Trump increases Economic and Security Uncertainty in Europe
Trump increases Economic and Security Uncertainty in EuropeFollowing the referendum last July I outlined 10 REASONS WHY BREXIT WILL NOT HAPPEN. The triggering of Article 50 would seem to be an appropriate time to review this prediction.
The review confirms my previous conclusion that Brexit will not happen and the events of the past nine months merely highlight some of the problems which lie ahead. We are now leaving the phase of meaningless platitudes “Brexit means Brexit “and “red ,white and blue Brexit”, dismissing genuine concerns as scaremongering, the issuing of reassuring wish lists and attacks on the other member states and the EU Commission. We will now enter serious negotiations where substance rather than aspirations will determine the outcome.
Enhanced role of Parliament
In reviewing my ten reasons it would appear that despite the endless debate very little has changed apart from the enhanced role of parliament.
The government had intended to use prerogative powers to carry the leaving process thereby largely excluding parliament. This was overturned by the Supreme Court which ruled that parliament must make the decision to trigger Article 50 but more importantly it must also have a vote on the final decision to leave. The government after an unsuccessful appeal has finally accepted this ruling.
I believe that Parliament may reject the terms negotiated. Indeed Keir Starmer’s speech on Sunday which sets out “six tests for Brexit” suggests this is a possibility.
Relationship with single market
Another issue which seems to have been resolved is the relationship with the single market. In July there were considerable differences within the government as to future trading relations with the EU. Ministers differed on whether we should seek access to the single market, be part of the Customs Union or join the EEA. This has been resolved in favour of the hardest Brexit possible – the total rejection of the single market despite previous claims by Boris Johnston that it was essential to have access and the commitment in the Conservative manifesto to it. Many MP’s including some leavers stressed the need to retain full access to the single market. If this is abandoned can these MP’s ratify the final deal?
Election of Trump creates economic and security uncertainty
One event which could not have been foreseen at the time of the referendum was the election of Trump. This is something which I feel should make many leavers reconsider their position.
Trumps recent statements have undermined existing institutions and are creating uncertainty particularly in relation to security and international trade. His ambiguous relationship with Putin and the questioning of the role of NATO has caused concern throughout Europe This has to seen in the context of Putin’s support for far right politicians in Europe and his policy of destabilising the EU. Should the UK support him in further destabilising the EU?
In trade terms Trump has emphasised his determination to put America First and to introduce policies to tax US investment abroad, protectionism. repatriate jobs to the US, and impose higher tariffs on imports. These policies if implemented will have a serious impact on global trade and are likely to develop into a trade war. In such a case we are much stronger as a member of 500 million EU market.
The issues of security and international trade will certainly become increasingly significant in the next two years
Northern Ireland, Scotland, Passporting and Expats
Many of the other issues I identified have been widely discussed over the past months and although the problems are now clearer we are no nearer a solution
As a resident of Northern Ireland (which voted 56% to remain) my greatest concern is to how the Irish border problem can be resolved and the implications for the peace process if border controls are reintroduced. There are more than 250 border crossings. It is clear that the government has no idea and it would appear to have little interest despite the fact that it is the only land border with the EU.
The PM assures us that there will be no hard border despite the fact that this has still to be negotiated with the EU. Leaving the single market will introduce tariffs making some border controls inevitable and it will provide a return to the heyday of smuggling.
In addition 120.000 people cross the border every day mostly to work. If we wish to limit immigration some form of control would be required to restrict EU residents entering the UK.
It would also be difficult to attract inward investment to Northern Ireland as companies would not have full access to the EU single market. One leading NI firm Almac has already decided to open a new factory across the border in the ROI so that it could retain access to the single market.
There is no question that Brexit would seriously disrupt the relationship between NI and ROI in terms of seamless travel and trade. This disruption could destabilize the peace process which has developed as the two countries move closer together within the EU.
In recent weeks we have also seen the divisive impact Brexit is having between Scotland and Westminster. Although the referendum was UK wide many Scots would claim legitimacy for independence as 62% voted to remain in the EU. This dispute will not easily be resolved and the question of a second Independence referendum will not go away.
As I previously pointed out passporting rights has become a major issue. In anticipation of the withdrawal of these rights many of the major financial institutions have already proposed to move staff to other EU cities including Morgan Stanley and Goldman Sachs
This will reduce London’s role as the financial centre of Europe and is likely to be opposed by MP’s with financial / banking background.
The position of expats and EU immigrants working in the UK has been widely discussed and the fact that these vulnerable group are being used as bargaining pawns has been widely condemned. Again this is an issue which is extremely complicated and involves nationals of many countries who have relocated families in all parts of Europe and shows no sign of any solution
These issues are likely to involve many months of complex and detailed negotiations.
First stage of negotiations
It is interesting that the EU Commission has indicated that the first stage of negotiations would deal with the conditions of divorce and highlight three issues 1) Britain’s exit bill,2) Borders control (Ireland) and 3) the status of EU residents. When these have been resolved negotiations on future trading terms between UK and EU can begin. This is likely to delay trade discussions for many months if not years.
Where are we now?
As I pointed out previously a week is a long time in politics and the next 2 years will seem a lifetime. The past nine months has seen little change in public support for Brexit.
The value of the pound has fallen by 20% but this has yet to be reflected in prices. Other changes are taking place including a reduction in investment and some relocation of jobs to other EU member states. However the fact is that negotiations have not yet started.
It is also important to point out that Ministers are predicting that we will leave the single market at the end of two years but there will need to be a transition period to negotiate a full trade agreement. This may take many years and is not what the Brexiteers voted for.
Where do we go next?
As I pointed out the battle is just beginning. As negotiations begin we must take every opportunity to highlight the impact Brexit will have on individuals, particular sectors or areas of the economy. For example although 80% of Northern Ireland farmer’s income comes from EU grants the farming sector voted solidly for Brexit. Brexit will mean the loss of these grants, having to replace migrant workers, high tariffs on exports to traditional EU markets and competition from surplus Argentinian beef. When these facts such as these are revealed public opinion may change.
For the next two years or more as negotiations continue we must fight on issue by issue highlighting the folly of Brexit and exposing the implications of each decision to the wider public.
We must also highlight the positive features of the EU and quash the prevailing image of the UK being an economic utopia before we joined the EEC .In fact the UK had just suffered a 14% devaluation of £, with balance of payments problems, a three-day week and a period of stagflation.
The EU has given us 60 years of peace and unprecedented economic growth. While there are problems caused by the influx of refugees and globalisation these can be resolved by working together.
I believe the majority of MP’s and the British public when they become aware of the full implications will not support the proposed Brexit settlement. This will lead to years delay, renegotiation, amended proposals and large quantities of fudge.