No one knows how it will end, but I believe that the probability of a no-deal Brexit is higher than you think. Much higher. The reason is not merely the often stated — and too often underestimated — assertion that no deal is the default position. To understand the dangers of a no-deal Brexit more clearly, it is also worth considering the European perspective if only to rule out some of the fantasies being indulged in the UK, including those being expressed through parliamentary amendments under discussion.
The main protagonists in the institutions of the EU — and the leaders of the EU27 — were clearly shocked by the scale of last week’s defeat for Theresa May’s withdrawal deal. I sense that they have a better understanding of the brutal forward thrust of the Article 50 timetable than many MPs and political observers in London. I could not imagine a French or German opposition leader making the logically impossible demand to rule out no deal as a precondition for talks on a deal, as Jeremy Corbyn, the Labour leader, has done.
The reason for their greater scepticism is that they know the limits on how far they can go to accommodate the UK. And they know what can go wrong. The sense of panic is particularly palpable in Germany, where a no-deal Brexit is now seen as the most probable outcome. This is why senior German politicians wrote an emotional joint letter saying they would miss British “black humour” and “tea with milk” if “our friends across the Channel” go ahead with Brexit. Sigmar Gabriel, the former German foreign minister, recently called on the EU to stop the clock on Article 50.
The EU will go out of its way to help Mrs May. But do not mistake readiness to engage in further discussions with a readiness to open up the withdrawal agreement itself. That will not happen. The EU will give additional assurances to the prime minister on the backstop, the plan to avoid a hard border between Northern Ireland and the Republic. They might, and should, give legal weight to their guarantees that it would be temporary.
They will happily reopen the political declaration on the future relationship and make room for alternative scenarios, including the so-called Norway option (membership of the European Free Trade Area) or a customs union. But the backstop will stay, and so will the rest of the agreement. They will not drop the backstop nor provide a guaranteed end date. And they will not act against the advice of the Irish government. From Brussels, too, the situation looks different.
There are exploratory talks under way over a long extension to the March 29 Brexit deadline. But do not underestimate the difficulty and overestimate the consensus. They would be ready to extend the date to accommodate an election. But a very long extension to make way for a referendum would be much harder, especially if the UK government is not fully behind it. One factor that might strengthen the spine of EU governments as the UK asks for concessions is their relative state of preparedness.
The French government is about to launch its hard Brexit programme. Marcel Fratzscher, head of the DIW economic research institute, last week told Die Welt that the costs of a hard Brexit are unlikely to be crippling for Germany. There are good reasons not to wish for a cliff-edge Brexit. But the EU will not bend over backwards through fear. Another factor that favours a cliff-edge Brexit is the blame-game dynamics. Did you ever wonder why the Irish government has a preference for a hard Brexit over even a modest relaxation of the Irish backstop?
For a long time, I was puzzled by this. But there is a rational answer. Leo Varadkar, the Irish prime minister, can rightly blame the UK for a hard border resulting from no deal. But Ireland’s citizens would blame him if he failed to negotiate a robust backstop.
A no-deal Brexit is clearly not rational. But if you look at the incentives of each individual decision maker, you may find there are worse options than no deal for each one of them. For Mrs May, the very worst outcome would be to end up with no Brexit at all. For Mr Corbyn, a no-deal Brexit might be the best opportunity for an early general election. For Mr Varadkar, nothing would be more humiliating than to compromise on the backstop.
Losing jobs and businesses over brexit
Britain’s biggest manufacturers are cutting jobs and becoming increasingly reluctant to hire amid growing uncertainty over Brexit, according to a survey.
The survey, which is closely watched by the Bank of England for early warning signs from the UK economy, suggested smaller manufacturing firms kept hiring last month to boost operating capacity, although large companies shed jobs. Firms suggested the lack of clarity on the UK’s future trading relationship with Europe was a factor.
Damn right! We are losing jobs ,firms are folding…still the Conservatives like a Soviet tank divison plough on