What an odd week it has been. I wrote last week of how the Tories’ best option would be to have a big rethink about how they are approaching Brexit, and what they expect to achieve. It felt more than ever that, whatever anybody's personal opinions on Brexit may be, we were reaching peak "they are going to screw this up for everybody, aren't they?" This led to the podcast we recorded last week being absolutely the most depressing yet. I’m not saying any of this has changed, but something interesting seems to have happened.

The idea for this week’s podcast had been to outline how we would do Brexit and to explain what we think we might get out of it; a positive and productive episode to offset the doom-mongering of last week. Broadly, we would outline how our opinion on this hasn’t changed in 18 months, and that the only way to do Brexit successfully is through membership of the EEA and EFTA. At the end of last week’s blog, I mentioned how this strategy had started to come back into the conversation. Michel Barnier seems increasingly keen to make it obvious that this route is a good idea and an acceptable compromise. EFTA representatives are suggesting they would be happy for us to become a member, and there are rumours of increasing support for the idea within the government. Then of course, we had the 2nd official round of negotiations, and everything looked depressing as usual. It was reported that there were significant disagreements over citizens’ rights, in particular because the rights of those citizens will have to be overseen by a supranational court - normally the ECJ, but this would cross one of the Tories red lines and so no agreement was reached. The talks were totally unproductive, it would seem. Then, Barnier was asked a few questions about ways to resolve the issue:

Once again, he made it clear that EFTA was a sensible compromise. The usual response from our side would be to completely ignore the suggestion, as they did, but then something else happened. Our side appeared to readjust their expectations. There was this scoop from the Huffington Post setting out how both Fox and Davis appear to have concede to Hammond’s idea of an implementation period, but more importantly, that freedom of movement would continue for at least two years after 2019, likely until 2022. Now, if that is the case, it would follow that this means single market membership until 2022, wouldn’t it? Then there is this article in the Guardian, where Fox again suggests that a transition period will go onto 2022, and there is this line: “Last week, senior cabinet sources suggested the government was united in its need to seek an “off-the-shelf” transitional arrangement, in which Britain would likely remain in the single market and retain free movement for at least two years after the UK formally leaves the EU in March 2019.” Then there was this article in the Telegraph, reporting that a group of Tory MPs have been meeting Labour MPs in order to push the Norway Option. There seems to be clues everywhere, we are now just waiting for one of the Brexiteers to explicitly address the EEA/EFTA possibility, and put the strategy firmly back into play.

​Meanwhile, Jeremy Corbyn has been on TV saying that “The single market is dependent on EU membership”, which is just bizarre. He then supported his statement by saying that they are “inextricably linked”, which is just completely untrue. I’m pretty sure everybody knows this now, I mean, even a totally uniformed person could disprove this in about 20 seconds. The question is, does Jeremy not actually know what he is talking about, or is he deliberately employing the tactics of say, Vote Leave, in brushing over some important details in order to justify his increasingly untenable position on the single market?

I’ll leave you with a few things to read. The big one is this report from The UK in a Changing Europe, which is a great overview of the horrors that no deal might entail. I wouldn’t say it does a comprehensive job in that regard, but it certainly exposes some of the rubbish still being pushed by some on the same topic, like this. This article in CapX is brilliant on why Norway is the way to go, and Stephen Bush in the New Statesmen is good on the possibility of a transition. Finally, this piece in The Conversation and this in the LSE blog explore the possibility of joining EFTA.

@GMCC_Alex

The big hoo-ha from last week was over our exiting of Euratom, the European agency which regulates the nuclear industry.  We first learned of this decision when it was included in the Article 50 withdrawal letter, but the subject flew somewhat under the radar. Until now. Of course it turns out that this could be a pretty big deal, but more terrifyingly, that no assessment of the implications of the move were carried out beforehand. The Euratom treaty enables the free movement of nuclear materials and workers, and oversees the rules of doing so. It also funds and co-ordinates nuclear research projects and institutions throughout Europe. Whilst a separate legal entity to the EU, the two are inextricably connected, with no country being a full member of Euratom from outside the EU. The decision to leave Euratom was made without assessment as it is subject to the jurisdiction of the European Court of Justice (ECJ) which is now a red-line for the government, because we need to “take back control”. Leaving Euratom, among other things, will put our world-leading nuclear industry and its workers at risk, will disrupt British scientists’ work in the field, and may restrict the use of radioactive materials in the health service, such as those used to treat cancer. There are ways around this, such as associate membership, but it is not at all clear how easy or practical this would be or what of the benefits could be retained. Even arch architect of Vote Leave Dominic Cummings ranted on Twitter about how stupid a move this would be. It is just another entry in the ever-extending list of things that nobody who is handsomely paid to do so gave any serious thought to – customs, skies, fisheries, medicine, nuclear – what will it be next week?

We also had the launch of the bill formerly known as the Great Repeal Bill – now entitled the “European Union (withdrawal) bill”. I’m rubbish at legal stuff but the general impression seems to be either that we don’t really know any more about what this means, or that we should all be terrified of the coming power-grab and potential constitutional crisis, or both.

The Tory cabinet seems to be ganging up on Phillip Hammond in anonymous briefings, and is squabbling over Brexit policy, according to leaks within the party. Figures like Chris Grayling have immediately come out and denied that this is happening, but if it is, it is not good news for the Tory party and is probably bad news for the country. The rest of the party remains intent on repeating the same things over and over again, not changing course one iota in light of emerging information, the absolute antithesis of pragmatism. Hammond, whilst not a great deal more impressive, is much more realistic and appears to be actually taking new information on board and adjusting his approach accordingly. His rhetoric is perhaps at odds with the party line, but as we have seen the party line is unhelpfully rigid and ambiguous. Hammond represents compromise within the party – something which there will need to be a lot of, on both sides of the negotiations, if an amicable deal is ever to be reached. Any attempts to silence differing viewpoints within the party makes one wonder how differing viewpoints may be approached during negotiations. Alas, Hammond did eventually reiterate that there would be no single market membership during the transition period, once again throwing absolutely our best option under the bus.

Labour continue to confuse everybody. They have refused to rule out SM membership during the transition, but still want to retain all benefits of the SM and the CU despite leaving them, which is impossible, but boy are they sticking to it. Rebecca Long-Bailey even said this week that Labour want to “have our cake and eat it” when it comes to Brexit whilst recognising that this would be difficult without major concessions – a “have your cake and eat it” of a position, and completely meaningless. The bigger issue with the current political landscape is that with Labour having done fairly well at the election and the Tories looking shaky, party politics is becoming more important than doing Brexit in a sensible way. Hammond will now be hounded for disloyalty rather than listened to when he makes fair points about how badly his colleagues are doing.

As we officially enter the second round of negotiations, it unfortunately feels as if the only appropriate course of action for our politicians at this point is to accept that they may have screwed this up somewhat on first attempt, and reset both their approaches and their expectations. Davis in particular is still confidently pedalling vague nonsense, as we saw at his questioning by the Lords Committee last week. Everything he says massively oversimplifies the task at hand, and his general message that through compromise we will get through this and everything will be fine is completely at odds with his parties’ complete inability to even entertain the idea that they should adjust their strategy. Brexit will only work with if both sides are willing to give ground, yet the Tories are showing zero capacity to re-evaluate and adjust the course they so obviously set us upon before they were ready. They seem to see any wobbling on the current approach as a weakness, rather than a strength in effective, pragmatic management and a clear sign to the other side that we want to work with them. I cannot see any future outcome in which the Tories look good, given their current strategy. If we crash out without a deal, their reputation will be shot, and they will likely be out of power for a long time. If Brexit doesn’t happen, their reputation will be shot, and they will likely be out of power for a long time. If we get a good deal, it will look absolutely nothing like what they are suggesting we might get, will cross their red lines, their reputation will be shot, and they will struggle to get into power for a long time. The only way out of this is for them to hold their hands up and rethink, or call an election in the hope that they lose. The trouble is, none of the other parties are offering up anything better.

To end on a slightly more positive note, everything is starting to point in one direction: Norway. Barnier is mentioning the EEA more and more often, seemingly growing frustrated at our sides’ unwillingness to confront the best possible option despite him repeatedly putting it on the table. Iceland’s foreign minister has basically invited us into EFTA, and apparently there is willingness from all EFTA representatives to allow Britain into the bloc. Bill Cash, who leads the European Scrutinee Committee has said EFTA membership is an ‘interesting proposition’, and apparently there is increasing support for the idea within government, even going as far as the PM, and with DExEU not ruling it out. The way out is right there in front of us guys!

alex.davies@gmchamber.co.uk

@GMCC_Alex

Theresa May is tomorrow, on her one-year anniversary as PM, set to make a speech to reinvigorate her premiership. In this speech she will call upon opposition parties to “contribute, not just criticise”, and to “come forward with your views and ideas about how to tackle these challenges as a country”. This message is in stark contrast to what we were seeing 6 months ago, when any opposing a hard Brexit were called out as saboteurs. That May is willing for Brexit to become a cross-party issue some will see as very welcome, but it is a clear sign of weakness and a path she has obviously been forced into rather than chosen. Nevertheless, it is yet another sign that our Brexit destiny is softening, with the threat of “no deal” feeling for the first time ever less likely than the whole thing being called off. Perhaps.

Of course, the issue is far from settled. Rebel MPs including Chuka Umunna and Anna Soubry have formed a cross-party group to oppose hard Brexit, and there are rumours that Eurosceptics Steven Woolfe, founder of Labour Leave John Mills and co-founder of Leave.EU, Arron Banks are teaming up in the hope of launching a new movement to stop Brexit being watered down.  It seems that we may be returning to the world of Brexit campaigns. The trouble with this strategy in my eyes, is that a new Hard-Brexit campaign would have nothing new to say, and would be operating in an environment that is obviously turning against them. It wouldn’t be a reboot of the leave campaign rather than a re-hash – surely something nobody wishes to endure at this point.

The move by May will hopefully force Labour’s hand by exposing the contradictions of their Brexit strategy, which is currently permitted by their opposition status to not have to make any sense. If however, Labour take up the offer to collaborate, they will certainly need to firm things up. Labour are currently managing to wear two hats – they essentially back a hard Brexit, but also have their six rules under which Brexit must not go ahead, none of which would be satisfied by a hard Brexit. With May looking in essence to trade amendments for votes in parliament, Labour could find themselves in a fairly powerful position should they choose to take it, even if it is one in which their incompatible Brexit statements (or super-smart totally-on-purpose next-level politicking) have to be addressed. Labour’s position thus far has been given a pass, but if they are to take a step closer to the negotiating table this cannot go on.

Guy Verhofstadt has given us his two cents on the proposal for EU citizen’s rights, calling it a “damp squib” and “far short of what citizens are entitled to”. His comments form a joint letter to newspapers signed by leaders of political groups accounting for two-thirds of the European Parliament, in which they explain that they can veto any deal if they do not approve. Of course, vetoing the deal as far as we currently understand would leave us with “no deal” in which the rights of all citizens concerned would be blown to smithereens. This is like our MPs suggesting they might vote against the final deal if they don’t like it, which again would guarantee the worst outcome possible. Am I missing something here? Are both sides implicitly saying that if they don’t like the deal, we revert to the status quo? Unless there is a secret agreement that if Brexit doesn’t satisfy everyone then we won’t Brexit, these arguments make no sense whatsoever, right? Maybe I am losing it, I don’t know anymore.

alex.davies@gmchamber.co.uk

​@GMCC_Alex

Last week, Jeremy Corbyn sacked three of his frontbenchers because they voted for an amendment on staying in the single market. I could dwell on the irony of JC sacking MPs for rebelling – something which he has been proud of doing for his whole career, but instead I’m going to try and break down the madness that is happening regarding the single market question. Elsewhere, Labour MP Caroline Flint, speaking at a Progress event, said that “Those who aim to keep us in the single market, know full well that this is EU membership in all but name”. Speaking on Question Time, Liam Fox said: “Let’s face it, the people who say ‘we want to stay in the single market, we want to stay in the customs union, but really, we still respect the will of the British people’ – it’s not true. They’ve tried to frustrate the will of the British people”. I am astounded and disappointed that this kind of unthinking is still going on in the minds of our politicians more than a year on from the referendum. A senior trade diplomat at the WTO this week was quoted to have said “There are people in the UK who know what they are doing, but they are not the ones making the decisions."

Now, I am not suggesting that the opinion that we should leave the single market and the customs union is invalid, just that I am getting quite annoyed at the shaming of people who perhaps might have a nuanced view of these issues. To suggest that anything but coming out of the SM and the CU as soon as possible is an attempt to frustrate the will of the British people or is some attempt to stop Brexit, is a shutting down of much-needed debate, just as an amendment that would enshrine a guarantee of continued membership is equally ridiculous whilst the matter is obviously not settled. The current rhetoric around this question from our politicians at the moment does nothing if make them look incapable of holding a complex, non-binary thought, and forces me once again to go over some of the same things I’ve been arguing since I first entered Brexit land.

So here we go again: Brexit is a process, not an event. It is a catalyst, not a cure. Whatever you may want to get out of it, there will need to be steps along the way. After each step, we must take time to ensure that we are prepared for the next one. Ideally, if businesses are going to need to make an adjustment to a new arrangement, there should be as few adjustments as possible, and they should have more than enough time to prepare for them. None of these steps or adjustments will give us what we want in and of themselves, they will only move us closer to a position where getting what we want is more of a possibility.

As things stand, we are over three months into our two-year negotiating period, and basically nothing has been achieved. There are in my mind only two possibilities wherein we can make this work: One, that we extend our membership of the EU until at least 2022, but likely longer, by which time we may have enough sorted out as to have the adjustment be manageable; or two, we negotiate an extended transition period until 2022, but likely longer, wherein we are technically out of the EU but little adjustment has needed to take place. Our primary objective at this point should be to remove ourselves from the current time constraint, and get ourselves into a position where we can take our time, and figure out how to get the most out of this whole process.

There are many prongs to the things we seek to gain from, and protect during the process, and different people want different things; there are going to be trade-offs, and effective management of these trade-offs through a pragmatic approach is vital. Rushing this and closing off possible routes is the best way of guaranteeing that we “win” in one area but “lose” in all others; that we take one step forward but many more steps back. Behind the scenes at least, It seems as if civil servants are starting to come to terms with these trade-offs, and are considering realistic first steps to manage them effectively. But when MPs on both sides shame people doing any serious thinking about how best to go about this, it feels like we’ve made no progress at all in the past twelve months.

What about freedom of movement? Well, SM membership is not at all at odds with controlling immigration, if we can be smart about it. First of all, FoM is Freedom of Movement of Labour, not everybody. Many countries within the EU have ID card systems or something similar that allow them to monitor who is coming in and out and what they are doing much more comprehensively than we do. Non-EU immigrants to the UK already have ID cards, we have a system in place that could be rolled out more widely, all within the rules of the SM. Other countries too, have stricter border controls than we do, all within the rules. In this respect I suggest that perhaps some the dissatisfaction with the way things are currently done here are more reflective of domestic policy rather than the EU's. Then there is also the possibility of something like the emergency brake outlined in article 112 of the EEA agreement which is rumored to be on the table for the transition period. I could also talk about how the most recent annual survey of EU citizens conducted by Project 28 found that 76% of EU citizens believe the organisation handled the migrant crisis poorly, or that 79% believe that the EU “should protect its outer European borders more effectively”. This is a massive disconnect between the people of the EU and its leaders, at least showing that the conversation around FoM is bound to change dramatically over the next few years as Brexit progresses. On this issue, we are not necessarily up against an immovable object. There are options.

On the customs union, Theresa May was actually spot on when she said it isn’t a binary choice. The CU isn’t really what people think it is, and the various aspects attributed to it are not interdependent. There are ways we can make sure that customs cooperation remains as it is today whilst we are released from the Common Commercial Policy that prevents us from doing our own trade deals. In fact, we could enter our own customs union with the EU kind of like Turkey, or strike up individual bilateral deals like Switzerland. There are options.

Ultimately I suspect that we will leave both the single market and the customs union, but like Brexit as a whole, these are only means, not ends. The first step we take – be it EEA, EFTA or something similar, might not be the final destination that people are after, but until we have determined the best way to manage the trade-offs on the way to that destination, we would be stupid to start taking options off the table. 

alex.davies@gmchamber.co.uk

@GMCC_Alex