Brexit sucked most of the oxygen out of British politics in 2017, leaving little to spare for domestic policy priorities—and still less for anything resembling an active foreign policy.
Yet 2017 was the preamble, the easy bit. 2018 is the year when real choices will have to be made, which will define Britain’s relations with Europe for the next generation. The way in which British government has handled the negotiations so far doesn’t give much ground for optimism that wise choices will be made: but it does give some clues as to how 2018 may play out.
Actually, the word negotiations is a bit of a misnomer for what happened in 2017. The EU specified the issues which would have to be resolved as part of the first phase of the Article 50 process. The EU27 stayed united behind the Commission negotiators. A divided British cabinet with a weak negotiating hand found they had no alternative but to align themselves step-by-step with the EU’s requirements.
That was clearest in the case of the financial settlement, where Britain’s position went from “go whistle” to agreeing to pay our debts of at least £40 billion in the space of a few months. But it also applied to the other areas as well.
The process of gradual retreat on the British side was not elegant. But it was done without too much fire and fury from the Brexit camp. The reason for that is relevant to 2018. The overriding priority for the Brexiteers is to get Britain out of the EU. They found in 2017 that, when push came to shove, they were willing to pay any price demanded by the EU to achieve that goal.
Read more: Theresa May—shuffled out
The same logic will probably apply to the next priority in the negotiations, to define the terms of a transitional deal. It is now obvious that it will be impossible to reach a full agreement on Britain’s future relations with the EU by the time the Article 50 clock runs down in March 2019. So a transitional arrangement is essential to buy more time for negotiations and to stave off the famous cliff edge.
Here again, Britain is in a weak negotiating position. A disorderly departure in 2019 with no agreement on the future would be hugely damaging to Britain, whatever preparations the government makes for a no deal scenario. I expect that, once again, the Brexiteers will recognise this hard reality, and will accept what the EU offers in terms of the transition. This will essentially be to continue the full rights and responsibilities of membership, including free movement, ECJ jurisdiction and paying into the budget, but without the right to participate and vote in EU meetings.
There is no time to negotiate a bespoke interim settlement. A steady-state transition will leave Britain in an uncomfortable limbo for two years or so. That is a lot better than no deal. Persuading the EU to prolong the Article 50 process would be even better, since the UK would then remain a full member of the EU through the transitional period. But the prime minister has always ruled this out.
“If the British side cannot make a coherent proposal, the EU will choose for us”That leaves the real negotiation: the one on the future partnership with the EU, starting in the Spring. Here, the negotiating dynamic will be different. The EU will look to London for clarity on what we want the end-state to be. That is the most divisive issue on the British side. It will no longer be about getting out of the EU, so the incentives for the Brexiteers to compromise will be less.
So far, this debate has been fudged. Even Philip Hammond continues to set out objectives that he must know are incompatible. It will simply not be possible to have, as he has proposed, frictionless trade with the EU, no hard border in Ireland, and an independent international trade policy. Striking our own trade deals with other countries will inevitably involve diverging from EU regulations in some areas, which will make Hammond’s first two objectives impossible.
My prediction is that the cabinet will continue to find it impossible to choose clearly between the two broad alternatives of staying close in terms of trade policy to the EU (our largest market), or pulling away from alignment with the single market, taking back regulatory control and searching for new trade deals further afield.
If the British side cannot make a coherent proposal, the EU will choose for us. The EU is very precedent-driven, so they will produce an off-the-shelf model taking account of the red lines the prime minister has set out. This will be a Canada-style free trade agreement. It will be possible to tailor it a bit, for example including cooperation on foreign, security and defence policy which is in everyone’s interest. But it will leave the UK with far less fluid trade access to the single market than we have now, and even less in the vital services sector. Unless parliament is willing to reject this, it will be a hard Brexit, imposed by the cabinet’s inability to agree on anything else.
Peter Ricketts was Ambassador to France and Permanent Under-Secretary at the Foreign Office. He is now a cross-bench Peer
Brexit Britain: the future of industry is a publication which examines the future of UK manufacturing through the prism of the recently released Industrial Strategy White Paper. The report features contributions from the likes of Greg Clark MP, Miriam Gonzalez, Richard Graham MP and Frances O’Grady.
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