The uncertainty of Brexit

20th November 2017

A lot has happened on Brexit in recent weeks and this post sets out what some general views as to where we are now in this adventure (or misadventure, depending on taste).

There is one thing which is more likely than not: the United Kingdom will, by automatic operation of law, cease to be a member of the European Union on 29 March 2019.

This is regardless of there being a deal or not.

The departure date could be later (or even earlier) but only by agreement and there is not a plausible prospect of such a change.

Those who want Article 50 notification revoked are probably correct in saying that if UK sought to revoke the notification (in good faith rather than as a negotiating ploy so as to re-set the clock) then it would probably be accepted.

But such a prospect is not obvious as of today.  It is not wishful thinking to say the notification can be revoked as a matter of law; but I fear it is wishful thinking to believe that it will be.

Little else is more likely than not.

The UK may not even have the necessary legislation in place in time.

The UK and EU may not have an exit deal in time.

The issue of the Irish border does not have any obvious solution.

The UK does not have a settled view on what trade relationship it will have with the EU after Brexit, though it is plain that a Canada-style Free Trade Agreement is the most likely outcome, regardless of what the UK says it wants.

The causes of all this uncertainty and lack of direction have been rehearsed many times.

But this does not make what will happen any the more obvious.

What will happen on, and after, the day of departure is still anyone’s guess.

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25 thoughts on “The uncertainty of Brexit”

  1. “The issue of the Irish border does not have any obvious solution”

    I’d be interested in whether a Canada-style free trade agreement could be compliant with the provisions of the Good Friday Agreement.

  2. I am prepared to predict (not guess) that Brexit won’t happen. Here’s why:
    The Irish Border is a deal breaker. The border will come back. This can only happen two ways. No Brexit or Union of the North with the Republic. Little noted is that the voting system in the North is the single transferable vote as in the Republic. Northern Ireland’s assembly has been trimmed down from to 90. A further slimming would make the constituencies fit perfecting into Dáil.
    Crashing out of the EU will push the economy into Depression.
    The Tories won’t be in power in shortly.
    The DUP supports the government but won’t if it is a question of union with the Republic – their worst nightmare. They will bring the government down.
    Labour will win the next election and cancel Brexit if only to keep those wealthy institutions, businesses, etc. in the UK so they can be taxed.
    The loss of EU institutions in the UK will be a blow to the economy as well.
    Ain’t gonna happen.

  3. At the risk of playing the proverbial fool who rushes in where others fear to tread I would suggest that there is an overarching reason for the “causes of all this uncertainty and lack of direction”.

    The illusion that there was no need for anything more substantial than a clear statement that the UK was to leave the EU (read: “Brexit means Brexit”) was founded on the belief that the EU was in a state of near collapse. With the shock of a UK leave decision the EU would begin to fall apart. The result: there would be no real need to negotiate with the EU because the other member states would, following the UK example, be heading for the door and would similarly be contemplating an existence more or less outside or on the margins of the EU.

    This belief was nourished by the proud British tradition of a thousand years of a nation state which, for the average Briton, makes it very difficult to accept that the nation state may be ripe for change; or may even be obsolescent. And, in fairness, the combination of the after-effects of the banking crisis, the Eurozone crisis, the Greek crisis and the refugee crisis, all of which had been building up since 2008, could reasonably be said to have fortified this viewpoint.

    But the big surprise if 2017 has been the revival of the EU with the buoyant Eurozone economy, the positive result of the Dutch elections and the “divine surprise” of the French elections (although the recent disarray following the German elections now seems to be heading the other way). Suddenly, for the UK there was (and is) a need for a strategy: the EU is not going to collapse.

    At a private dinner held in London in February 2017 this commentator asked an eminent former Conservative politician and Eurosceptic whether Brexit was predicated on the collapse of the EU. It is only fair to record that his answer was a clear no.

    But if this was not the overarching position that explains so appalling a lack of preparation on the part of the Brexiters, what other overarching position was there?

  4. Regarding the Irish border question, what would actually happen in practice, especially in the case of a no deal scenario? Are the EU obliged to put up a hard border or is the UK? If the UK then what’s to stop them just not doing it?

  5. I remain convinced that Brexit is the unplanned vision of a vocal minority agitated by external influences rather than the genuine ‘will of the people’ Whatever the outcome, it is evident that the scale of this project is far greater than the competence of those tasked with delivering it and that party politics, not logic, will determine the outcome.

  6. As a Brit living in mainland Europe, this whole debacle leaves me feeling sick to my stomach and ever-more worried for our future. The Brexit vote was bad enough – especially since I, along with 800,000 other Brits in the EU27, was denied a vote and had to sit helplessly by while others decided on our fate. But watching the Government entirely ignore the 48%, and take an antagonistic, adversarial worst-of-all position, plus the lack of any opposition from Labour, then watching MPs vote to remove their own powers and the sheer nastiness of the right-wing press ramping up. Well, words fail, really. It’s almost beyond belief that a democracy that appeared so solid could be hijacked by extremists in such a manner. But it is, I suppose, a very British coup. We Brits in Europe must now hope for the best from the EU, since our own government has entirely abandoned us.

  7. Does any border not have “our” side and “their” side?

    Surely we can unilaterally decide to have our side function post 3/19 exactly as it does today ie very soft and Irish citizens can live and even vote here.

    You can’t get softer than that.

    So why can’t the Irish shrug off the EU and decide themselves how they want their side to operate?

    1. Ireland cannot as a matter of EU law act as if the NI border is not an external frontier of the EU. The UK has chosen to leave the customs union and the internal market. Neither of these acts were required by Brexit. Thus there will be a different customs regime in NI from March 2019 as well as a different regulatory regime. Irrespective of membership of the EU the Republic would have to act to protect its own laws and its revenue base.

      Finally, if the UK accedes to the WTO it will not be permitted to have an open border on one side. The issue here is not the EU or the Republic of Iteland but the asinine idiocy of the UK deciding before negotiations had even commenced to set out its stall so absolutely that its negotiating position was sabotaged. It was a monumental act of self-harm on top of Brexit. It occurred solely because Teresa May, a remainer, wanted to demonstrate her Brexit hard line credentials. It was solely a Tory Party “necessity” but in time it will be seen as an act of hubris and treason. Party before country.

  8. So it is clear we will Leave, but then some, perhaps most, expectations will not be met and some of these will have serious consequences. Brexiteers will be blamed for the mess, so will Remainer ‘back-stabbers’, the electorate can never be wrong. Legal order will continue in what will generally be regarded as an ‘unhelpful’ way, and a generation of vilification and unhappiness will result until we learn to seek advice from experts and to trust them again.

  9. Clearly leaving is difficult. But every time I start wondering how I would feel if we had voted to stay I come back to the same issues; we were being asked to vote to remain in the EU on the basis that we, alone amongst the 28 countries, would be exempt from participating in what is the primary purpose of the EU; Ever Closer Union. That doesn’t make any sense and in the long run is simply not viable. Secondly, we were being offered a chance to “remain in a reformed EU” but Juncker specifically ruled out reform at every opportunity. We were told we would have to keep FOM, and the European Commission projected (at the time) an increase of 25% in the population between 2013 and 2050/60. Building the infrastructure for that, which is the equivalent of two Londons, in 40 years is completely beyond us. So despite the problems I remain happy with the decision to leave.

    We have been told of impending disaster by Remainers throughout the whole process. Immediate recession, loss of half a million jobs etc etc. These things didn’t happen. We were told EU citizens were leaving in droves; there are more here now than at the time of the Referendum.

    There is no clear road map from here, no-one who can call with confidence where we are going. We are afloat on a sea of uncertainty. Are the problems of leaving real? Or are they a smoke screen put out by the EU and Remainers to try and force a bad deal on the UK? Will the dire predictions of “experts” come true? Or are they just people abusing their professions to present their own opinions and wishes as facts when they are simply opinions and wishes? We have no way of knowing. Technocrats hate this, but for many people in business this is everyday existence, and you just face the task head on every day and don’t flinch. Time to be ambitious and optimistic, not a moaning fearful pessimist.

    And that Ireland border. Here’s my view. We aren’t bothered about people coming across the border. The more the merrier. Employers are responsible for ensuring their workers have the right to work here so we aren’t going to see any more illegal workers than we currently do. Anything that goes across the border in anything smaller than a small truck I’m not bothered about; the NI authorities are responsible for what happens in NI, and pragmatically if someone in NI could drive to ROI, buy something and bring it back, then selling the same item in NI shouldn’t be a significant problem and all goods will be covered by UK law that says they must be fit for purpose. Articulated lorries or any other large movement of goods would have to cross into the UK on ferries so Customs could operate spot checks there. All done. I believe there are problems with agri-businesses and other businesses moving things across the border but if ROI and the EU are happy to work through that then I’m sure we are.

    Varadker is making a major mistake by making the border such a central issue, one on which the whole discussion hangs. If he fears the consequence of a bad deal, he should be trying to persuade the EU to offer a good deal not getting the EU to threaten us on his behalf. Thinking that the UK will cave in to threats is to make the same mistake that Remain made when they got Obama to threaten us. Varadker is badly misreading the mood in the UK and his approach is likely to ensure the very outcome he fears and which he could easily avoid.

    1. Dipper, your comment is symptomatic of everything that is wrong with the Brexit position. You simply don’t understand what you have set in motion.

      The Irish understand perfectly that once the UK decided to leave both the internal market and the customs union, a hard border for trade became necessary. This is the case all over the world. Ireland will be an external frontier of the EU. The UK will be outside the EU (it could have left the EU and stayed in the customs union and/or internal market) and this means he UK will be applying different taxes and different regulatory standards to goods. The normal mechanism for controlling such a scenario is a hard border.

      The UK on the other hand wants to have its cake and eat it. Having decided to leave the customs union and the internal market it now wants to retain the benefits of both, because you know we are the UK, but without any idea of how this could work in practice. You simply don’t get it. You don’t understand borders or what they are meant to achieve or what they enforce. And the bureaucracy! The scale is staggering. But the UK chose this once it left the customs union and internal market. The EU didn’t chose this outcome.

      The Irish PM knows that a central part of the Good Friday Agreement is membership of the EU. It’s written into the Agreement. The UK has decided to unilaterally change the terms of an international agreement. Everyone knows that the current UK position will lead to a hard border. This is the antithesis of the GF Agreement as the invisibility of the border is core to peace in NI.

      The position of the DUP and Arlene Foster is typical of the self deceit that is being engaged in by Brexiteers. Hard brexit but no hard border. It’s a lie. But the Irish are well used to perfidious Albion and are not fooled. It’s strange how in such a short space of time the UK has managed to turn close allies into enemies. What an achievement. The UK by engaging in self deceit and refusing to acknowledge the logic of its own position and the consequences is alienating allies and destroying its own reputation and power. The recent UN setback is but the first of many. The UK is becoming an inward looking irrelevance.

      1. John – thanks for your reply.

        “once the UK decided to leave both the internal market and the customs union” – the EU made it clear that remaining in the internal market would require us to keep Freedom of Movement. So it was as much the EU’s choice as the UK’s.

        “The UK on the other hand wants to have its cake and eat it.” – yes. That’s our starting position in the negotiation. It is not the job of the UK to do the EU’s negotiating for it by bargaining our own position down.

        “The Irish PM knows that a central part of the Good Friday Agreement is membership of the EU”. Is your case that the GFA means the UK can never leave the EU? The world changes, politicians have to move with the changes.

        “the consequences is alienating allies and destroying its own reputation and power.” – allies don’t normally require payment to be your allies and don’t normally demand the right to determine what you re allowed to do in your own land. You need another term.

        “The recent UN setback is but the first of many. The UK is becoming an inward looking irrelevance.” I can’t wait to be free of the shackles of the inward looking protectionist EU zone and start to engage more with countries across the globe without having to go through the EU. Remainers seem very exercised about the UK’s “position in the world” and “influence” but Leavers know the empire ended decades ago and are keen to be just another nation out there in the world looking for mutually beneficial deals.

        Ireland’s problem seems to be that the organisation they are part of – the EU – does not have Ireland as a priority. They are negotiating against the interests of Ireland. What Ireland should be doing is encouraging the EU to strike a decent deal, not winding up the UK with threats.

        1. Dipper

          Thanks for your response. You say: “the EU made it clear that remaining in the internal market would require us to keep Freedom of Movement. So it was as much the EU’s choice as the UK’s.” No it wasn’t. The UK is the country that decided to leave. The referendum was non-binding. More importantly, there was no requirement for PM May to declare at such an early stage of the negotiations that the UK was leaving the internal market and the customs union. It limited your options and those of the EU. It was a very bad negotiating stance.

          I said that the “The UK on the other hand wants to have its cake and eat it.” and you replied “yes. That’s our starting position in the negotiation. It is not the job of the UK to do the EU’s negotiating for it by bargaining our own position down.” With respect you miss the point. The point is that what the UK wants is not and can never be available. If you want the benefits of free trade then stay in the customs union. If you want the benefit of the internal market then stay in the internal market. These are the mechanisms that deliver those benefits. There are no other mechanisms and there cannot be other mechanisms because of the sheer range of technical and legal harmonisation that must exist for those benefits to be available in the first place.
          These benefits took decades of negotiation. The notion that there is another way that they can be achieved in 18 months without unraveling all the existing arrangements is simply a fantasy.

          I said that “The Irish PM knows that a central part of the Good Friday Agreement is membership of the EU”. You say that “Is your case that the GFA means the UK can never leave the EU? The world changes, politicians have to move with the changes.” My response to this is that one side to an International Agreement cannot unilaterally walk away from that Agreement, as the UK has done and is doing, without sincere negotiations and consultation. These consultations have never taken place. Change must be negotiated. What we have is a pretense on the UK side that it is business as usual and that is a straightforward lie.

          I said “the consequences is alienating allies and destroying its own reputation and power.” You replied “allies don’t normally require payment to be your allies and don’t normally demand the right to determine what you re allowed to do in your own land. You need another term.:. Actually I don’t need another term. Allies often require payment and are usually allies because of mutual benefits. When one side unilaterally changes the nature of the relationship then the relationship itself evolves. If by payment you mean the UKs acceptance that it has outstanding liabilities to the EU which it must settle then I do not see that requiring to UK to agree on the extent of those liabilities changes friendly states from Allies to something else. It’s business and it is the UK who is changing the terms of that business not the EU.

          I said “The recent UN setback is but the first of many. The UK is becoming an inward looking irrelevance.” You said “I can’t wait to be free of the shackles of the inward looking protectionist EU zone and start to engage more with countries across the globe without having to go through the EU. Remainers seem very exercised about the UK’s “position in the world” and “influence” but Leavers know the empire ended decades ago and are keen to be just another nation out there in the world looking for mutually beneficial deals.” My response to this is good luck. You’re going to need it. The UK is leaving all the trade deals behind that it has at present and will need to negotiate new ones. That will take time and money and political capital because trade deals are ultimately about politics. The UK is abandoning a whole range of economies of scale it enjoys within the EU in relation to regulations and is returning to the past when it did all of these things for itself. That will be very expensive and time consuming even for a nation with the resources of the UK.

          You say “Ireland’s problem seems to be that the organisation they are part of – the EU – does not have Ireland as a priority. They are negotiating against the interests of Ireland. What Ireland should be doing is encouraging the EU to strike a decent deal, not winding up the UK with threats.” I say that you don’t get it. The EU has Ireland as one of its top 3 priorities and this is why Ireland can veto any advance in the talks. The issue for Ireland is that its former closest ally, the UK, completely ignored the interests of Ireland including a solemn international agreement, and is still engaging in a deceit that nothing has changed on the border when in fact everything has changed. Neither Ireland or the EU can deliver what the UK wants as what the UK seems to want (cake and eat it) isn’t available and never will be because the UK has ruled out membership of all the technical mechanisms for having such a relationship.

          What may be available to the UK is some version of the Canada EU agreement. That is far less than the UK has at the moment and does not cover services. Good luck. You’re going to need it. The grass is not always greener on the other side as the UK is about to discover – “there be dragons”.

  10. The Irish border is not just a matter for UK and Ireland. If unresolved it will provide a portal between the EU 27 and the UK that will undermine any agreements. The pragmatic solution is a United Ireland which is why we have seen Gerry Adams strategic retirement from the field of play. The survival of the conservative party will inflict serious collateral damage that will make the Con/LibDem coalition seem like a love in. The upside is that the DUP will be destroyed but it’s a high price to pay for that.

    1. “If unresolved it will provide a portal between the EU 27 and the UK that will undermine any agreements. ”

      In the event of the EU failing to negotiate an agreement that does not require a hard border, the EU will have to implement a hard border on the Irish side. What we choose to implement on our side is our business. That’s obvious isn’t it?

  11. The uncertainty of Brexit is, to any large business, the fact of Britain’s exit from the European Union.

    You can’t run an international business on a guess that we’ll be ‘sort-of’ and ‘somehow’ still able to trade goods and services between the EU and the UK; not when the costs are unknown and the risk is non-zero that we’ll be totally unable to trade, or forced to halt our business by the excessive costs of trying to do so.

    This is why the motor manufacturers and their suppliers are quietly disinvesting and replicating their UK business activities into the EU. You might hear about the big decisions to transfer production, but not the passive choices – the UK’s major production lines *not* being tooled-up for the new model.

    Hard Brexit is happening, softly and quetly, right across the manufacturing economy.

    The Bankers’ Brexit is less tangible, but just as real. Every single foreign bank and trading house in London must now re-register with the PRA as either a ‘Third-Country Branch’ or as a ‘Subsidiary’ – a UK-domiciled legal entity wholly-owned by an overseas company but subject to ring-fencing restrictions that force it to retain its regulatory capital in London if (or when) the overseas head-office might want to drain its subsidiary’s funds to ‘cut and run’.

    Neither of these approaches are cheap; nor are they attractive to European banks who were trading freely across a borderless union from a trading floor in the City.

    They are equally unattractive to the British banks who must now establish the regulatory status of third-country branches or subsidiaries in the EU, in order to continue selling their profitable services to European customers, clients and trading counterparties.

    That same task is unpalatable to the American banks with their European headquarters in Canary Wharf. But they *have* to have their papers filed with European regulators by March next year: there’s a year-long lead time for these complex applications and the associated regulatory negotiation.

    There is no choice in the matter: the banks must all have their applications in by March. It’s expensive and there is every reason for the US banks’ EU headquarters to ‘up stakes’ and go to Frankfurt, lock stock and barrel, leaving just a local branch to serve a local market in the isolated economy of Brexitstan.

    Right now, because the uncertainty of Brexit is the fact of Brexit, the expense and administrative effort of all this activity is happening *anyway*, whatever our relationship with the EU will be in 2019.

    1. Nike your reading of the status of international finance seems to be off. Banks are winding down their commitments to move to Europe as they find ways to minimise disruption and retain a large presence in London. Demand for employees is still high in London. Apart from requiring physical cash to be traded in the Eurozone which they already do it is hard to see what the EU can do about this.

  12. “In the event of the EU failing to negotiate an agreement that does not require a hard border, the EU will have to implement a hard border on the Irish side. What we choose to implement on our side is our business. That’s obvious isn’t it?”

    Less obvious is the increasing apathy towards the religious and political divisions that have maintained NI. I expect Brexit to be a significant catalyst for a United Ireland within 20 years.

    1. Thinking more about the Irish border question … the Irish border exists because the creation of an independent Ireland failed. A large portion of the population didn’t want to join an independent Ireland and wished to remain in the United Kingdom.

      The UK does not have a strategic interest in NI. Unlike Russia and Ukraine where Ukraine has Russia’s only warm-water port, there is nothing in NI that UK desperately needs.

      The situation has always been since the creation of the border that if an acceptable solution arose then a united Ireland would be possible. To avoid implementing the wishes for the population of the UK because otherwise it might precipitate an outcome that both entities in Ireland would find favourable doesn’t seem logical?

      and “the increasing apathy towards the religious … divisions” well the UK doesn’t have a side in that. We aren’t pro-protestant and anti-catholic. We are unionist because the majority of the population in NI wish to remain in the union; no other reason.

      1. Dipper you say “Thinking more about the Irish border question … the Irish border exists because the creation of an independent Ireland failed. A large portion of the population didn’t want to join an independent Ireland and wished to remain in the United Kingdom.”

        Not so. but it is pretty to think so as it displaces the source of the problem onto the unruly natives. The problem with NI is that the UK invaded and then “planted” a group of loyalists there and displaced the natives. NI is a gerrymandered statelet deliberately designed to deliver a Unionist majority. A majority which is fading fast.

        The only reason we have an agreement on how reunification can take place with the Republic is the Good Friday Agreement. An Agreement the UK has unilaterally abrogated.

  13. I agree. My comment regarding the the increasing apathy towards religious and political divisions referred to the residents of NI. The younger generations will not maintain the hatred incited by their elders. Interestingly it may be modern technology like Tinder that bridges helps to heal the divisions as relationships form between both sides that would not have been encouraged 20 years ago. Gerry Adams is nobody’s fool and whilst McGuiness didn’t, he may well see a united Ireland in his lifetime.

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