If Brexit is ‘done’, then where’s the dividend? | Brexit

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It is two weeks since Britain finally cut its ties with the European Union. It may therefore seem a bit premature to ask how it is all going. But the reality of Brexit in early 2021 is stark. We may now be a sovereign nation – which matters a lot to many – but in almost every material respect the UK is currently worse off than before 1 January.

Whatever else this tells us, it is a reminder that Brexit is not yet done. Great Britain remains an island off the coast of the EU, which is its major market. This requires policy and action from politicians and parties. Brexit is a stage in that process. But the process goes on, and Brexit still shapes it. Consider four live examples, on all of which parliament heard evidence today.

First, there is the mountain of paperwork freshly involved in trading across the Channel and into the EU. The Food and Drink Federation’s Ian Wright told MPs on the Brexit committee today that a job that typically took three hours before Brexit is now taking five days, even for big companies. The customs enforcers were currently as much in the dark about the rules as the exporters, he added.

Second, there is the specific effect of all this on the emotive issue of fish and seafood exports, over which the Scottish national party berated Boris Johnson at this week’s prime minister’s questions. Scotland Food and Drink warned on Tuesday that seafood exporters were losing £1m in sales every day.

Third, there is a separate specific crisis in food distribution between Great Britain and Northern Ireland. This week the big UK supermarkets warned of long-term shortages in Northern Ireland supermarkets. Andrew Opie of the British Retail Consortium told the Brexit committee today they would get worse when Brexit grace periods end, on 31 March.

Finally, there is the ending of full police and security cooperation between the UK and the EU. In a separate session today, Prof Gemma Davies of Northumbria University told the Northern Ireland affairs committee that Brexit amounted to an overall “security downgrade” compared with the years of EU membership, and highlighted the loss of access to real-time data as a major problem.

All the committee witnesses were clear that this deal, whatever its problems, was better than no deal. It may also turn out that their concerns prove to be Brexit teething problems. The lateness of the 24 December deal certainly posed massive challenges. As the new rules begin to bed in, it is also likely that all sides will find workaround solutions.

Yet this would still be a highly optimistic way of looking at the problems facing the more than 50,000 UK manufacturers whose only trade is with the EU. And while workarounds are to be welcomed, they are inferior to the free passage of the past, and they must ultimately be compatible with law and regulation on both sides. This is another fragile area of the agreement, yet to be tested.

The emotional importance of Brexit should never be underestimated. Support for it will always depend more upon feelings than realities. Yet the plain fact is that there has been no material Brexit dividend of any kind in the first two weeks of the break. Perhaps that does not matter. Perhaps a dividend will come. But perhaps the EU has also succeeded in showing there are real costs to leaving.

The current reality is nevertheless that each of the material problems seems likely to grow more acute. That is true for distribution chains in particular. According to Wright, all EU-UK supply chains will have to be re-engineered over the coming months. The economic and employment implications of this statement are huge, especially amid the pandemic. The impact on fishing will be especially politically sensitive. And no one pretends that the medium-term future for Northern Ireland after Brexit is anything other than delicate.

But the uncertainty extends deep into other areas of the economy and society too. Since London can no longer be the financial centre of the EU, UK financial services seem doomed to decline in importance. So does the attractiveness of UK universities to students and researchers. The arts industries are vulnerable too, as Simon Rattle’s return to Germany underlines. Lockdowns and travel restrictions mean there is currently less attention to post-Brexit tourism problems, but these will unquestionably revive.

The Conservatives and Labour each have a shared interest in treating Brexit as done. Johnson wants to tout it as his passport to history, especially amid his Covid failures. Keir Starmer can see no route to a Labour majority (or party unity) from reopening the European issue. This week he tried to close the file on freedom of movement as part of that. This may be understandable from the point of view of electoral self-interest – but that does not mean the party interest is the same as the public interest.

Material issues over commerce, trade and jobs thrown up by Brexit cannot be ignored just because to talk of why they are occurring may reopen the deep and disturbing divisions of the past decade. Nor can there be a code of silence over the umbilical link between Brexit and issues such as the potential breakup of the UK or the decline in Britain’s standing in the world. These are real and growing dangers to Britain, and thus even to Brexit itself.

The feeling that Brexit was based on – that Britain and the British were being done down by the EU – lay behind its enormous political success at home. But beyond leaving the EU, Brexit never amounted to a programme of change. There was no yardstick other than departure by which to judge the policy.

This simplicity remains both the strength and weakness of Brexit. It means all the areas that were left blank before and after 2016 will now need to be filled in. In practice, this mostly means working with the EU rather than competing against it, whether in trade or foreign policy generally. The head of the foreign affairs thinktank Chatham House, Robin Niblett, wrote this week that Britain will fail after Brexit if it tries to recreate itself as “a mini great power”. The former cabinet minister David Lidington has said he sees the prospect, over time, of various forms of “association agreement” between Britain and the EU.

None of this is to say that a British return to the EU is remotely on the cards any time soon. But, as time passes, the grip exerted by the votes of 2016 and 2019 will weaken. Britain’s multiple living relationships with Europe, meanwhile, will not go away. Decisions will have to be taken. Things will have to evolve. In one form or another, what we now call Brexit will never be an entirely settled issue. We would be deceiving ourselves to treat it as one.





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