by Brendan Donnelly, Director, The Federal Trust

5th December 2017


Even during the European referendum last year it was clear that those who wished the UK to leave the European Union fell into two quite different camps, those who wanted Brexit to mark a decisive break in the economic and social life of the United Kingdom; and those who wanted Brexit to take place with minimal social and economic disruption. This division has become more pronounced in the months since the referendum and is at the heart of the current controversy over the Irish border. This particular controversy may be resolved in such a way as to permit movement towards the second phase of Brexit talks at the European Council on 14th December. The fundamental divisions within the pro-Brexit camp can however only become more obvious and more acute in this second phase of negotiations. The debate over the Irish border may well come to be seen in retrospect as simply a precursor of other even more intractable dilemmas thrown up by the self-contradictions of the whole Brexit project.

Tensions within the Conservative Party

The tensions between those favouring a revolutionary Brexit and those wanting to preserve as much as possible of the status quo are particularly manifest within the Conservative Party and government. Most Conservative MPs, unlike the membership of the Conservative Party, voted to remain within the European Union in last year’s referendum. A larger majority of the present Cabinet did the same. Most of these MPs and Ministers have now reconciled themselves to the prospect of leaving the European Union but are determined that the economic damage they believe Brexit will entail should be minimized as far as possible. They are however confronted by a well-organized and determined minority within the Conservative Parliamentary Party who take a very different view, namely that leaving the EU loses much of its sense if the supposedly transformative effects of “liberation” from the European Union are not welcomed and emphasized. This minority is wholly unwilling to see the fruits of the narrow referendum victory frittered away in lengthy and expensive negotiations on Brexit that delay or even potentially prevent the social and economic transformation they desire and expect for the United Kingdom outside and indeed at some distance from the European Union.

Until now Mrs May has been able to preserve an uneasy truce between these contradictory conceptions of Brexit. She has invented for her fractious party the reassuring chimera of a “bespoke” arrangement after Brexit between the UK and the EU which will allow the United Kingdom to maintain “frictionless” trade with the Union, but simultaneously ensure that the UK is not inconvenienced in its internal or external economic arrangements by European legislation or trade policy. Those economic interests in the UK traditionally supportive of the Conservative Party will have their established trading patterns with continental Europe maintained, while those in the Party who wish to use Brexit as a platform for radical economic change in the UK will have a free hand to conduct their reorientation of British economic and social policy away from the European model for which they feel such contempt. The Prime Minister may have hoped that this pleasing fairy-tale, a more genteel version of “having our cake and eating it,” would have remained intact until at least the second phase of the Brexit negotiations. The inclusion in the first phase of these negotiations of the Irish dimension of Brexit has made this much more difficult.

The view from Dublin

The Irish government rightly believes that the openness of the inner Irish border is an important expression of the success of the Good Friday agreement in vastly reducing political violence and promoting co-operative integration within the island of Ireland. It equally rightly fears that Brexit may compromise this open border if the internal and external trading regimes of Northern Ireland and of the Republic of Ireland differ significantly from each other after the UK leaves the European Union. The government in Dublin is unimpressed by airy British assurances that technological or other administrative solutions for trans-border problems can be found at the time of the UK’s leaving the Union. These assurances remind Irish politicians and officials unhappily of the naïve claims made by pro-Brexit campaigners during last year’s referendum that negotiating a new and favourable trading relationship for the UK with the rest of the European Union would be a straightforward and rapid process. Many in Dublin remain convinced that even today the British government is incapable of realizing the objective complications and contradictions of the path towards Brexit on which it is engaged.

Mrs May’s Irish dilemma is stark but simple. She can assure herself of Irish support for moving towards the second phase of Brexit negotiations by assuring the Irish government that the difference between the internal and external economic regimes of the two parts of the island after Brexit will be minimal or non-existent. This guarantee will suffice to quell Irish fears that a reintroduced border between the Republic and Northern Ireland is the inevitable consequence of radically diverging economic arrangements within the island of Ireland. Or the British Prime Minister can maintain the precarious unity of her Parliamentary Party by refusing to give any such guarantee, claiming that it is either premature or unnecessary. Nor is it only the unity of her own Parliamentary Party that is at stake in this delicate calculation. The DUP made clear, in the humiliating veto it imposed on Mrs May’s negotiations with Mr Juncker and Mr Barnier earlier this week, that its support for the present Conservative government cannot be taken for granted if the latter envisages exceptional economic arrangements for Northern Ireland after Brexit, arrangements that would differentiate the Province from the rest of the United Kingdom.

As so often in the Brexit tragicomedy, there are no good choices for Mrs May. Progress towards the second phase of the Brexit negotiations is dependent upon giving an undertaking that one part of the United Kingdom will not move far away from the European regulatory model. This undertaking will be unacceptable to an important section of her own party and inevitably lead to calls for similar exceptions to be carved out for other parts of the United Kingdom such as Scotland, Wales and London. Already voices are being raised to argue that if Northern Ireland is in effect to remain within the European single market and Customs Union perhaps the rest of the United Kingdom should do the same. The Prime Minister also knows that failure now to move to the second phase of the Brexit negotiations and in particular failure rapidly to agree a “transitional” period for the UK after it leaves the European Union in March 2019 will inevitably trigger a substantial reduction of economic confidence in the UK by major domestic and international economic actors. It has been fear of this loss of confidence which has led her over recent weeks to important readjustments of British negotiating positions. If even these readjustments are insufficient to secure progress on 14th December towards the second phase of the negotiations, Mrs May’s political position within the United Kingdom will be perilous indeed.

Which way will the Conservative Cabinet jump?

It has been reported that the British Cabinet intends to meet in the New Year to discuss its policy preferences for the second phase of the Brexit negotiations. Helpfully, Mr Barnier and others have made clear that the real choices open to the United Kingdom correspond precisely to the line of cleavage within the British Cabinet. The United Kingdom can choose to remain close to the European Union by adopting some version of the “Norwegian” model, involving close approximation to European standards without participation in its decision-making institutions; or it can choose the much looser association of a third party trade treaty, such as that recently concluded with Canada. Minor variations of these existing models will perhaps be negotiable, but no more. The polemic already surrounding the question of the Irish border is an obvious foretaste of the uncertainty that will surround the projected meeting of the British Cabinet in 2018 to choose between these two offered templates.

Earlier this year, Mrs May gave an undertaking that after Brexit the United Kingdom would leave both the European single market and the Customs Union with the EU. In a less febrile and fluctuating political environment than the current one, it might be assumed that this undertaking prefigures an inevitable victory in next year’s Cabinet meeting for those who wish to leave the European Union in the most decisive and disruptive fashion possible. It is a token of the confusion and self-contradiction in which British European policy finds itself that not even this apparently logical prediction can be made with confidence. At the time when Mrs May committed herself to leaving the single market and the Customs Union, it was in the clear belief that similar “bespoke” arrangements could be negotiated between the UK and the EU that would replicate for the UK the trading advantages of the single market and Customs Union. Harsh experience in the first phase of negotiation will have disabused Mrs May and her colleagues of any such delusions for the future. If and when the Conservative Cabinet steels itself to make a realistic choice about the future relationship it wants to have with the European Union, it will do so on the basis of hard-won knowledge about the real options which the Union is prepared to entertain for that future relationship. The present Irish controversy will have played an important role in that process of learning throughout suffering. It would be a brave commentator who would predict the final European choice of the Conservative Cabinet next year. It is not even clear that said Cabinet, having made a choice, would be willing and able to live with the consequences of this choice. “Taking back control” may have been an attractive slogan during last year’s referendum. It bears little relationship to the realities faced by the British government in trying to “make a success of Brexit.”