Who will carry the cost of Brexit?

Het zijn voornamelijk de groepen die in meerderheid voor Leave hebben gestemd die vooral geraakt worden door het uitblijven van een Brexit deal. Dat stelt Simon Usherwood, docent en onderzoeker aan de University of Surrey in het Verenigd Koninkrijk gespecialiseerd in Britse-Europese relaties en euroscepsis. Het Brexit proces is lang en pijnlijk en het is dan ook in niemands belang dat de onderhandelingen onnodig hard en langslepend zijn, concludeert Usherwood.

One of the more surprising aspects of the UK’s decision in June 2016 to leave the European Union (EU) was the absence of any concrete plan to bring that decision into effect. Now, more than six months later, that surprise is turning steadily into frustration, as the UK continues to be unclear about what it hopes to achieve, or when it hopes to achieve it by.

In very large part, the situation was the result of the government being unwilling to consider the possibility of losing the vote, or even looking like it was considering it: a perennial problem for EU-related referendums, as the Dutch well know. But the British case is much more severe, for unlike a failed ratification of a treaty, the non-status quo option involves a very basic reorganisation of the polity and policies.

Theresa May’s government enters 2017 without an explicit set of objectives, a fixed timetable or even an agreed internal process for triggering Article 50 negotiations: a state of affairs that underlines the complexities involved and absence of clear means of achieving a positive outcome. Even the speech of 17 January, with its 12 principles, did little more than rule out an EEA-style arrangement and load down the negotiations with a jumble of desiderata.

Part of May’s reticence comes from the recognition that there will be costs involved: the only real questions are; how big will they be, who will carry them and what will their reaction be.

Three candidates

Three obvious candidates exist for the shouldering of the burden.

Firstly, businesses are already preparing for adverse economic shocks from Brexit. The rapid depreciation of Sterling since June has already raised import costs and is increasing inflationary pressures, but this will be small in comparison to the potential impact of the kind of limitations to free trade with the EU implied by May’s recent speech. With sector-specific deals looking unlikely, both manufacturers and services are now stuck in a position of high uncertainty, not knowing what the new UK-EU relationship will look like, nor when it will arrive.

Secondly, British public opinion remains fluid. While a majority still support leaving the EU, surveys also indicate less than a third think the government is handling matters well. May has the cushion of an opposition Labour party that is caught in internal conflicts, but the contagion of Brexit into the rest of the political agenda will continue right up until the next planned general election in 2020, when discontent might result in further support for anti-establishment parties.

In the meantime, the economic impacts of Brexit will shape many workers, ironically hurting those most likely to have voted to Leave – lower-skilled, older manual workers – hardest. Couple this to increasing rates of social tension, including high levels of anxiety about immigration and a growing number of racist attacks, and there is much potential for further disruption of the current political system. However, part of May’s calculation will be that by talking tough and entering negotiations with a seemingly clear commitment to a ‘clean’ Brexit, most people will give her the benefit of the doubt, especially they have only a limited understanding of what that might involve.

Finally, the EU itself will have to be prepared to have some of the burden of Brexit placed on its own shoulders. As EU leaders have made clear, the UK cannot have a better deal outside the organisation than it has inside, both on point of principle and to limit any contagion to other member states. If that position results in an inability to find agreement with the UK under Article 50, then there will be an economic cost to the Union, but also a political one. Despite the novelty of the situation, Brexit starts from the great advantage that the UK is already compliant with EU laws and regulation: thus the default position is that there are no barriers, unless and until the UK builds them. May’s announcement that she will not seek free movement rights is helpful in this, since it avoids a battle over core principles of the single market.

Rapid and stable conclusion

After the shock of the delayed CETA ratification, and with many other pressing and critical policy items on the agenda, the EU needs to find a rapid and stable conclusion to Brexit. The danger will be whatever terms are concluded, they will be used in the British debate to explain any difficulties encountered, especially given the general lack of knowledge about the EU and its workings. Thus principle might come to be presented as vindictiveness, which cannot help the Union at a time when it needs to rebuild and strengthen public confidence.

As the EU awaits the UK’s formal notification of departure, it cannot afford to forget that the UK will remain a member state for some significant time to come. That means British MEPs and British ministers voting on legislation, even if they find themselves short on allies of late. The path to Brexit will be long and difficult, and it cannot be in anyone’s interest to make it harder than it already is.