50 Britain The EconomistFebruary 1st 2020
2 could be awarded more exemptions from
labour regulations.
This worries the eu, which is particular-
ly concerned that there should be a “level
playing field”. On environmental protec-
tion, Brussels calculates that British indus-
try could save €4.7bn a year if it departed
from the eu’s rules on industrial emissions
and pollution.
Yet Mr Johnson seems unlikely to go for
much of this sort of deregulation. He is not
that sort of Tory, and cutting labour and so-
cial protections would rile British voters—
especially in the poorer areas where the
Conservative Party has just made big gains.
Although Britain originally got an opt-out
from the Social Chapter of the Maastricht
Treaty, it has sometimes gone above and
beyond what Brussels wants: it has given
temporary workers more rights and par-
ents more leave than the eudemands. The
green movement is strong in Britain, and
will keep a protective watch on environ-
mental regulation. The government is re-
portedly inclined to toe the euline and
keep most of the massive reachlaw that
regulates chemicals. “There are plenty of
things you might want to do in your dark
free-market heart but the public doesn’t
want it,” says Robert Colvile, director of the
Centre for Policy Studies, a Conservative
think-tank.
Focused as it is on boosting growth in
England’s peripheries, the government
seems more likely to diverge from eustate-
aid rules than from social, environmental
and labour protections. Mr Johnson has
put the creation of ten “freeports”, that for
customs purposes are legally outside Brit-
ain, high on the agenda. Freeports can offer
zero tariffs, low taxes and loose regulation.
America has 250 free-trade zones. The eu
claims to have 85 customs-free zones but in
reality there isn’t much to them. Mr Sunak
says eu single-market regulations and
state-aid law have stopped Britain from us-
ing such zones properly. “The eumakes it
very hard to make them seamless and real-
ly exciting,” he says.Going free range
The biggest arguments are going to be
around fisheries (see box) and agriculture.
Farmers and fishermen, who voted enthu-
siastically for Brexit, make up a tiny pro-
portion of gdp—0.6% and less than 0.1%
respectively—but their travails will loom
large: Scarry’s Law, formulated over a de-
cade ago by this newspaper and named
after Richard Scarry, a children’s illustra-
tor, states that politicians mess at their per-
il with groups that feature in children’s
books—farmers, fishermen, train drivers
and suchlike.
The eu’s approach to farming is unpop-
ular among an impressively wide range of
people. Some dislike the fact that the com-
mon agricultural policy (cap) has shov-elled vast subsidies to a tiny sector, many of
whose members are landed gentry; others
that it depresses the price of agricultural
products, thus impoverishing developing
countries. Environmentalists regard auto-
matic payments for agricultural land as an
incentive to clear wildlife habitats and cut
down trees. Farmers dislike the eu’s tight
rules on the use of pesticides.
The government’s new agriculture bill
proposes public subsidies for farmers who
promote public welfare. They will in future
be paid for things like improving animal
welfare and air and water quality. But their
future looks uncertain. Within the eu,
farmers benefited from the power of the
French agriculture lobby, which ensured
that tariffs were high and the cap swal-
lowed up more than a third of the eu’s bud-
get. British farmers do not have that sort of
clout. Declining subsidy is not the only risk
they face: American farmers want access to
British markets for their chlorine-washed
chicken or hormone-filled beef. British
farmers fear that they may find themselvessacrificed to the need for a trade deal.
Sectoral worries aside, surveys suggest
that business sentiment soared after the
election result. A cbisurvey of manufac-
turers published on January 22nd reported
the biggest positive swing in confidence
since the poll was first taken in 1958. Manu-
facturers’ absolute confidence level is now
as high as it was in 2014 when the economy
was emerging from recession.
This surge of animal spirits is down
partly to the defeat of a left-wing Labour
Party and partly to greater clarity about
Britain’s future relationship with the eu.
But it also springs from a hope that the gov-
ernment will not just throw off eurules,
but also improve the way it works with
business. “We’ve got to park the past and
make the best of what we’ve got,” says Sir
Roger Carr, chairman of baeSystems, a de-
fence firm. The hardest part of Brexit—ne-
gotiating a full trading relationship with
the eu—is still to be achieved, but British
business appears ready to be bolder than
the pike. 7B
rexit’s new freedomsresoundespe-
cially with fishermen who felt be-
trayed when Britain joined the common
fisheries policy (cfp) in 1973, giving up
fishing rights to other European coun-
tries. Michael Gove, in charge of eu
negotiations, believes the cfpdestroyed
his father’s Aberdeen fishing business.
The appeal of taking back control of
Britain’s fish post-Brexit, as Iceland did
in the 1970s, is strong.
Britain’s seawaters give it a strong
card. Yet it is not an easy one to play. One
reason is that fish have a pesky habit of
swimming across boundaries. Another is
catching and eating habits. Two-thirds of
the fish landed in Britain is exported,
mostly to the eu. But most of the fish
eaten in Britain is imported, mostly
caught (often by Brits) in euwaters.
Trade barriers would disrupt both sides.
Next are historic rights for eucoun-
tries, many of which long predate the
cfp. Some arise because eubusinesses
bought British vessels and their quotas.
Removing these rights might entail
litigation and compensation. Also fish-
processing, which could face tariffs after
Britain leaves the cfp, has become a big
business in ports like Grimsby—and it
depends on the unfettered import and
export of fish caught all over Europe.
The biggest problem is politics. Barrie
Deas of the National Federation of Fish-ermen’sOrganisationssays Britain
should follow Norway’s example by
adjusting allowable catches in its favour
and settling quotas annually with the eu.
But he fears political polarisation. Ire-
land’s Leo Varadkar has suggested Britain
might have to give up control so as to get
better terms elsewhere. France’s Emman-
uel Macron has said that, if it rejects
open access to its waters, Britain will not
get a trade deal. Since fisheries account
for less than 0.1% of Britain’s gdp, com-
pared with 4% for cars or 7% for financial
services, fishermen may be right to worry
about being traded away once more.A scaly problem
Fisheries after BrexitWill fisheries be sold down the river again?Slippery customers