Short term politics behind the UK's hard Brexit

Mercifully, I’m not attending the Conservative Party Conference in Birmingham, but watching and reading the news reports I’m struck by how quickly the Notting Hill Tories have been airbrushed from the Party.

According to one news report, a video on Sunday that showed the achievements of David Cameron was greeted with “a stony silence.” The party faithful are stampeding towards the Brexit.

Meanwhile a hardy band of Conservative remainers keep a low profile, muttering in the dark corners while Tory Brexiteers trumpet really important issues like bringing back British passports (in royal blue please) and re-commissioning HMS Britannia.

Mr Cameron and Mr Osborne’s brand of metropolitan, socially liberal conservatism is suddenly so last year. The new Prime Minister has made clear, in lobby briefings, that her policy targets now focus on voters in the £16-21K income group.

That focus may align to the Tory Brexit agenda, where the push from some elements of the press and right-leaning strategists for there to be a hard Brexit has seen the PM announce this week that Article 50 of the Lisbon Treaty will be invoked by March next year.

Sensing Labour weakness among voters in Labour’s own heartland constituencies (fuelled by dislike of Jeremy Corbyn’s London-centric middle class socialism), the Tories see an opportunity to attack, picking up patriotic blue collar Labour votes and pushing out UKIP at the same time.

This strategy is less about what’s good for the UK in the longer term, and more about the short-term opportunity for Tory electoral hegemony. It illustrates how short-medium term political considerations trump longer-term pragmatism (an accusation, to be fair, that was also leveled at Cameron’s ‘government by headlines’), to the detriment of the longer term interests of UK once the fiendishly complex Brexit negotiations kick into gear next year.

For an excellent (and sobering) insight into the perilous seas the UK has cast off into following the June referendum, Charles Grant’s essay on the likely hard line taken by the EU 27 is non pareil. A link to his piece is here for interested parties if you cut and paste it into your browser

The economic consensus is that Brexit will see a 2-8% reduction in GDP growth. Chancellor Philip Hammond expects a 4% drop, albeit over several years.

Looking ahead to March, once Article 50 is invoked, there is no chance that the UK can agree a long term deal with the EU by 2019, not least because – just as in the UK – politics will guide action among all 27 member states and there has to be agreement to a deal by every single EU member.

The sense is, therefore, that the next two years will see negotiators working towards a transitional arrangement that removes the need to agree a final separation quickly.

A trade off between Single Market access and free movement is not a runner. Not least because some EU Member States, such as France and Holland will want to avoid being held to account by nationalist anti EU parties complaining that if the UK can secure a good deal by leaving the EU, they should follow.

On some issues, the UK has advantages, such as the Capital Markets Union, where Southern European states benefit from UK financial assistance for, among others, Italian Banks (it was no surprise that the Italian stock market was the biggest faller after June 23).

But even in Italy, Prime Minister Renzi has taken a hard line on Brexit, noting perhaps that 52% of Italian voters want to avoid giving any favourable concessions to the UK.

The Irish Republic will also want to avoid a solld border between it and the North, for obvious reasons, so there will be some support for the UK in the negotiations, but whatever Brexiteers would have us believe with their absurdly optimistic propaganda, the UK is in for turbulent and challenging times once the starting gun is fired in March.