Britain and Europe

Brexit steers Britain to edge of economic disaster

9 March 2017

Brexit will have massive untold consequences for the UK economy and the country's position in the world

Roger Liddle

Since I got in the Lords I have always loyally voted the party whip (making my views known behind the scenes when I had reservations about party policy). But in the last two weeks, on the European Union (notification of withdrawal bill) I will have voted against our whip three times – for an amendment to keep us in the single market, hold out the possibility of a referendum on the outcome of the Brexit negotiations and in the final vote that the bill do now pass.

That I felt compelled to rebel has deeply upset me. I rejoined Labour in the 1990s because I believed it had, at last, become a strongly pro-European party. Labour could have maintained that position after last June’s referendum – by accepting the democratic result, but fighting to the last what is now firm government policy – that a ‘hard Brexit on Tory terms’ is what people voted for last June and that in Theresa May’s words, ‘no deal’ with our European partners ‘is better than a bad deal’.

Allow me to explain. On June 24, I felt devastated, but I was willing to accept the referendum result. As a bereavement therapy I wrote an article for Political Quarterly on how Britain could retain its European commitment and vocation while not being a member of the EU – at least for a considerable lapse of time. There were three pillars to the argument.

First, ever stronger engagement with our European neighbours and partners would be essential to address much needed reform of the EU – in Labour’s case with fellow social democrats, as well as progressive liberals and greens. That debate on reform needs to be on a far broader front than much needed reform of free movement, but would certainly involve a more coherent European policy on migration, both external and internal.

We are now witnessing a fresh determination from the centre and centre-left on the Continent to fight for Europe and a reformed Europe, as we see with Emmanuel Macron in France, Martin Schulz in Germany and Matteo Renzi’s fightback in Italy. The flame of pro-Europeanism is being rekindled, but where is British Labour?

The second pillar of British pro-Europeanism outside the EU should be much beefed up political, security and defence cooperation. That made eminent sense last June, given the common threats all of Europe together faces on our doorstep: chaos in parts of north Africa, terror in the Middle East and revanchist nationalism in Russia. Britain cannot escape these problems by building a sea wall around itself. Today, greater European cooperation is made imperative by the sad and appalling fact that we can no longer rely on the president of the United States as a consistent ally.

Third, the economic foundation of this new European partnership would our continued membership of the European single market as a member of the European economic area. This is of vital importance for business and jobs, but also for the social democratic values we care about. Only full membership of the single market can guarantee, in a quasi-constitutional form, the social rights that go with membership of Europe’s single ‘social market’: the corporate standards, the environmental obligation, the consumer entitlements, and the workers’ rights that underpin it. Let us hope the failure of our present party leadership to understand this point is a case of temporary political amnesia.

These three pillars – closer engagement in EU reform, deeper security cooperation and single market membership – were all possible after June 23. Indeed, such terms were on offer from our European partners. Some were prepared to go even further, such as the influential think tank Bruegel with its proposals for a continental partnership.

This would have been the basis for a national consensus in a country sharply divided by the referendum – and, for a time, I was comforted by the prime minister’s repeated mantra that ‘while we are leaving the European Union, we are not leaving Europe’.

Of course the forging of such a consensus always depended on the creation of a spirit of compromise that our polarised politics has never found easy. It meant pro-Europeans like me giving up on our ambition to put Britain at the heart of Europe. But it also meant anti-Europeans abandoning their desire for what they misleadingly call a ‘clean break’ – as after 44 years of EU membership, no such thing is possible.

The last six months have however been ones of bitter disillusionment with the prime minister. Instead of seeking to unify the nation, she has pursued at all costs the unity of her own cabinet and the Conservative party. We have seen appeasement of hard line anti-Europeanism every step of the way.

Abstract theories about regaining national sovereignty have taken precedence over the modern day realities of interdependence. For only through pooling sovereignty can nation states take back control over the huge challenges facing humanity, such as climate change, terrorism and migration that as an individual nation state are beyond their reach.

Doctrinal legalism over the jurisdiction of the European court of justice is being pursued as a guiding principle of government policy to the point, where as we saw in last Wednesday’s debate on the government’s insistence that the United Kingdom withdraw from Euratom, the nuclear industry in Britain – supposedly one of the government’s top strategic industrial priorities – may simply not be able to function if no deal can be reached.

Most important of all, a theoretical control over free movement – which on the Brexit secretary’s David Davis’ own admission, will do nothing to stem migration from Europe for years to come – is being given priority over what should be the top priority of any political party – people’s jobs and living standards.

What is more, for all the puff surrounding the prime minister’s Lancaster House speech, it contains multiple contradictions. We are to withdraw from the customs union, but at the same time, by some magical, hitherto unknown means, we can secure tariff free access for goods to European markets in some new frictionless trade arrangement – and claim that as a result that we can maintain an open border in the island of Ireland. This contradictory position is all to please Liam Fox so that the UK can negotiate independent trade deals with economic powerhouses such as New Zealand.

As for our vital services exports to the EU, we hope to retain unimpeded access by mutual recognition of present standards – to be codified in a so-called ‘great repeal bill’. However, we undermine that assurance straightaway by asserting our national sovereignty not to copy future changes in developing EU standards in key areas such as the digital single market, as well as the right to alter those standards at any time we please. This provides business with no security and certainty for the future.

As for the EU budget, the prime minister insists we will no longer pay what she calls ‘vast sums’ to Brussels. However according her Brexit secretary, the ambitious and comprehensive trade deal we will ensure us the same level of trade access as the single market. Who is kidding whom here?

The Lancaster House policy is the political equivalent of La La Land.

The forthcoming negotiations with our European partners are heading not just for a car crash. There is very likelihood of a multiple motorway collision. And from this collision the breakup of the UK is now a seriously real prospect. How do all the unionists in the Tory party feel about that?

The reason for this likely outcome is that the government has not made any of the tough choices that they must prepare for in any serious negotiation. It is not just parliament that the government is hiding the truth from: it is members of the prime minister’s own cabinet and party.

Yet in practice we have little more than ten months – from the formation of the new German coalition late this autumn to Michel Barnier’s deadline for putting a draft deal to the European parliament – to conclude the most important, complex and difficult negotiation in British history since the end of the Second World War.

And of course it will be our European partners who will be blamed. You see it already in Lord Bridges’ language. He no longer speaks of our European partners, but our European counterparts. In a few months the Daily Mail will be running headlines about the European enemies of the people.

I fear we are heading for a breakdown with massive untold consequences for our economy and our position in the world. We have barely recovered from the 2008 banking crisis and a disorderly Brexit will inflict on our economy and people another massive blow. As for our standing in the world, I cannot think of a worse moment in our post-war history to have a major bust up with our European partners.

That is why I cannot in all conscience add my name to the passing of this miserable, divisive and potentially catastrophic measure. To end on a hackneyed phrase, we are teetering on the cliff edge of a national disaster.

Photo credit: Ilovetheeu CC BY 4.0