The Economist Europe – July 22-28, 2017

10 Leaders The EconomistJuly 22nd 2017

C

RISIS? Whatcrisis? So many

have been triggered in Brit-

ain by the vote a year ago to

leave the European Union that it

is hard to keep track. Just last

month Theresa May was re-

duced from unassailable iron

lady to just-about-managing mi-

nority prime minister. Her cabinet is engaged in open warfare

as rivals position themselves to replace her. The Labour Party,

which has been taken over by a hard-left admirer of Hugo Chá-

vez, is ahead in the polls. Meanwhile a neurotic pro-Brexit

press shrieks that anyone who voices doubts about the coun-

try’s direction is an unpatriotic traitor. Britain is having a very

public nervous breakdown.

The chaos at the heart of government hardly bodes well for

the exit negotiations with the EU, which turned to detailed

matters this week and need to conclude in autumn 2018. But

the day-to-day disorder masks a biggerproblem. Despite the

frantic political activity in Westminster—the briefing, back-

stabbing and plotting—the countryhas made remarkably little

progress since the referendum in deciding what form Brexit

should take. All versions, however “hard” or“soft”, have draw-

backs (see page 43). Yet Britain’s leaders have scarcely acknowl-

edged that exit will involve compromises, let alone how dam-

aging they are likely to be. The longer they fail to face up to

Brexit’s painful trade-offs, the more brutal will be the eventual

reckoning with reality.

Winging it

In the 13 months since the referendum, the awesome complex-

ity of ending a 44-year political and economic union has be-

come clear. Britain’s position on everything from mackerel

stocks to nuclear waste is being worked out by a civil service

whose headcount has fallen by nearly a quarter in the past

decade and which has not negotiated a trade deal of its own in

a generation. Responsibility for Brexit isshared—or, rather,

fought over and sometimes dropped—by several different de-

partments. Initially Britain’s decision notto publish a detailed

negotiating position, as the EUhad, was put down to its desire

to avoid giving away its hand. It now seems that Britain trig-

gered exit talks before working out where it stood. The head of

its public-spending watchdog said recently that when he asked

ministers for their plan he was given only “vague” assurances;

he fears the whole thing could fall apart “at the first tap”.

As the scale of the task has become apparent, so has the dif-

ficulty of Britain’s position. Before the referendum Michael

Gove, a leading Brexiteer in the cabinet, predicted that, “The

day after we vote to leave, we hold all the cards.” It is not turn-

ing out like that. So far, where there has been disagreement

Britain has given way. The talks will be sequenced along the

linessuggested by the EU. Britain has conceded that it will pay

an exit bill, contrary to its foreign secretary’ssuggestion only a

week ago that Eurocrats could “go whistle” for their money.

The hobbled Mrs May has appealed to other parties to

come forward with ideas on how to make Brexit work. Labour,

which can hardly believe that it is within sight of installing a

radical socialist prime ministerin 10 Downing Street, is unsur-

prisingly more interested in provoking an election. But cross-

party gangs of RemainerMPs are planning to add amend-

ments to legislation, forcing the government to try to maintain

membership of Euratom, for instance, which governs the tran-

sit of radioactive material in Europe. Even within the govern-

ment, the prime minister’s lack ofgrip means that cabinet min-

isters have started openly disagreeing about what shape Brexit

should take. Philip Hammond, the chancellor, has been sniped

at because he supports a long transition period to make Brexit

go smoothly—a sensible idea which is viewed with suspicion

by some Brexiteers, who fearthe transition stage could be-

come permanent.

The reopening of the debate is welcome, since the hard exit

proposed in Mrs May’s rejected manifesto would have been

needlessly damaging. But there is a lack of realism on all sides

about what Britain’s limited options involve. There are many

ways to leave the EU, and none is free of problems. The more

Britain aims to preserve its economic relationship with the

continent, the more it will have to follow rules set by foreign

politicians and enforced by foreign judges (including on the

sensitive issue of freedom of movement). The more control it

demands over its borders and laws, the harder it will find it to

do business with its biggest market. It is not unpatriotic to be

frank about these trade-offs. Indeed, it is more unpatriotic to

kid voters into thinking that Brexit has no drawbacks at all.

The government has notpublished any estimates of the im-

pact of the various types of Brexit since the referendum, but

academic studiessuggest that even the “softest” option—Nor-

wegian-style membership of the European Economic Area—

would cut trade by at least 20% over ten years, whereas the

“hardest” exit, reverting to trade on the World Trade Organisa-

tion’s terms, would reduce trade by 40% and cut annual in-

come per person by 2.6%. As the economy weakens, these con-

cerns will weigh more heavily. Britain’s economy is growing

more slowly than that of any other member of the EU. The

election showed that its voters are sick ofausterity. Our own

polling finds that, when forced to choose, a majority now fa-

vours a soft Brexit, inside the single market (see page 44).

Back in play

A febrile mood in the country, and the power vacuum in

Downing Street, mean that all options are back on the table.

This is panicking people on both sides of the debate. Some

hardline Brexiteers are agitating again for Britain to walk away

from the negotiations with no deal, before voters have a

change of heart. Some Remainers are stepping up calls for a

second referendum, to give the country a route out of the deep-

ening mess. As the negotiations blunder on and the deadline

draws nearer, such talk will become only more fevered.

So it is all the more crucial that all sides face up to the real

and painful trade-offs that Brexit entails. The longer Britain

keeps its head in the sand, the more likely it is to end up with

no deal, and no preparations for the consequences. That

would bring a crisis of a new order of magnitude. 7

Britain and the EU

Facing up to Brexit

As long as the government stays in denial about Brexit’s drawbacks, Britain is on course for disaster