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◼ AGENDA
● Whether the U.K. prime minister is pursuing negotiations
or an electoral advantage, he’s headed for disaster◼BLOOMBERG OPINIONWritten by the Bloomberg Opinion editorial board ILLUSTRATION BY OLLIE SILVESTERWhen a government makes emergency plans to safeguard
water supplies, stockpile vital medicines, manage food short-
ages, prepare for civil unrest, suspend the legislature, and
exploit arcane procedures to stay in power, things aren’t
going great. For British Prime Minister Boris Johnson, it’s
evidently all part of the plan. He came into office in July vow-
ing to leave the European Union on Oct.31, w ith or without a
withdrawal agreement. Since then his government has been
shifting cash around, reassigning civil servants, initiating a
huge propaganda campaign, and noisily affirming its pledge
to pursue a no-deal Brexit if needed.
This apparent commitment to self-harm has a certain logic.
It might induce the EU to offer more concessions to Johnson’s
negotiators and produce a revised exit agreement that
Parliament could assent to. Or it might help the prime minis-
ter secure a more coherent majority after an election. There’s
also the remote possibility he thinks it’s the right thing to do.
Whatever his purposes, a no-deal exit looks likelier by the
day. This would, it bears repeating, be a calamity. It would lead
to severe trade disruption, transport bottlenecks, rising prices,
consumer shortages, failing businesses, and in all likelihood a
recession within months. Public finances would be ravaged,What Is Boris Doing?
and unemployment would surge. By the government’s own
reckoning, the long-term costs could be immense.
Nor would such an exit achieve its stated goals. If the objec-
tive is a competitive “global Britain,” severing all ties with the
country’s biggest trading partners overnight amid a simmer-
ing trade war and a looming recession probably isn’t ideal.
Of the 36 trade deals the U.K. was subject to within the EU, it
has managed to roll over just 13, many of them only partially.
Far from offering a “clean break” from the EU, moreover, a
no-deal exit would ensure years of hideous negotiations with
no leverage and little hope of clawing back the benefits of
membership. Any agreement would likely need to be ratified
by the EU’s 27 parliaments, which may not be sympathetic
after the U.K. has imposed such mayhem.
Among the only certainties are that Britain’s influence
will diminish and its union be weakened. Any deal it reaches
with the EU will leave it with rules it has little power to shape.
Scotland may demand independence; a referendum on a
united Ireland may follow; even Wales is asking questions.
Partly because this strategy is so obviously illogical, the
government has had a hard time getting people to believe
its warnings. One survey found only 14% of small businesses
have made plans for no deal. Of the 245,000 British com-
panies that trade exclusively with the EU, just 66,000 have
completed the customs paperwork they’d need after a crash-
out. They seem to take Johnson at his word that the chances
of no deal are “a million to one”—thereby increasing the cost
and risk of the whole misadventure. <BW>A busy week beckons for retailers, with Home Depot, Gap,
Kohl’s, and TJX all reporting numbers on Aug. 20. T o keep
consumers happy, President Trump said on Aug. 13 that he
will delay tariffs until mid-December on some products that
are holiday-season favorites.▶ France hosts the Group
of Seven meeting on
Aug. 24-26 in Biarritz, with
President Trump attending
amid increasingly frayed
trans-Atlantic relations.▶ BHP Group releases
earnings on Aug.20.
Demand for copper and iron
ore at the world’s biggest
miner provides a barometer
for economic growth.▶ On Aug. 19, German
Chancellor Angela Merkel
meets Hungarian Prime
Minister Viktor Orban in
Sopron, which played a key
role in the Iron Curtain’s fall.▶ Nauru, the world’s
smallest island nation,
whose fertilizer reserves
once made it fabulously
wealthy, holds parliamentary
elections on Aug. 24.▶ Bank Indonesia releases
its rate decision on Aug.22.
It’s hinted at a cut to
unwind a series of hikes
from last year, joining other
central banks.▶ Aug. 22 is a day of
jubilation—or bitter
tears—as the GCSE final
school exam results will
be published for British 15-
and 16-year-olds.▶ Retail Therapy in a Trade War
Bloomberg Businessweek August 19, 2019