Thursday 6 December 2018

NO DEAL IS NOT AN OPTION

I note this morning that Dr North at the EU Referendum blog (HERE) has a post about the legal advice published yesterday but he seems far more exercised about various comments about Dominic Grieve's amendment effectively meaning that no deal is off the table. I readily acknowledge his expertise in EU matters but, in my opinion, for political insight he allows his Europhobia to cloud his judgement. In so far as no deal was ever on the table, something I have always thought unthinkable anyway, the amendment has definitely ruled it out completely.

Yet, Dr North insists that if the deal cannot be renegotiated with the EU we will crash out next March with all of the consequences he has personally warned about for years. It makes no sense to me.  Leaving with no deal is the default position in the same way that if I drive down the M1 from Yorkshire, going over Beachy Head is the default position. But it just does not and will not happen.
 
He takes aim at Nick Timothy and The Times:

"Amongst that [the Westminster bubble], we get Nick Timothy, one of the people least qualified to comment on events, pontificating that, as a result of Dominic Grieve's amendment, "a no-deal Brexit will almost certainly be stopped".

"This same lacuna graced the front page of The Times yesterday (print edition). A significant number of politicians and journalists apparently believe that parliament, by way of an amendment to the government motion, can instruct Mrs May to reopen negotiations with Brussels, thereby preventing a "no deal" scenario taking effect.

"One really does wonder what it will take to eliminate this mistaken belief from the system. But when the government cannot force the EU to come back to the negotiating table, and where "no deal" is the default option in the event that the withdrawal agreement is not ratified by parliament, it is a matter of astonishment that supposedly sophisticated political actors can get it so wrong".


I would bet my house that we will leave with a deal or we will not leave at all. The impact of no deal, falling into a legal void with potential food and medicine shortages and the breakdown of integrated supply chains, total disruption if not the elimination of of just in time manufacturing using European parts with serious job losses and the economy taking a huge short and long term hit, is not something that any government could contemplate doing voluntarily - at any time short of war. And certainly not when it could be avoided by the PM simply putting pen to paper and withdrawing Article 50.

In those circumstances, all those who voted remain would be absolutely furious and, I daresay, a big majority of leavers would join them. I don't know which side would be more aggrieved. Remainers for saying this is what we warned about or leavers for saying they were told it was all just scaremongering. Neither side would be happy and whichever political party it took place under would suffer at the ballot box for a generation or more.
 
No deal is not and never was an option. Forget parliament and Dominic Grieve, the government itself is not serious about it.  

I see there are commentators suggesting with hindsight the government should have done more to prepare for a no deal exit, starting from the day after the referendum presumably. The pound took a battering in the days following the vote but has since stabilised now at around $1.30. Imagine what would have happened had the government immediately started to plan for leaving the EU on WTO terms. The markets, industry and the financial sector would have gone into panic mode initiating a further round of selling and the pound would probably have dropped below parity with the dollar.

As it is, a lot of financial institutions have already taken steps to slowly migrate operations into the EU and this will accelerate next year. Manufacturers with large physical assets have had to sit tight and wait. But they too will eventually have to move if there is no deal. But doing this in a panic, at short notice would have unleashed chaos on the economy and the government would have been forced to back pedal and adopt a far more measured approach - which is more or less what they did.