Credit Suisse PowerPoint deck cuts to shreds Theresa May’s position on Irish border problem

  • Alternative customs arrangements for the Irish border either don’t exist, have not been invented, or have not been negotiated, and thus Britain will stay inside the EU customs union post-Brexit, Credit Suisse says.
  • Prime Minister Theresa May doesn’t really have a choice, the bank’s PowerPoint slideshow says.
  • Leaving the customs union is unacceptable to the EU, Northern Ireland, Ireland and a majority of UK’s parliament.
  • Thus we’re heading for a soft Brexit, whether you like it or not.

LONDON – There is only one likely outcome to Britain’s exit negotiations with the EU, and that’s continued membership of the European customs union and “soft Brexit,” according to an incredibly blunt PowerPoint deck from Credit Suisse economics director Sonali Punhani.

Prime Minister Theresa May wants to pull Britain outside the EU’s customs union area but avoid erecting a “hard border” between Ireland and Northern Ireland. (Doing so would hinder trade and, more importantly, potentially rekindle the armed conflict that ended in 1998.) She has proposed two alternatives: Either a minimally invasive border that would allow trusted companies and individuals to trade unhindered by getting clearances in advance, or making Britain the functional external border of the EU with a role collecting external tariffs and passing them back to the European Union. Both ideas have been shot down by the EU.

As this archly annotated Credit Suisse deck points out, May only has one real option left: Staying inside the EU’s customs union.

Credit Suisse Brexit
‘Trade deal with the EU – Not negotiated,’ the deck says. ‘Technology – not invented. Legal backstop option – … keeping Northern Ireland in the customs union,’ the deck says. Credit Suisse

The customs union is poison to the hard-Brexit wing of the Conservative party, who regard it as a betrayal of the 2016 EU referendum result, because it would leave Britain’s economy tethered to the European free-trade zone.

But the hardcore Leavers have lost this argument already, Punhani predicts. May’s government is already showing “a steady shift to a soft Brexit,” she wrote in the presentation.

“Our central view is that soft Brexit (i.e. the UK remains a part of the customs union and single market) is much more likely than the UK crashing out without a deal.”

The reason? “A majority of the UK parliament seems to be in favour of a soft Brexit”:

Credit Suisse Brexit

Leaving the customs union makes the Irish border question unsolvable (unless the government wants to risk restarting the Irish war by re-dividing the island, which would enrage Republican terrorists). As the Eurosceptic wing of the Tory party dare not topple May for fear of triggering an election that might usher Labour leader Jeremy Corbyn into 10 Downing Street, staying inside the customs union is the only option left, Punhani argues:

Credit Suisse Brexit

The deck was published earlier in April.