Six reasons why it is likely there will be a Brexit exit deal

23rd July 2018

How likely now is a no-deal Brexit?

Many serious people are worried that the UK may leave the EU next March without a withdrawal agreement in place.

Stepping back, there are six pointers to there being an exit agreement in place in time.

The first is that both sides want an agreement.

The second is that it is in the respective interests of both parties that there is an agreement.

The third is that the two sides are still negotiating.

The fourth pointer is that there is a text which is 80% agreed.

The fifth is that there is plenty of time before next March (and even before October which is preferred deadline of the EU).

And sixth, the current difficulties about the Irish “backstop” arrangements if there is not a future relationship agreement are a disagreement about means rather than ends.  Both sides accept that this is an issue to be addressed and a risk to be managed.

Putting into this perspective, the current noise about there a “no deal” Brexit should not be too disheartening.

But a call for calm is not an invitation for complacency: the negotiations can still collapse, and there is a non-trivial chance that the UK will leave the UK by automatic operation of law on 29 March 2019 without a withdrawal agreement in place. Policy and law are not often logical or sensible.

(No doubt this disclaimer will not stop a commentator saying “but you are making an assumption that…” when I am not making any such assumption.)

Overall, it is far too early to panic.

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21 thoughts on “Six reasons why it is likely there will be a Brexit exit deal”

  1. I have a feeling that there will be last minute deals and pictures taking of the negotiating teams from both sides smiling and showing just how clever they are – the last year or so appears to be a lot of bluster and showing off.

    Only my humble opinion of course, no matter what happens the rich shall still get richer and the poor more down-trodden following the well worn path we have been meandering down for some time. ‘Average Joe’ will not reap any benefits by remaining or leaving…

    As others have stated previously it is in the interests of all parties for a deal to be struck, however the EU will not want anybody else leaving the party so we will have to suffer for a while.

  2. As usual this looks excellent analysis.

    As a Leaver, I would say that some Leavers would like preparations for No Deal to be made and publicly committed to as a negotiating tactic to end up with a better deal, and others genuinely want no deal. We won’t have an idea how those positions break down in terms of numbers until we get to the finishing line.

  3. The deal, if provisionally agreed with the EU, has to get Parliamentary approval, that is by no means without risk. Who chooses the way forward under the conditions of a rejection assuming there is some time before March 2019?

  4. I can afford to be very calm because I’m a EU27 citizen on the continent and our company is in the final stages of implementing the contingency plans for “no deal”.

    However, as much as I value your sharp analyses, I respectfully disagree here.
    Your hypotheses work on the assumption that both parties act rationally. Considering that various individuals of HMG behave lately more irrational than ever and most media outlets cheering on their cake-ism approach, I expect the talks to go nowhere and finally collapse.

    May, Davis, Johnson, Raab and Hunt shall write a book “The Art of No Deal” – whenever they spot an opportunity to erode EU27’s trust in UK further, they certainly do.

    I just don’t see them waking up from Brexit LaLaLand ever. Which I find very sad for all the wonderful and rational British people know.

  5. Reasonable analysis but two problems arise already on the 1st pointer: “…both sides want an agreement”.
    a) A long standing one, at least since the 2017 election: The definition of side on… the UK side: May? ERG? Raab? Boris? etc., etc.
    b) A more recent one, and mainly fuelled by a), in some countries on the EU27 side: “just 0,3-0,8% less GDP for us in case of no deal? Do we really care?”

  6. As you say, the two sides (HMG and the EC) desire agreement.

    Each side however has stakeholders with the power to prevent agreement if certain specific demands are not met.

    For HMG I would suggest the key stakeholders are
    – the DUP
    – the ERG
    – the cross-party “sensible” majority in parliament

    For the EC I would suggest the key stakeholders include
    – Ireland
    – the European Parliament
    – possibly Spain (Gibraltar)
    – possibly Cyprus (the sovereign bases)

    The politics may get very interesting.

  7. So, keep calm, and carry on, then.

    UK negotiators should realise the potential political costs of blaming the EU27 for protecting their own interests. Like applicants, we are essentially plaideurs and should combine discretion with good manners… Politically, blaming the EU may not play out as well as some judge at the moment, even within the UK. we have only ourselves to blame for throwing the toys out of the pram.

  8. The trouble is that by the time it becomes clear that it is time to panic, it will be to late to do anything!

  9. I live not far from the Irish border; things are seen here rather differently. Don’t underestimate the DUP; their insecurity is such that the preservation of the union with GB overrides all other concerns. And they have power in the present government.

    They have been anti-EU for a long time. During the first referendum on the then EEC in 1975, the Free Presbyterian Church or their ‘political wing’ had a leaflet with four reasons to say ‘no’. These were: 1) Ecumenism, 2) Rome, 3) Dictatorship and 4) Antichrist.

    They’ve not changed in 40+ years. While they say they want an open border on the island of Ireland, as things presently stand, they cannot have this without a border between NI and GB in the Irish Sea. The latter is a complete anathema to them; they would close the land border first. And, paradoxically, it is the DUP who are thereby driving the idea of a united Ireland forward.

  10. “The first is that both sides want an agreement.”

    In the words one of your colleagues once wrote on my behalf
    “We would put you to proof on that”

    I’m also not perfectly convinced there are only two sides.

  11. I agree, but with the proviso that I still struggle to see how the Irish border issue is going to be resolved – and that accounts for most of the outstanding 20%.
    What the UK agreed in December and March about the backstop means that NI will remain subject to the customs union and large parts of the single market unless the final trade deal between the EU and UK comes up with an alternative solution which avoids controls at the border.
    It was always difficult to see how this could be turned into a legally-binding agreement acceptable to the UK, which has already rejected the EU’s first attempt. May’s capitulation to the ERG’s amendments in the HoC last week appears, on the face of it, to make it impossible as a matter of UK law.
    Moreover to avoid the backstop coming into play a final trade agreement would really have to be so good as to replicate the UK’s membership of the CU and the single market in goods and agri-products. That seems most unlikely, because it would force the EU to give way on the indivisibility of the single market’s four freedoms.
    For you to be proved right – as I hope you will be – a way has to be found through this tangle. At the moment I can’t see how that will be done.

    1. The Irish border started as partition nearly a century ago; the problem wasn’t solved then, and still hasn’t been solved. N Ireland has needed a subsidy from GB from the mid-1930s. It’s about £10 billion today; imagine that as £200 million a week for the NHS on the side of a bus. Even before partition, politicians were warned that economic dependence was likely; they took no heed.

      Unsurprisingly, given the apparent impossibility of squaring this particular circle, there is very considerable renewed interest in Irish unification. And if there is a ‘hard’ Brexit with significant economic costs, it will become ever more probable.

  12. Hi, I don’t think you’ve taken into account the way the parliamentary splits in all parties adds up to get a deal voted through. There is the ERG & DUP to take into account and I think some of these MPs will not necessary vote with the government. You may have been too rational in your analysis!!! Regards, Ian

  13. All good points, but as Shrimsley points out out in the FT, there is no Westminster majority for a deal, unless enough MPs put country before party. That is possible, but so is my being struck by lightning in the next two seconds.
    No lightning.

  14. Thank you, David, for your sensible analysis. I too am not entirely convinced that there will be a deal because:

    – The fact that both sides want an agreement means not that one is achievable. The EUs stance on certain key aspects is basically unmovable and more than two years after the referendum HMG still has to figure out what kind of Brexit they want.

    – It is in the interest of the sensible people on both sides but with the likes of Raab and Rees-Mogg gaining ever more power it is very uncertain that ratio will prevail.

    – Are both sides still negotiating? Since december there hasn’t been much progress and with the new personell on HMGs side the future of the negotiations is in jeopardy.

    – I’m certain you are well aware of the Pereto Principle and that, as both sides have repetedly made clear, “nothing is agreed until everything is agreed”. And all the key problems like customs and the irish border are still largely unresolved.

    – It’s 8 months till end of march 2019 which to me doesn’t seem to be a lot of time, considering that the commons are in summer recess, HMG still has to figure out their position and every draft paper has to be discussed and approved of by the british houses, the parliaments of the EU27, the EU parliament and all respective governments.

    – I pretty much don’t get your sixth point (which could be entirely due to english being not my native language, so forgive me if I’m arguing against a point you didn’t make): That the Irish border will be a problem has been clear to everyone since the day A50 was triggered. But Brexit has created a problem practically unmanagable under the condition that everyone act according to their own set of rules: HMG can’t accept Irish unification or a hard border in the Irish sea (in practice: customs at GB ports for NI goods and vice versa), the EU can’t accept an open border because of WTO rules, NI and RoI can’t accept a hard border on the mainland because of the GFA.

    I still believe that an agreement is possible but in absence of a clear posture of HMG on the way they want Brexit to look like, I fear that the only solution will be a complete last-minute surrender of one side very shortly before end of march 2019. And given the current situation I very much doubt that it will be the EU caving in.

  15. I just wonder whether the rich and unscrupulous (not the ordinary rich) have secretive vested interests in Brexit, the “harder” the better. For example, deliberate wearing down of the NHS with private lucrative contracts going to rich and unscrupulous cronies.

  16. I too think it is still unlikely that the UK will crash out of the EU with no deal. If agreement can’t be reached, the chances are that an A50 extension will be requested/agreed to.

  17. Reposted from Twitter at David’s request:

    Not so sure.
    (1) questionable
    (2) hasn’t mattered so far
    (3) how meaningfully are they doing so?
    (4) but we need 100%
    (5) is there?
    (6) questionable.

    Added: obviously I very much hope to be worrying about those things needlessly.

  18. The UK government have to recognise that Northern Ireland, Gibraltar and any other British territories will have to be treated differently to the rest of the UK.

    Once that happens, then a deal that could work for everyone is possible. If the UK government can’t accept this reality, then there won’t be a deal.

    Everyone else in the world recognises this reality. I just hope HMG do too.

  19. I work in a university and the marketing database we have access to (Euromonitor) has different outcomes for different wealth quintiles of people with different types of Brexit. According to them. the hardest Brexit makes the top three quintiles poorer but does increase the average wealth of the poorest people in the UK, while a soft Brexit makes the wealthiest wealthier and the poor poorer. I have no idea how accurate Euromonitor are but if Labour believes something similar then they have no incentive to stop the ERG Brexiteers reducing inequality, and it is possible that we have no deal.

  20. There is no “no deal” scenario, because there is a web of international arrangements that will kick in, in the absence of anything else. Now, the default position under many of those arrangements is not very good, and it is difficult to foresee any negotiated deal that could possibly be worse than that default (“no deal”) scenario. In fact, any deal will be better than no deal.

    And that is why we will end up with a deal.

    Not for the first time, I agree with David :)

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