Thursday 31 May 2018

TIME IS RUNNING OUT

Time is running out for Theresa May and, while one might sympathise with her on a personal level, she is going to have a very difficult few weeks. She is a cautious person, not given to making quick decisions or indeed any decisions at all if she can help it, but fudging and tautology is no longer enough. The prime minister is going to have to do what she has put off for so long. That is to confront full on what Brexit actually means.

In one ear she has the massed Eurosceptic ranks and the right-wing pro-Brexit press all screaming about betrayal and the lack of government planning for a no deal exit (HERE), as if that was ever a feasible option and in the other ear business is demanding "free and frictionless" trade with the EU and continued involvement with EU bodies and institutions, exactly as we have at the moment. Meanwhile the EU look on and wait for her to make a decision.

The BBC are reporting (HERE) yesterday's meeting in Downing Street between the PM and big European businesses in the form of the ERT (European Round Table of industrialists) group who apparently warned Mrs May that time was running out to get frictionless trade "as with a customs union" which is what they want. The group included BMW, Nestle, Vodaphone and so on. This cannot have come as a surprise to the government. British CEOs have been meeting DEXEU, BEIS and Theresa May herself for months and months. The CBI, EEF and the BCC have all made their position abundantly clear from the outset. It's widely believed that the secret letter sent by Greg Clark, the Business Secretary, to Nissan included a commitment to frictionless trade.

In fact, I am convinced it is this constant pressure from business and industry that has caused the government to pursue the two ridiculous customs options for so long. They were both condemned as magical thinking last August but Mrs May has clung to them like a comfort blanket in the faint hope that we can get trade "as with a customs union" even after she declared we will leave the customs union and the single market.

I think perhaps the last year has been quite an education for No 10. While business before the referendum was pretty neutral on Brexit for fear of provoking Brexiteers or inviting a backlash from leave voters, I think they have probably been far more vocal in private since the referendum result. The PM cannot now be unaware of the colossal damage to the economy that we would suffer in either a hard Brexit or even with a FTA and for JIT supply chains there is little difference between the two options.

This is why the government appears to be paralysed. Because they are.

A White paper setting out our future relationship with the EU has been promised for June but reports claim ministers still can't agree on what will be in it (HERE). 

The Irish Times reports (HERE) that the PM has been told by Brussels that her new plan to extend the regulatory alignment to the whole of the UK for a limited period as a way of solving the Irish border issue, is a "non-starter".

Nicola Sturgeon has got the Scottish parliament to refuse consent for the EU Withdrawal Bill and says keeping regulatory alignment only in NI would give Ulster a competitive trading advantage over Scotland after Brexit (HERE). This is a new problem and not one that anybody has yet thought about as far as I'm aware and means that Scotland is now against the EU's plan for the backstop to apply only to NI.

A hard Brexit is quite impossible and as time goes on and the implications of becoming a third country with a UK-EU Free Trade Agreement become clearer - even the Daily Express is beginning to recognise them. It claims (HERE) that France is "blocking" access to a "crucial" criminal DNA database and says we are also asking for "access to the European Criminal Records Information Exchange System and the Schengen Information System". Well that's a surprise! Imagine, you vote to leave the EU and they block your access - what a cheek. Vodafone don't do that, do they?  End the contract and they just allow you to carry on as before.

There is no doubt, wherever you look there are big problems - some new and never even considered - but plenty of others that were dismissed as scaremongering at the time but are now seen as only too real.