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Sunday, 7 April 2019

Myths of Brexit - A Note

The 17 million voted for a "no deal" Brexit.  A customs union with the EU - let alone membership of the single market - would be a betrayal of the referendum result.

That is what we are currently told by the more zealous Brexiteers.  But are these claims true?

As early as January 2016, Remain advertising was pointing out that Leavers were divided on what the UK's future relationship with the EU ought to be.  In March 2016, Boris Johnson switched within days from talking about a Canadian-style free trade agreement to advocating "associate membership" along the lines of Turkey, which is in a customs union with the EU.

This sort of message indiscipline was anathema to Dominic Cummings, the director of Vote Leave.  He deliberately decided not to allow the campaign to be become embroiled in debates over the future relationship:
No one knows what the single market is.  The MPs don't know what the single market is!  No one knows!  No one will know what it is by the end of this campaign.  Period.  [Source: Tim Shipman, All Out War, p244]
This helps to explain why it was not until as late as 19 April - mere weeks before the poll - that Michael Gove announced on behalf of Vote Leave that post-Brexit Britain would not seek to retain its membership of the single market.  In doing so, however, he insisted that Britain would remain integrated into the European economic system:
There is a free trade zone stretching from Iceland to Turkey that all European nations have access to, regardless of whether they are in or out of the euro or EU. After we vote to leave we will remain in this zone.
The suggestion that Bosnia, Serbia, Albania and the Ukraine would stay part of this free trade area - and Britain would be on the outside with just Belarus - is as credible as Jean-Claude Juncker joining UKIP.
The notion that the UK would leave without a deal - the Belarus option - was not even on the radar screen.  Turkey, as noted, is in a customs union with the EU; and Bosnia, Serbia, Albania and Ukraine have all signed up to partial participation in the single market.

From this point onwards, the official Leave line seemed to be that the UK would retain the economic benefits of single market membership without the costs.  This impossible aspiration subsequently became known among Remainers as "cake", based on a notorious comment by Boris Johnson.  Brexiteers themselves described their untenable position using the weaselly phrase "access to" - as opposed to "membership of" - the single market.  On 8 May, Michael Gove told Andrew Marr:
We should be outside the single market. We should have access to the single market, but we should not be governed by the rules that the European Court of Justice imposes on us, which cost business and restrict freedom.
This was incoherent.  Participating in the single market without ECJ jurisdiction is impossible.  The single market only works because its members agree to follow a single rulebook enforced by a single court.  The court isn't an optional extra.  It is essential to the system.  From this perspective, "access to" the single market was a highly misleading phrase.  Every country in the world has "access to" the single market in the literal sense of being able to do business with it; but the phrase was clearly designed to imply some sort of cake-like close relationship.  It was a classic piece of political dishonesty.

Nevertheless, the canard of "access to" the single market persisted.  This may have been what Daniel Hannan was trying to say when he made his infamous comment in May 2015 that "absolutely nobody is talking about threatening our place in the single market".  Elsewhere in the same interview, he compared post-Brexit Britain to Switzerland, which has a vaguely cake-like relationship with the EU by virtue of being largely integrated into the single market without formally being a member.  Going back to the referendum campaign, on 9 May 2016, Hannan wrote an article in which he rubbished the idea that the UK would be left outside the European trading system:
Britain would find itself in the same position as every other non-EU state in Europe – that is, part of a European free trade area by dint of an intergovernmental treaty. Andorra, Bosnia, the Faroes, Iceland, Jersey, Macedonia, Monaco, Montenegro, Serbia, Switzerland, Turkey – all trade freely with the EU while making their own laws....
The only geographically European states that don’t have unhindered access to EU markets are Belarus and Russia. No one seriously thinks that that would be Britain’s future.
The significance of these examples is that they include both states within the single market (e.g. Iceland) and states in a customs union with the EU (e.g. Turkey), as well as Switzerland.  The only "no deal" states in Europe, as Hannan accurately wrote, are Belarus and Russia.  And he seemed very sure that "[n]o one seriously thinks" that the UK would end up like them.

Moving on - on 26 May, David Davis gave a speech in which he explicitly rejected the idea that Britain would be left with no deal and compelled to trade on WTO terms:
They cannot afford the threat being levelled at Britain, so called “WTO terms”, because they would involve a 10% levy on all car imports.  A German Chancellor would have to avoid this, particularly in an election year....  Indeed the first calling point of the UK’s negotiator in the time immediately after Brexit will not be Brussels, it will be Berlin, to strike the deal: absolute access for German cars and industrial goods, in exchange for a sensible deal on everything else.
He went on to say that the UK would only be "forced back onto WTO terms" if "everybody behaves irrationally".  "I do not believe for a moment that that will happen", he added for good measure.

(This speech, incidentally, has gone on to be remembered as a classic example of the "German car makers" fallacy - the notion that domestic German industrial interests would force the German government, and therefore the EU, to give Britain the cake it wanted.  This myth seems to be traceable back to an article written in December 2015 by an LSE researcher who suggested that German car manufacturers would insist that the German government go easy on the UK.  His source was a May 2015 article in a car industry bulletin which warned generically about the impact of Brexit on the industry, although without suggesting that this would translate into political leverage.)

On 10 June 2016, less than two weeks before polling day, the Guardian reported that some (unnamed) politicians were talking about using the Remain majority in Parliament to keep Britain in the single market if Leave won.  This idea was instantly rejected - but not, interestingly, by Leave campaigners.  The rejection came from Wolfgang Schaeuble, the German Finance Minister.  Perhaps he hadn't heard David Davis' speech.  Vote Leave seemed to regard Schaeuble's comments as unhelpful, and were quick to dismiss them:
The eurozone economies are dependent on trade with the UK. We are the fifth largest economy in the world, while many of them are in a desperate state due to the failing single currency. There is no question about it, Britain will still have access to the single market after we vote leave. It would be perverse of the eurozone to try to create artificial barriers – and would do far more damage to them than to anyone else.
This was more cake.  They need us more than we need them, so they will square the circle of letting us keep the benefits of European economic integration without its costs.  The same message was put forward by Boris Johnson in the Wembley debate on 20 June:
I must say that I think that it was extraordinary to hear that we would have tariffs imposed on us because everybody knows that this country receives about a fifth of Germany's entire car manufacturing output - 820,000 vehicles a year.  Do you seriously suppose that they are going to be so insane as to allow tariffs to be imposed between Britain and Germany? 
Zero tariffs require either a customs union or a free trade agreement; they are not relevant to the single market.  This technical point aside, the message was clear enough.  The EU would be "insane" not to let us have our cake, because of the size of our economic muscle.  The same line continued to be spun by the Leave side in the immediate aftermath of the referendum.  Neil Hamilton of UKIP insisted confusedly that it would be "hugely in the interests of the European Union" to give the UK "tariff-free access to the single market".  Likewise, our friend Johnson was quoted as promising something that sounded an awful lot like free movement, together with the usual cake on the single market:
British people will still be able to go and work in the EU; to live; to travel; to study; to buy homes and to settle down. As the German equivalent of the CBI – the BDI – has very sensibly reminded us, there will continue to be free trade, and access to the single market.
A lot of Leave voters had very deliberately been voting against free movement, of course, and it was generally seen as an obstacle to the UK's continued participation in the single market.  This point was made by none other than the legendary German car markers themselves.  On 28 June, an official of the German car industry body, the VDA, was quoted as saying that the UK would have to accept free movement as the price of ongoing single market membership.  He was promptly slapped down by John Redwood, who predicted that Britain could get a better deal on market access than Norway or Switzerland.  Cakeism still lived.

It took a long time to die.  Google Trends shows that, with the exception of a brief spike in October 2017, talk of a "no deal" Brexit only really took off in July 2018, in the aftermath of the ill-fated Chequers cabinet meeting - which marked the point when it dawned on hardline nationalists that Theresa May was not going to attempt to pursue their ideas as government policy any longer.  It was around the same time that hard Brexiters coined the dishonest term "world trade deal" to describe the swingeing effects of trading on WTO terms.  Needless to say, no-one had heard of a "world trade deal" at the time of the referendum, and precious few even knew what the WTO was.

The conclusion has to be that there is no factual basis for the idea that the voters were told that they were voting for a "no deal" Brexit, or for a hard Brexit that would exclude a customs union.  On the contrary, they were repeatedly promised cake - a close economic relationship with the EU that would preserve the advantages of single market membership without its costs.

But perhaps the hard Brexiteers are right.  In January of this year, Boris Johnson argued that a "no deal" Brexit was "closest to what people voted for".  This implies that Leave voters' preferences in 2016 were: (1) the EU27 giving in to our demands for cake, (2) no deal, and (3) striking the sort of deal with the EU27 that other countries have.  They assumed that Johnny Foreigner would give us what we wanted because we're the British, and they preferred to crash out and become like Belarus rather than make any meaningful compromises.  Bearing in mind what we know about the nationalist mindset, how implausible does that sound?