A letter and an article in this week's New European got me thinking. The letter was titled: Brexit Babble and pointed to section 4 of the draft Exiting the European Union, Financial Regulators Powers (Technical Standards) Regulations (HERE page 3), It is rather like reading concentrated gobbledegook. It looks as if it was written by professor Stanley Unwin, in the style of Edward Lear, while under mind altering drugs. It is an insight into the astounding complexity of Brexit, not just in financial regulation but in many other areas of life in this country after Brexit.
I quote a part of section 4 to give you a flavour:
Division of responsibilities
4.—(1) This regulation applies if—
(a) either condition A, B or C is satisfied; and
(b) condition D is satisfied.
(2) Condition A is that the PRA proposes to exercise the power in regulation 3 to modify an EU Regulation specified in Part 4 of the Schedule, and the PRA—
(a) proposes, in modifying the EU Regulation, to make separate provision for PRA-authorised persons (within the meaning of section 2B(5) of the Financial Services and Markets Act 2000), persons connected to them, or a specified category of such persons, or
(b) considers that the EU Regulation may need to be modified to make such provision in future (whether under the power in regulation 3 or otherwise).
(3) Condition B is that the Bank of England proposes to exercise the power in regulation 3 to modify an EU Regulation specified in Part 5 of the Schedule, and the Bank of England—
(a) proposes, in modifying the EU Regulation, to make separate provision for—
(i) central counterparties; or
(ii) financial counterparties or non-financial counterparties within the meaning of the EMIR regulation, or
(b) considers that the EU Regulation may need to be modified to make such provision in future (whether under the power in regulation 3 or otherwise).
This is only about a third of section 4 - it goes on and on in much the same vein. Remember, this is intended to be English law post Brexit - supposedly one of the reasons we will be transformed into "global Britain".
Now imagine this in plenty of other areas of national life, in regulations that cut across each other and have plenty of potentially unanticipated effects on things we take for granted today. From food and product safety, to travel, the environment, consumer protection and so on. It is inconceivable to me that such a fundamental upheaval in even one single area alone could be handled smoothly, and to a hard deadline while avoiding serious problems and difficulties. No modern, industrialised country has ever attempted anything like it. We will be the first, and we're doing it against the clock. It has disaster splashed all over it.
And in the same issue Jonathan Lis has an article (HERE) about the long and winding road back from the brink. He argues for a second referendum, which I agree is a political imperative for reversing Brexit even if it's not a legal one, but he is not confident remain would win and suggests even if we did, the right wing press would have apoplexy and simply carry on as before. If we lost, we could forget rejoining the EU for decades. As he rightly says the people can't be wrong twice. But a referendum is the prerequisite of reversing Brexit, let's be honest.
So, the question is when to push for it. And this brings me back to the complexities as noted in the draft financial powers regulations. Things will go wrong in many areas, badly wrong in my view and when they do, it will reinforce the economic problems caused by the present uncertainty. This uncertainty is not going to be replaced by certainty, as Brexiteers hope. Uncertainty will probably be replaced by worse, chaos in fact, as government departments struggle to cope. It will not be pretty.
Although polling has shifted a little towards remain, most leave voters have forgotten the referendum and are getting on with their lives on the basis that the government has now got to deliver the will of the people. But the far reaching impact has not yet become apparent, it is a slow burning fuse that will start to become clear from the second half of this year. I don't for one second doubt that Brexit will happen next March 29th but by then a lot of difficult decisions will have been made that may not be greeted with universal approval, much less fireworks and bunting. The road will be very bumpy and the longer the problems continue, the louder will grow the calls to revisit the referendum. This to me is unavoidable.
To those who thought being inside the EU was bad, a period outside the EU will show how much worse it can be. If the present problems of reaching any kind of solution to the Irish border issue incompetents doesn't convince you, try reading section 4 of the draft Exiting the European Union, Financial Regulators Powers (Technical Standards) Regulations.
So. regrettably I think we have to spend year or two outside the EU, perhaps a bit longer. The demographics will help to bring a younger, more liberal and less xenophobic electorate and this, coupled with Brexit chaos, will set us on the short and winding road back to sanity. The second referendum can only come when the result is not in doubt.
