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Brexit Post-Election: Politics, Economics and Time

Paul Craig (University of Oxford)

Political change is rarely uniform across time. This is so whether viewed from a short or long-term perspective. Consider recent events. We all became inured to the battle-ground in the Commons, wherein deftness of strategy in relation to Commons Procedure, combined with voting numbers, was the name of the game. Move was followed by counter move as a minority government under successive Prime Ministers sought approval of Withdrawal Agreement Mark 1, followed by Withdrawal Agreement Mark 2. Public lawyers scaled the steep learning curve to master even the bare rudiments of Commons Procedure, which on occasion assumed a Byzantine complexity. The prospect of a second referendum was still on the cards, and with it the hopes of Remain voters.

Election night changed all that in a heartbeat. The PM secured a resounding victory, and breached the red wall. Labour was left licking its wounds, searching for a new leader, as the PM basked in the glory of his victory. Brexit will happen. There will be no second referendum and the memory of the many divisions that characterized the House of Commons agenda for the past three years is already fading.

Predicting the future is a dangerous game, but it nonetheless holds a continual allure, notwithstanding, indeed perhaps because of, the inherent dangers in the enterprise. With this caveat let me posit a tension that will face the PM in the coming months. It is summed up by the title to this blog, where the three key variables are politics, economics and time. The tension is not hard to discern.

We begin with politics. The PM wishes to cement his hold on what was hitherto the red heartland. This is a rational political strategy, entirely to be expected. To do otherwise would be politically irrational. The rationality is attested to by the trip north immediately after electoral victory, the promise of cash for the Northern towns, and the change to the Withdrawal Agreement Bill, wherein the UK will be legally bound to leave at the end of 2020, and not seek an extension, subject of course to the normal precepts of continuing parliamentary sovereignty. The trip north was symbolic, albeit important for all that. The promise of cash requires no further explanation. The curtailment of transition was designed, inter alia, to convince Leave supporting Labour voters that Get Brexit Done was for real, with no temporal backsliding allowed.

This is all well and good, in its own hermetically sealed terms. The problem is that the political strategy may not sit easily with the economic consequence, more especially that which impacts on the very Northern Labour voters that the political strategy is designed to cement to the Tory flag. The reason is not had to discern. The commitment to leave by December 2020 means that if a trade agreement is secured it is likely be thin, covering only the bare basics of a future trade relationship. This same temporal commitment increases the likelihood of a no deal Brexit, and default to WTO rules. In this eventuality, the difference between leaving with a Withdrawal Agreement, and leaving on a no deal basis will be simply temporal. The no deal kicks in 12 months later. The economic likelihood was always that manufacturing industry would be hit hard by Brexit. Consider in this respect the unprecedented move by five major trade associations warning the government of the dangers of leaving without a deal, and the dangers also of the extra costs that would be incurred by increased customs complexity. The bottom line for the purposes of this blog is that the political imperative to convince Labour Leave voters that the PM is serious in getting Brexit done, may well have economic consequences that are particularly deleterious for those very communities that are dependent on manufacturing. If this is so then the PM’s chances of retaining the allegiance of traditional Labour voters may be short-lived.

The tension between the political and the economic is manifest and rendered further complex by the geographical dimension, which for these purposes means Scotland and Northern Ireland. The PM may have breached the red wall, but the tartan wall further north was reinforced. The SNP was victorious and Conservative representation in Scotland is exiguous. This naturally prompted Nicola Sturgeon to raise the prospect of another Scottish referendum, and equally naturally prompted the PM to resist. The PM has formal legal arguments to fall back on, but it is nonetheless difficult to see how the demands for a second referendum can be resisted in the short or medium term. The political consequence of Brexit, predicted by many in 2016, wherein leaving the EU would lead to the break-up of two unions, including the UK, may well become a reality. The political dimension in Northern Ireland is also likely to become increasingly febrile. The modified Northern Ireland backstop included in Withdrawal Agreement Mark 2 will lead to increased checks, and trade disturbance, notwithstanding the PM’s repeated disavowal in this respect. The natural pull of the trade provisions relating to Northern Ireland will draw it closer to the Republic of Ireland.

There will be economic consequences of these developments, notwithstanding the fact that they may not be easy to predict, and notwithstanding the fact that they may pull in different directions. Space precludes detailed analysis, but the economic consequences of Scottish independence for the rest of the UK maybe significant, more especially if it joins the EU, as it surely will. The temptation will be for UK firms to relocate their headquarters to Edinburgh or Glasgow and thereby secure unfettered access to the single market. This temptation will be all the greater if we leave without a deal, or if there is increased regulatory divergence between the remainder of the UK and the EU, with attendant cost increases for firms based in England.

Time will tell whether these changes occur, but as noted at the outset, political change seldom moves at a uniform pace. This is a fortiori true of economic development in circumstances where the economic stakes are high, and the political backdrop unpredictable. 

The views expressed in this article reflect the position of the author and not necessarily the one of the Brexit Institute Blog

Paul Craig is Professor of English Law at St John’s College, University of Oxford

 

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