Commentary on Political Economy

Sunday 27 December 2020



I was one of the millions opposed to Brexit. I’ve seen nothing here to change my mind | Will Hutton

Sun 27 Dec 2020 08.30 GMT

The dream is over. On New Year’s Day, the curtain comes down on Britain’s long engagement with Europe’s noblest and greatest effort at collaboration and liberty. Our freedoms are to be slashed and an immense bureaucracy imposed on us. Next Friday Britons will lose the freedom to live, work, and trade in goods and services as they choose throughout the EU. Once natural rights are to be torched.

Our goods exporters, previously able to treat Europe as their home market, will have their goods painstakingly checked and controlled at EU borders, and VAT and excise duties paid immediately. More than 200m customs declarations will have to be filled in as lorries wait in new vast holding pens disfiguring our land.

To sell into the EU a business will have to ensure it complies with that country’s laws. Services, our banks, insurance companies and investment house – great economic strengths – will have to go cap in hand asking permission to trade where once they were welcomed.

We will need visas to stay in the EU beyond three months. Fifteen thousand British students a year will lose the right to study with no fees in European universities under the Erasmus programme. Britain is out of the European Investment Bank, which lent billions to the depressed parts of the UK; also out of EuratomEuropol and Eurojust. We are out of the EU Emissions Trading Scheme, crucial in the fight against climate change and fundamental to the economics of wind farms and new nuclear power stations alike. We are to lose all automatic access to EU databases.

The economic cost will be huge. To limit trade to this degree is to put a ball and chain around British business. Worse, the capacity of the British government to turn British regulations into EU regulations and, via the EU’s heft, then global regulations, as it has done so cleverly, for example, over specialist chemicals and mobile phone networks, has disappeared. No British company will be able to follow Vodafone to global pre-eminence. Inward investment, which boomed under EU membership, and which has already fallen by four fifths since the referendum, will remain depressed.

On top, our horizons shrink, along with our influence. Cooperation with the EU over defence, foreign policy and external security is to cease at the request of the UK government. Thus, not only is Britain outside the forum where European states construct their alliances, thereby disabling itself from the great European game of balance of power politics it has played so well, it has chosen to make itself a Little Sir Echo in a world of mighty superpowers – “a nice little fellow… but always so far away”, as the song has it.

The trade and cooperation agreement with the EU, hailed so triumphantly by our clownish booster-in-chief, Prince Boris Johnson of the English nationalist party, is thus an exercise in limiting the damage – and, as was inevitable, almost completely on the EU’s terms. The EU has kept the UK in its orbit with a newly established partnership council to govern the agreement, ensuring that it has the firepower to launch crucifying trade sanctions if the UK dares to undermine the single market and customs union or depart from its regulatory standards. We are to be a rule taker.

In fairness, the booster-in-chief has rescued some scraps from the wreckage. As was certain, given the starting point of complete regulatory and trade alignment, this is a trade agreement with no quotas and no tariffs, winning the right for British exporters to self-certify that they comply with EU regulations; also there is no automatic obligation for the UK to follow any EU regulatory changes. All of which goes significantly beyond World Trade Organization terms. Even the EU concedes that this is unprecedented, if very much in its interests, enjoying a £34bn annual surplus in its goods exports to the UK.

What’s more, both sides have made pragmatic compromises to keep flowing the preponderance of EU goods exported to the UK. Customs formalities will be a little lighter, with both sides recognising that traders can win the right to be trusted to complete the required customs forms rather than everyone being stopped and checked. Road haulage schedules will be free within limits. But on services, where UK exporters earn a vital £83bn surplus with the EU, the EU has made almost no compromises at all. Britain’s overall surplus position will thus be weakened.

The UK will win some new autonomies. It will be able to approve the use of hi-tech products – from drones to new medicines – faster, which, if used cleverly, will benefit those fast-growing industries. There will be a baby trade deal with the US. But, in the biggest irony of all, if this is to benefit British capitalism it will require a makeover – to become more high investment and stakeholder-oriented, working closely with government. It will have to look… more European.

It is the paradox of Brexit. Britain will not love becoming Europe’s “nice little fellow”, with a stagnating economy and a mendicant relationship with its EU “partner” – so the obvious future to become more European. The narrow majority in the working population who voted 51% to 49% to remain in the EU in 2016 will grow year by year over the 2020s – so that when the incoming Labour government of 2029, led by one of the MPs who saw the future and voted against the treaty this week, holds its promised referendum on EU membership, the elderly Europhobe voters will this time be outvoted.

Nigel Farage was wrong when he said the war was over – and the European commission president, Ursula von der Leyen, right when she said, quoting TS Eliot, that in every end there is a beginning. Brexit is to be a staging post in Britain’s eventually becoming a full-hearted member of the EU, so regaining our lost rights and freedoms – and ending, as Johnson rightly remarked, our hitherto vexed relationship with Europe. His historic mission will be to have finally settled the issue – but in a way wholly opposite to the one he now imagines.

• Will Hutton is an Observer columnist

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