UK Brexit Direction Awaits New Conservative Party Leader

A new series of everyone’s favourite UK show, Brexit, has kicked off in dramatic style with the resignation as Conservative Party leader, encouraged by her own party, of Prime Minister Theresa May. A new leader will be elected in the next two months, and unless something extraordinary happens this individual will become Prime Minister. Many existing and former Ministers have indicated that they will stand for the process in which fellow Conservative MPs will produce a shortlist of 2 for members to vote upon.

Brexit will of course dominate the leadership contest. Already candidates are speaking of making changes to the previous UK position, generally in two camps of seeking to renegotiate the Withdrawal Agreement to remove the Irish backstop, or to prepare the country for leaving with no-deal. The problems with these commitments are however being increasingly discussed.

Those who seek to renegotiate the Withdrawal Agreement between the EU and UK rejected three times by Parliament, such as Foreign Secretary Jeremy Hunt, are being told that the chances of the EU revising an agreement to exclude the Irish backstop are infinitesimal. This reflects the EU’s commitment to Ireland as an EU member, more important than any non-member as the UK soon will be, but as much that to retreat now having solemnly promised not to do so would mean that no future EU red line in external negotiations would have any value. With a new Commission to be put in place after the recent elections it is also unclear how any new negotiation would be possible.

Some candidates are putting their faith in ‘alternative arrangements’ that can be put in place now or in the near future to avoid the need for border infrastructure. Even if they were available, there is little chance that the EU will backtrack on their backstop commitment. They are also almost certainly not available. There is no border outside of the EU without infrastructure put in place to prevent illicit trade, and while alternatives can be imagined, they would require very high levels of design and joint working to implement. It isn’t just about tracking goods from willing traders.

The alternate approach championed by some candidates most notably ex-Foreign Secretary Boris Johnson is to make sure the UK is ready for no-deal, or say it already is. Unfortunately the level of trade integration between EU and UK means that issues in the case of no-deal are inevitable. We only have to look at the chaos at Paris Gare du Nord when the French implemented extra checks to see UK vulnerability. We can also look at the 100+ no-deal notices on the UK Government’s website to see how much work has to be done.

No deal doesn’t necessarily mean supermarket shortages or 50 mile queues of lorries in the UK, though it might. Rather it means a huge load of individual issues to dominate Government and media attention. Farmers unable to sell their produce to the EU without the right certifications. Service suppliers unable to obtain work visas. Tariffs on UK goods sales to the EU rendering them uncompetitive. Not to mention the loss of trade agreements that the EU has negotiated, out of 36 we’ve only succeeded in obtaining commitments in the case of 11, and that doesn’t include key markets like Canada, South Korea and Japan. UK business will then be disadvantaged compared to EU counterparts.

It is also unclear whether candidates see no-deal as a temporary state, after which for some mysterious reason the EU suddenly changes their negotiating approach, or a permanent end-state, in which case the UK would be one of few countries not to have a trade agreement with neighbours. The problems and likely economic impact that no-deal would likely bring mean there seems to be a clear majority in Parliament against this option, setting up a potential clash with a new Prime Minister intent on the option.

All of this is why the UK is stuck with a Withdrawal Agreement that nobody much likes, but no obvious alternative. Certainly there is little sign that the Conservative Party would want an election or second referendum, and though the Labour Party may move in the direction of the latter, it is still not particularly likely to happen. Thus we can expect Brexit to continue to be an issue for the new PM, and for the EU with the current deadline being the end of October.

It is possible that the new PM might reconsider whether retaining single market membership (Norway option) or a Customs Union with the EU (Turkey) would be so bad. These alternatives are not incompatible with the existing Withdrawal Agreement, but could mean the Irish backstop never entering force. They would however be seen by many in the Conservative Party as being not a true Brexit.

Even less likely would be to say that leaving the EU in good shape would require a significantly longer timescale, like the ten years the internal Government report suggested it would take to get an alternative to border infrastructure on the island of Ireland. Such a solution would then allow the UK and EU to negotiate a CETA-style Free Trade Agreement, though the UK may find the loss of market access in this case to be significant.

Thus three years after the UK’s referendum led to a vote to leave the EU we are none the wiser as to whether or how this will happen. It is scarcely surprising that frustration has been building in UK politics, as this uncertainty continues and other policy issues are left effectively unattended. It is possible that a new leader providing a clear sense of direction will in fact be able to overcome the many challenges, but there has been little so far to suggest that candidates are grappling with the very real difficulties.