As the UK cabinet finally and very belatedly gets round to talking about the crucial Brexit end-game, nine months after triggering Article 50, yet more data has emerged today to confirm what many of Gove’s dreaded experts have been saying for a long time, that the economic impact of Brexit on the UK is far worse than that for the other EU states, and thus Britain is in a very weak bargaining position. Thus one of the central planks of the Brexiteer case for Leave has been fatally undermined. It is therefore no surprise that the UK is currently conceding to the EU demands during the Brexit negotiations. To do otherwise would wreck the economy, and thus it shows how the extremists can very probably no longer carry the day in the cabinet or Parliament. The UK has very probably also provided a nice textbook example of how not to negotiate with a stronger partner.
The experts speak again
A report has just been produced by a team of economists at Birmingham University on the likely economic impact of Brexit on both the UK and other EU members. Their conclusion is stark, that the impact on the UK, and just less on Ireland, would be far greater than on the others, to a degree of 4.6 times: “The UK’s exposure to Brexit is some 4.6 times greater than that of the rest of other EU as a whole, and the UK regions are far more exposed to Brexit risks than regions in other EU countries, except for those in Ireland.” They also conclude that it is the UK’s weaker regions that are most exposed, those that we know voted Leave. They also warn that these conclusions are at the conservative end, and that a “no deal” Brexit would be far worse.
What this shows is just how weak the UK’s bargaining position is. It is despite the Brexiteer camp’s attempt to present it as one where the EU is bound to give what the UK negotiators want, a Free Trade deal, because it is in their economic interests. Yet, as Barnier and others have repeatedly warned, the UK has far more to lose. This explains why Barnier has continued to refuse British negotiating bids and has simply said, “the clock is ticking”. The deadline of March 2019 is in itself a pressure to concede, and all the EU has to do is wait. While Davis says that the UK can have a “Canada-plus-plus-plus” deal, the EU has repeatedly said no such one is available: Britain cannot “cherry-pick”, throwing back Johnson’s infamous line about the UK having its cake and eating it. It is either stay in the single market and/or customs union, on some version of what Norway and Switzerland have, or a complete severance and up to 10 years to agree something like that agreed recently for Canada (which excludes 80% of UK business, which is in services).
Michel Barnier showed this slide to EU leaders last week. For EU shows how UK red lines leave FTA as only option. pic.twitter.com/1QadsCe1tY
— Jennifer Rankin (@JenniferMerode) December 19, 2017
More pulling teeth
If the recent prolonged negotiations over the divorce agreement are anything to go by, this will drag on, the political conflict in the Cabinet and Westminster will continue, and eventually a Transition Agreement will be reached whereby the UK stays in the Single Market and tries to bang its head against the proverbial brick wall until either the Tories are finally and disgracefully dispatched by an angry electorate, there is possibly a re-run of the Referendum, or a new reality will dawn in which the UK will finally, and resentfully, find itself relegated to the Second Division where other, bigger players call the tune. It will be a very painful lesson in the realities of global power politics.
Note on other reports
There have been various reports underlining the economic damage to the UK of Brexit.
This one recently from the influential Rand Corporation in the US discussed the impact under various scenarios
This one discussed the impact of a “no deal” Brexit