Two Conservative MPs — Anna Soubry and Ken Clarke – were reported last week to be seeking cross-party support for keeping intact the UK’s current customs arrangements with the European Union (EU) in amendments that they intend to table for vote by Parliament at the end of this month.
The former has also indicated that in the event of the displacement of Theresa May by a leadership triumvirate of Rees-Mogg, Gove, and Johnson that she would jump the Conservative ship to an alternative – albeit – undefined party.
A political window of opportunity, accordingly, appears to beckon for Labour. But, it should, in any case, make every possible effort to secure the passing of any such amendments. The national interest demands that HM Government’s loyal opposition spotlights the confusion, drift, and downright contradictions that continue to swirl unresolved within the current conservative brexit approach, which can hardly be called a policy or a strategy.
A January 2018 economic analysis produced by the government’s own economists (that it does not trust us to read) has been widely reported as forecasting that any form of brexit would depress UK GDP over the next fifteen years. A disorderly one, where we reverted to World Trade Organisation (WTO) rules in 2019 would have the most adverse outcome at eight per cent of GDP. A Canada-style Free Trade Agreement (FTA) would lead to a five per cent drop. Even the ‘softest’ exit option, continued UK membership of the European Economic Association (EEA), involving continued single market(SM) access, would still induce a two per cent drop.
MPs allowed to read it have relayed back that increased government borrowing of £20bn by 2033 is forecast under the EEA model, £55bn under a Canada FTA, and £80bn under the WTO, options.
Essentially, possible forecast gains secured from alternative trade deals with the US, Japan, and India were modelled lie at best in the 0.4% to 0.8% range, over the entire 15 year forecast period: negligible, in comparison.
It is not impossible that these forecasts could be belied if the UK, freed from the shackles of EU membership, became a buccaneering free trade partner within a future global trading environment bestowing most of its favours on countries negotiating bespoke trade agreements outside wider international arrangements or customs unions, but pigs may fly. Here and now common sense screams that disrupting trade links and complex integrated supply chains with your closest neighbours whom you have shared a deepening single market for decades, simply is not sensible.
Alternative free trade deals with countries, such as the US – led by the mercurial and protectionist Trump, or India, which will seek the lifting of UK visa restrictions, or Japan, which has recently finalised a trade agreement with the EU, will take the UK years to negotiate; even if achieved, the available evidence converges on the conclusion that the posited benefits of such agreements to the UK will prove largely illusory and limited, and will fail to offset the loss of a large slice of the ‘gravity-based’ gains that frictionless trade with our EU neighbours currently secure.
A study published earlier this month that modelled the particular impact of brexit on the manufacturing sector, for instance, concluded that high-tech and medium-high tech sectors, such as car-making and aerospace, are most at risk of a decline in domestic production, and are associated with a possible employment loss in excess of 1,000, in Sunderland, in Birmingham, in Coventry, in Derby,as well as the Cheshire East, Solihull and County Durham, local authority districts. http://blogs.sussex.ac.uk/uktpo/files/2018/02/Briefing-paper-16.pdf
As to the question as to whether the UK signing new trade deals could compensate for the loss of market access and the EU, its modelling of an even a ‘best-case’ scenario, in which the UK leaves the EU without a deal, but signs FTAs with all other countries in the world (the pigs might fly option?), suggests that even such universal FTAs would not fully mitigate the brexit-related loss of trade with the EU.
The balance of risk, as is currently discernible from reasonable analysis and observation, is towards the downside that the economic impact of brexit will prove to be more severe than is currently modelled.
Maintaining de facto CU membership infinitely until an improved alternative and sustainable alternative emerges would, therefore, accord with Labour’s EU negotiating red lines, concerning economic and employment outcomes. It should help to mitigate the adverse economic consequences of brexit across the regional economies most dependent on manufacturing, such as the North-east and the West Midlands, that also provide large swathes of its actual and potential vote amongst the ‘left-behinds’ – the group that is likely to suffer the most from brexit. At the same time such a stance should help to solidify Remainer support for Labour.
What is then stopping Labour? That is not wholly clear; clearly its front-bench does not wish to appear going against the referendum vote, at least until the climate of opinion demonstrably changes, fearing further loss of its core vote in brexit-voting constituencies.
Some also suggest that both Corbyn and McDonnell, want a complete UK rupture from the CU and SM, in order to remove future impediments to Labour implementing an interventionist industrial strategy.Such impediments are, however, based on perception rather than reality, as a recent publication by Labour MPS, Heidi Alexander and Catherine West, and others, explain cogently with particular reference to relevant parts of the party’s 2017 manifesto in:
Labour should support the Soubry-Clarke amendments or otherwise table its own, requiring the government to include continued CU membership within its EU negotiating position, that due to its own internal divisions than it cannot settle, even though time before the EU seeks to impose its own terms, is now rapidly running out.
By doing so, Labour could make a clear case in the general national interest, as well as in the particular interests of voters in brexit-voting constituencies, that a cliff-edge exit from the CU, either in 2019 or 2021, would certainly cause unnecessary, deep, and quite possibly catastrophic, economic and social damage.
The public finances would be consequently weakened, thus constraining further the fiscal capability of any future government to invest in health, education, and health infrastructure, most needed by the ‘left behinds’.
The official opposition needs to hammer home the reality that May’s espousal of a deep, special, and comprehensive bespoke replacement FTA with EU, cannot possibly be negotiated by 2021.
Another core reality is that the Phase 1 agreement on the Eire/N.Ireland border assumes continuing de facto CU membership, as well as continuing regulatory alignment. In that particular light, already the EU is taking contingency steps to enforce the December 2017 Phase 1 agreement in the event of UK backtracking and/or a disorderly exit.
Advancing such amendments would also offer a platform for Labour to develop its strategy to actually extend opportunities to the ‘left-behinds’ in terms of industrial policy, affordable housing, training and apprenticeships, and for general education advance.
What it would not do, is to signal a Labour-led overturning of EU referendum result. In fact, the contrary, insofar that the prospect of a disorderly exit or one imposed on the EU’s own terms, would most likely result in pressure for that vote to be revisited given the damage to Britain’s economic and social fabric that it would almost certainly generate.
Continuing CU membership is different to continuing SM membership with its four freedoms, including FOM, although there is overlap, as discussed in http://www.asocialdemocraticfuture.org/can-uk-long-term-stay-cu-outside-sm/.
A concerted and focused Labour intervention could well also be effective. A position whipped across the Labour benches attracting sufficient support from Remainer conservatives and other parties is likely to force May to crystallise more clearly the government’s position in favour of continued CU membership, in the face of a potential fatal loss of support from the NI Unionists, as well as from her own Remain wing.
The Brexiteers were they chose to sought to reverse any such concessions through setting in train a leadership challenge, could then precipitate a general election.
To duck this challenge would be a dereliction of duty by Labour, in respect of both its actual position as the official opposition and of its purported one of safeguarding and protecting the interests of the disadvantaged in society. It will not be forgotten by future generations.