Two reports were published in the last few days, one by the CBI and the other by the Institute for Government, both about a no deal Brexit and both, I imagine, prepared during the leadership campaign which Johnson used to constantly threaten this utterly disastrous outcome if he could not get an improved deal. I should say here that in my opinion, in the end he will do neither.
The IfG's effort: Preparing Brexit, no deal, concentrates on Johnson's first 100 days up to October 31st and the next 100 days after that. It summarises the immense difficulties he will face, saying "the prime minister’s second 100 days will [be] even more unpredictable than his first".
It's well worth a read but the vital points, I think, are firstly that they say no more legislation need be passed for us to leave on October 31st. We can apparently manage without the Trade, Immigration and Financial services Bills which are struggling to get through parliament.
But secondly, they make this crucial point (page 14)
"As of 1 November, the Withdrawal Agreement will officially be dead. By the middle of that month, following a no-deal Brexit, the UK will not be able to change its mind and sign up to the deal as it was, and nor could the EU suddenly change tack and offer the UK a decisive concession".
Just like the 'cliff edge' that everybody talks about, once we leap off there is no going back. Joe Owen, one of the report's co-authors was on the Today programme yesterday making this very point. Once we are out we leave Article 50 far behind and Article 218 hoves into sight. This is the article used by the EU to negotiate trade deals.
This will take YEARS (five at best and probably much longer) while we are outside the EU and trading on the worst possible WTO terms with our biggest trading partner. It would indeed be calamitous for both sides, but far worse for the UK and it would poison the atmosphere for a generation. And while Article 50 has to be agreed by a qualified majority, a trade deal under A218 requires all 27 nations to unanimously agree so getting a FTA ratified will take longer and any country can hold us to ransom (Spain?).
The IfG also say:
"Both leadership contenders hoped to get a deal with the EU eventually, even if they were to leave without one in October. This would inevitably involve returning to Brussels, possibly as soon as November, to try and establish a long-term sustainable relationship".
The IfG's effort: Preparing Brexit, no deal, concentrates on Johnson's first 100 days up to October 31st and the next 100 days after that. It summarises the immense difficulties he will face, saying "the prime minister’s second 100 days will [be] even more unpredictable than his first".
It's well worth a read but the vital points, I think, are firstly that they say no more legislation need be passed for us to leave on October 31st. We can apparently manage without the Trade, Immigration and Financial services Bills which are struggling to get through parliament.
But secondly, they make this crucial point (page 14)
"As of 1 November, the Withdrawal Agreement will officially be dead. By the middle of that month, following a no-deal Brexit, the UK will not be able to change its mind and sign up to the deal as it was, and nor could the EU suddenly change tack and offer the UK a decisive concession".
Just like the 'cliff edge' that everybody talks about, once we leap off there is no going back. Joe Owen, one of the report's co-authors was on the Today programme yesterday making this very point. Once we are out we leave Article 50 far behind and Article 218 hoves into sight. This is the article used by the EU to negotiate trade deals.
This will take YEARS (five at best and probably much longer) while we are outside the EU and trading on the worst possible WTO terms with our biggest trading partner. It would indeed be calamitous for both sides, but far worse for the UK and it would poison the atmosphere for a generation. And while Article 50 has to be agreed by a qualified majority, a trade deal under A218 requires all 27 nations to unanimously agree so getting a FTA ratified will take longer and any country can hold us to ransom (Spain?).
The IfG also say:
"Both leadership contenders hoped to get a deal with the EU eventually, even if they were to leave without one in October. This would inevitably involve returning to Brussels, possibly as soon as November, to try and establish a long-term sustainable relationship".
They concede both sides at the last minute may agree a 'technical extension' to finalise no deal planning but this is not guaranteed.
This brings me to the CBI report: What comes next, which summarises the state of readiness of both sides for a no deal scenario. The media have already picked up on the CBI's comment that the EU are even less prepared than we are for a no deal outcome. For this they rely on a comment from the report (page 5) which says:
"By some way, the EU has taken fewer steps to reduce the damage of no deal than the UK has, having taken a noticeably less generous, more limited approach to reducing the disruption of no deal, with only a small number of limited temporary measures made – such as allowing UK HGV licenses to be valid for 9 months from no deal and permitting UK aeroplanes to continue flying for 6 months".
But, following this statement, which I am not sure is true anyway since Ireland, Holland and France have recruited additional customs and border staff and started to build infrastructure, the improvements the CBI propose are to help the UK, not the EU. They recommend the EU:
- Start drafting further communications to be released to priority audiences in the event of no deal by the middle of August
- Bring forward the ability for UK firms to apply for essential licenses as a third country by the start of September
- Begin preparations by the start of October – both at an EU and Member State level – to be able to move quickly into no deal negotiations should the UK crash out of the EU
- Discuss priorities for temporary standstills or extensions of temporary measures at the next European Council in October
- Match, at least for a period of time, the UK’s temporary mitigations if no deal occurs
- Encourage a pragmatic approach from authorities and Member States to liability and citizens if no deal becomes a reality
The EU have repeatedly said if we crash out without a deal there will be no further negotiations and both sides should move to secure themselves. In practice, the EU might take a softer line - eventually - and agree to some mitigations but they will all be for their own benefit, not ours.
The rancour all this would cause would be terrible and as the CBI say, echoing the IfG, "The effects of no deal would ripple on for years."
For all these reasons, Johnson and his gang of Brexiteer ministers will not go over the cliff. Before risking the willful trashing of the national economy you would need to be 1000% sure that what you are doing is right, and deep down they cannot have that certainty.
The pound fell dramatically yesterday against both the dollar and the Euro and according to the BBC this morning it also fell in overnight trading in Asia to a two-year low of $1.2152 and €1.0912. I wrote to Nigel Adams just after the referendum result and said I thought the markets would have the final say on Brexit and the more Johnson talks of leaving by Halloween 'do or die', sterling will continue its erratic path towards dollar parity.
I stand by my own prediction.
Britain's total wealth is about £13trillion. The 1.5% fall in sterling yesterday cost the country something like £200 billion. The pound has fallen from its average value of around $1.50 to $1.22, roughly 18% or about £2.34trillion, making our companies look more attractive to foreign buyers and costing us more to import stuff or travel abroad.
This is all to save £10 billion a year. Insane isn't it?
