- David Davis surrenders to EU demands on timetable for Brexit talks.
- Ministers signal a lengthy transitional period is likely.
- Chancellor concedes that leaving without a deal would be “very, very bad.”
- UK will have to accept large “divorce bill” before beginning trade talks.
LONDON — Ever since Britain voted to leave the EU senior UK government figures have boasted of the hard line they would take in Brexit negotiations, with everyone from junior ministers to the prime minister herself, warning that they would walk out of talks rather than capitulate to EU demands.
“May to EU: give us fair deal or you’ll be crushed” was the Times’ headline following May’s Lancaster House speech on Brexit earlier this year.
“Europe will be ‘in tiny little pieces’ if it punishes us” said the Metro, while the Mail warned simply that May would “make EU pay” for a bad deal.
“No deal is better than a bad deal,” insisted May again during the general election campaign as she boasted that, unlike Labour leader Jeremy Corbyn, her own ministers would not be left “alone and naked in the negotiating chamber of the European Union.”
“[Brexit talks] begin just 11 days after polling day and the European Union is already adopting an aggressive negotiating position,” she said.
“That’s why now more than ever Britain needs a strong government and a strong prime minister capable of standing up to Brussels.”
Stepping into that role, Brexit Secretary David Davis insisted that the UK would stand firm on the first issue under discussion — the timetable for Brexit talks.
David was responding to an EU edict stating that the UK would have to settle its exit from the EU, including the matter of its so-called ‘divorce bill’ before beginning talks on any future trading relationship.
Davis dismissed this and said the UK would not budge, telling ITV’s Robert Peston that settling the matter would be “the row of the summer”.
In the end, it wasn’t even the row of the day. After just half a day of talks, the EU’s chief negotiator Michel Barnier reported that the UK had capitulated to their original demands.
With a permanently stern expression, Barnier said he was “not in a frame of mind to make concessions”.
The UK would have to face up to the “consequences” of leaving the EU he said, adding that “the consequences are substantial”.
Left, in May’s words, “alone and naked in the negotiating chamber”, Davis was reduced to claiming that “It’s not when [negotiations] starts. It’s how it’s concluded that matters.”
Davis’s surrender yesterday is just the first relatively minor concession in what is likely to be a series of major climbdowns by the UK government.
Despite all the hardline rhetoric of the UK government, the reality is that Britain is in a uniquely weak position in these talks for several reasons.
We don’t have time
There are now just 21 months until the date that Britain must leave the EU under the terms of Article 50, following the prime minister’s decision to spend two months on a failed attempt to increase her parliamentary majority. This is a vanishingly small amount of time in which to negotiate what will be the largest and most difficult set of negotiations the UK has ever embarked on in peacetime.
At the end of this period is a “cliff edge” over which, without a deal, Britain will fall out of the EU without any trading or regulatory framework on which to land on. And while May has repeatedly insisted that “no deal is better than a bad deal,” the reality is that failing to secure any deal with the EU before exit would be catastrophic for the UK economy — forcing huge tariffs onto consumer goods, causing huge queues at ports and leaving Britain in a regulatory and legal no man’s land. In a further sign that reality is starting to dawn on government, the Chancellor Philip Hammond conceded at the weekend that such an outcome would be “very, very bad” for Britain.
This cliff edge hands huge negotiating advantage to the EU, which although it would also be hit by such an outcome, would not be anywhere near as badly hit as the UK. On this issue, as on many others, the negotiating advantage lies with the EU.
The politics are against us.
The UK does have some leverage in these talks. We are a large trading partner with other EU countries and our strengths in intelligence and security are in our favour. However, our advantage stops there. Attempts by Theresa May to act as a “bridge” between the EU and the US were rejected wholesale by other countries. As the Lithuanian President Dalia Grybauskaitė told Sky earlier this year: “I think there is no necessity of bridges… Today we are communicating with the United States mainly on Twitter.”
Meanwhile, the political pressures on the EU not to compromise with the UK are massive. First of all, there is the obvious pressure not to give the UK any deal that would be more attractive than staying in. If Britain is handed advantages that other EU members are not allowed — on immigration controls or trade for instance — then the EU would risk a stampede to the exit door from other member states. There are also wider political pressures on the EU not to compromise with Britain. A new poll of EU citizens out today found that two-thirds of EU citizens want their negotiators to take a hard line with the UK in negotiations. The Chatham House-Kantar survey revealed strong opposition in nine EU countries to compromising on the bloc’s “core principles” such as freedom of movement.
With Germany still opposed to concessions and France newly electing a president and parliament with a clear integrationist agenda, the chances of Britain successfully negotiating all the benefits of EU membership without the responsibilities, looks slim to non-existent.
The economics are against us
Successfully pushing through a ‘Hard Brexit’ outside of the Single Market and the Customs Union in just two years while not damaging the economy would be a mammoth task for any government, even one with the sort of landslide majority May had hoped to win in this month’s general election. Without that majority, pushing through such a Brexit will be next to impossible. May now has neither the mandate, the majority in parliament, nor the support in her own Cabinet to force through the sort of hardline ‘deal or no deal’ Brexit she originally promised. This was clear in the Chancellor’s Mansion House speech today in which he rowed back heavily from the anti-immigration agenda previously pursued by May.
“The future of our economy is inexorably linked to the kind of Brexit deal that we reach with the EU,” Hammond said.
“And I am confident we can do a Brexit deal that puts jobs and prosperity first; that reassures employers that they will still be able to access the talent they need; that keeps our markets for goods and services and capital open.”
The comments mirror a similar statement by May’s new Education secretary and leading Brexit campaigner Michael Gove yesterday, in which he conceded that immigration would not grind to a halt, despite May’s pledge to reduce it to the tens of thousands a year. “Nobody wants to harm the economy,” he insisted.
Both Gove and Hammond now acknowledge that there will need to be a lengthy “transitional period” in which the UK would continue to follow the terms of the European Single Market and the Customs Union, potentially meaning that freedom of movement from the EU could extend long after we leave in 2019.
Brexit Divorce Bill
While significant, Davis’s early concession is just the starter in what is likely to be a veritable feast of concessions from the UK government on Brexit. These concessions are likely to come on immigration, customs and trade. However, where Britain’s weakness will be most laid bare is on the question of Britain’s divorce bill from the EU. This bill, for unpaid commitments by the UK could extend into the tens of billions and is likely to be hugely politically painful for the government, particularly after ministers raised the possibility of not having to pay any bill at all.
But whatever their previous protestations the reality is that Britain will have to pay up. As Barnier made clear yesterday, failure to agree on the bill would mean refusal from the EU to even begin negotiations on Britain’s future trading relationship. And whatever May publicly claims about being prepared to walk away, that would be an outcome the UK will do everything it possibly can to avoid.
In almost every aspect of these negotiations, Britain is in a weaker position than its European partners, with 90% of the best cards firmly in their opponent’s hands. This week the reality of that position is finally starting to become clear.
This column does not necessarily reflect the opinion of Business Insider.
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