point the situation resolves and renders the cat either dead or alive but somewhat peeved.  Just like Schrödinger’s cat, Brexit, it seems, also exists in equal and mutually exclusive states; and will continue to do so until some final deal is either adopted or rejected.

Thus far, both Britain and the EU27 have been content not to open the proverbial box.  Instead, they have fudged the issue by talking about “regulatory equivalence” (essentially existing in both states at once).  However, this was only done to prevent the UK crashing out of the EU without a deal even before the EU had secured the compensation it sought from the UK.  Until a final deal is agreed or rejected, everything remains in flux.  As the EU’s chief negotiator Michel Barnier has said time and again, “nothing is agreed until everything is agreed.”

The reality of Brexit is that there are just two rational end states.  Either the UK leaves the EU entirely and falls back on World Trade Organisation rules, or it remains in the EU.  No position between these two outcomes makes sense economically or politically, since they leave the UK in a kind of no-man’s land with nothing resolved.  Remaining in a customs union renders trade deals with non-EU countries extremely difficult, while obliging the UK to comply with rules and regulations it can no longer influence.  Remaining in the Single Market makes external trade deals impossible, but leaves Britain effectively governed by the EU and subject to its courts.  Thus, full membership of the EU with all of the opt-outs and concessions that Britain already enjoys is the only non-Brexit option that makes sense.

Of course, the problem with going down that path is that it makes a mockery of democracy.  For while Remoaners have turned intellectual cartwheels in an attempt to claim they somehow won a vote that they clearly lost, the reality is that people elected David Cameron in 2015 precisely so that they could have the promised EU referendum; and then proceeded to vote in vast numbers for Britain’s elite to do precisely what it said it didn’t want to do.  It is entirely possible – and indeed very likely – that the elite will use Parliament (which is pro-Remain) to overturn the referendum result.  But when it does, it will lose its claim to democratic legitimacy for good.

The opposite state – of complete withdrawal from the EU – is thus the only rational alternative.  That is, Britain accepts the likely economic hit that a complete withdrawal from the world’s largest trading bloc entails, and then sets about the painful process of re-orientating its economy to the wider global economy.  The problem with this is that the British government is woefully unprepared for the economic shock that is coming its way when its membership of the EU expires. As Adam Payne at Business Insider reported recently, even the EU Commission is worried about the UK’s competence at negotiating its future trade deals:

“One of the tasks facing Britain is to ensure the free trade deals it already has with other non-EU countries, as part of its EU membership, continue to apply after it has left the bloc.

“However, the Commission — led by President Jean-Claude Juncker — has told the EU’s other institutions it is ‘deeply concerned about the UK’s incompetent handling of trade deal rollovers,’ and [Trade Minister, Liam] Fox’s ‘failure to grasp basic concepts and trade-offs’…

“One former senior UK government official told BI they were not surprised the Commission was worried. ‘As it should be,’ they said. ‘Frankly, they’ve [DIT] been messing around for months and not doing any of this. Most of the people who are having to deal with this are totally ignoring reality’.”

The UK government dilemma is that, like Schrödinger’s cat, they do not want Brexit to be resolved one way or the other; since the moment it is, the Tory Party – which contains a large number of pro-Remain MPS – will be torn in two and the minority government will fall; which is why the Irish border issue – like the radioactive material in Schrödinger’s experiment – has become so toxic.

To maintain a majority in Parliament, the government was forced into a grubby deal with the Democratic Unionist Party.  That party has made clear that it will accept no border between Northern Ireland and Great Britain, since this would be seen as a big step on the road to a united Ireland.  The problem for the UK government is that the only alternative short of remaining in the EU is for Britain to remain in the Single Market or in some form of customs union… something most Tory backbenchers will not tolerate.

This, perhaps, explains the embattled Home Secretary Amber Rudd’s recent and rapidly retracted remarks suggesting the UK would remain in a customs union.  This would solve the Irish border question, but it would be devastating to the government.  Thus, in order to prevent the government falling, Theresa May has been adamant that there will be no customs union – a position that Amber Rudd was quickly obliged to adopt.

The single biggest mistake that the UK government has made from the very moment that the referendum result was announced, was to believe that somehow the EU27 would be obliged to dance to Britain’s tune.  If this were true, the UK government could maintain Brexit in an unresolved state for months, if not years to come.  But what Britain has never fully grasped is that a sizable majority within the EU27 believe that the UK has always been an impediment to the European project, and that they would be better off without us.  David Cameron more or less told us so in one of the very few honest things he ever said:

“Some argue that we could strike a good deal quickly with the EU because they want to keep access to our market.  But the Government’s judgement is that it would be much harder than that – less than 8% of EU exports come to the UK while 44% of UK exports go to the EU.

“No other country has managed to secure significant access to the Single Market, without having to:

  • follow EU rules over which they have no real say
  • pay into the EU
  • accept EU citizens living and working in their country.”

The British belief that the EU Commission is going to be swayed by the temporary economic impact on French cheesemakers, Italian vineyards and German car plants is fanciful.  While their negotiators will seek to minimise the potential harm, they will not allow this to overshadow the need to preserve and expand the European project itself.

The likely point at which this will become clear is over the Irish border.  This is because it is one of just two locations (the other is Gibraltar) where a full Brexit will result in a hard border for goods and services seeking to enter the EU.  As Stephen Collins at the Irish Times recently explained:

“The outrage in the UK at the commission’s stance on the legal status of the Border should be taken with a grain of salt in light of the scant regard the advocates of a hard Brexit have shown for either part of Ireland in the whole process…

“We shouldn’t ignore the fact that the Border gives Barnier a useful weapon in his tussle with UK negotiators, but there is also something deeper at work: a sense of solidarity among member states which goes to the core of what the EU is all about.”

In effect, Barnier can use the Irish border question to scupper any attempts the UK government might make to continue fudging Brexit in an attempt to secure a favourable deal for those sectors of the British economy that have caused the most difficulty to the EU down the decades.  As Thomas Colson at Business Insider reports:

“Theresa May has been reduced to ‘pleading’ for a Brexit deal for Britain’s financial firms which is unrealistic and unworkable, the EU’s chief Brexit negotiator Michel Barnier has suggested.

“Speaking in Sofia on Thursday, Barnier said that the UK was seeking a deal which allows Britain to continue selling financial services into the EU’s Single Market without following European regulations, and dismissed May’s plan for a special access regime based on a broad commitment to adopt the same rules as the EU.

“’I can perfectly see the UK’s logic and interest in pleading for a system of “mutual recognition” and “reciprocal regulatory equivalence”. This is, indeed, what the Single Market achieves!’ he told an audience at a financial conference.

“’The EU understands that the UK does not want to become a “rule-taker”. But the UK also needs to understand that the EU cannot accept mutual market access without the common safeguards that underpin it.”

Sooner or later, Mrs May is going to have to decide whether she is going to throw Northern Ireland (and Gibraltar), the City of London or her own government (possibly all three) under the bus.  And as the negotiations with the EU27 move into the autumn (when a provisional deal will have to be agreed if both the UK and EU parliaments are to have a chance to vote on it before the UK leaves in March 2019) it may well be that Barnier will use the Irish border as the device with which to resolve the terms of Britain’s Brexit once and for good.  At which point the UK choice will be stark – revoke the referendum result and split the government, or maintain the government and destroy the economy.

As you made it to the end…

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