Economic Theory

The “clean break” illusion: why a No Deal Brexit will not be the end of anything


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According to a recent YouGov survey, one in four people think a No Deal Brexit would be a good outcome, and another 13 per cent see at as at least acceptable. The option of leaving the EU without a deal enjoys the support of a significant minority, both on its own terms, and when directly pitched against other options.

Does this mean that there is a widespread appetite for the hardest of Hard Brexits?

Articles which try to second-guess what the participants of a survey “really” meant are often a bit tedious, because there is always a danger that the motives the author attributes to people are simply their own projections. But here we go – this is one of those articles. My impression is that the apparent popularity of a No Deal Brexit is, to a large extent, a reflection of Brexit fatigue. Brexit is crowding out almost everything else, it feels never-ending, it doesn’t seem to be going anywhere, and it’s wearing people out.

Let’s face it: Brexit isn’t interesting anymore. We’ve had (or at least heard) all the arguments one can possibly have about the subject. We’ve been arguing, or listening to others argue, about the Single Market, the Customs Union, the free movement of people, the Irish border, the UK’s payments into the EU budget, the backstop, the Common Agricultural Policy, the Common Fisheries Policy and the European Court of Justice. And we’re now just repeating the same old arguments over and over again. And that is the sad truth: Brexit is boring.

Hence the allure of No Deal, which comes with the promise of putting an end to the whole thing, at last. Better a painful break than to draw out the agony. It may not be pretty, but at least it will finally be over.

Let’s ignore the elephant in the room, that is, the question whether leaving without a deal really will be as catastrophic as some forecasts suggest, or whether it will be no worse than a garden-variety recession. This article is not about that. It’s about the “clean break” illusion. A No Deal Brexit will not be the end of anything. Even if it turns out that the warnings about its short-term impact were wildly over the top, a No Deal Brexit will not make the issue go away.

To the best of my knowledge, nobody is suggesting that we should trade with the EU on WTO terms forever. No Deal does not mean No Deal Ever. It means “no deal for now”, it means “leave first, negotiate later”. So there would still be negotiations at a later stage. At some point, the UK and the EU would want to formalise their trading relationship, and reduce administrative barriers to trade. And that means a deal, because, for better or worse, international trade is usually mediated through trade deals of varying depth and scope. There is a good chance that those negotiations would soon start to look suspiciously like the current Brexit negotiations again, and that the public debate around them would also look start to suspiciously like our current Brexit debates again.

What would those negotiations be about? Presumably, somebody on either the UK or the EU side would suggest that there should be some degree of regulatory alignment in some sectors, in order to remove non-tariff barriers to trade. This would require some joint decision-making and oversight, which means that the UK would participate in some EU institutions, or in newly created joint UK-EU institutions. Presumably, somebody on either the UK or the EU side would suggest to make it easier to obtain work visas, in order to improve labour mobility. Presumably, somebody on either the UK or the EU side would suggest a greater degree of coordination of external trade policies. Again, this would need some joint decision-making and oversight, which means that the UK would participate in some EU institutions or in newly created joint UK-EU institutions. And so on.

What would happen next? Why, in no time, the usual suspects would be back on the telly, screaming betrayal. They would say that those measures are taking us half-way back into the EU, that this is not what 17.4 million people voted for, that this is the work of sneering metropolitan elitist liberal Remoaners (or now: Rejoiners) trying to overturn the will of The People, and so on.

Those who believe that leaving without a deal represents some sort of shortcut misunderstand why Brexit is so polarising. It is not that we agree on an end state, and just disagree on how best to get there. We disagree on the end state itself. We disagree, fundamentally, over what sort of relationship with the EU we ultimately want, with the dividing lines running not just between Leavers and Remainers, but also within each camp. These disagreements will not go away. Whether we negotiate as a member who is on their way out, or as a non-member who is looking to formalise the relationship from the outside, is ultimately not that important.

The fundamental trade-offs are the same either way. If we insist on tightly controlled immigration, we cannot have unimpeded access to the Single Market. If we do not want any regulatory alignment, we will have to accept some duplication of regulatory compliance costs. If we want to diverge from the EU in terms of external trade, arrangements at the Irish border will have to reflect the fact that this is now a border between two different customs territories. And so on. There are trade-offs in a lot of areas, and they are here to stay.

And thus, so are our Brexit arguments. Sure, if we left without a deal, the word “Brexit” itself might become obsolete. But a lot of what is currently going on around that word would not.

So if you want Brexit to be over soon, don’t pin your hopes on No Deal. Don’t pin your hopes on anything, in fact. We are in it for the long haul. You can No Deal any time you like, but you can never leave.

 

This article was first published on CapX.

Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).


6 thoughts on “The “clean break” illusion: why a No Deal Brexit will not be the end of anything”

  1. Posted 14/04/2019 at 12:03 | Permalink

    Dear Dr Niemietz
    Thank you! So what can Brexiteers do to escape this Hotel California, apart from accepting our own Treaty of Versailles? Continue to accept free movement, and the entire aquis communautaire? But in what sense is that “leaving”? Is the EU demanding this of Canada, for example, as a pre-condition of its trade deal. If not, why make such a demand of the UK? M. Barnier supplied the answer to that in 2016. “J’aurais réussi ma mission si, à la fin, le deal est tellement dur pour les Britanniques qu’ils préféront rester dans l’Union,” reported in the French current affairs weekly Le Point as having spoken those words to EU leaders in 2016. In other words, the Commission has not, nor never intended to negotiate with us in good faith, in the sense of seeking a mutually acceptable “deal” (or more precisely, a deal to discuss a trade deal). The puzzle to me is that one in the UK has thought to consider what sort of rotten trade deal Barnier might have in mind for us. You can be sure that it would involve continued access for French fishermen to what was once our fishing waters.

    The only way that that I can envisage us being treated decently and with the respect that I think our history deserves is to leave and only then attempt to negotiate a trade deal, as Canada is doing.
    yours faithfully
    Nicholas Owen

  2. Posted 14/04/2019 at 15:05 | Permalink

    We trade with the rest of the world but do not have to accept free movement of all its citizens. It is quite ridiculous to say that we must accept free movement in order to trade with the EU. The EU is not the centre of the universe and accounts for less than 7% of global population. We also have a massive, growing, and unsustainable trade deficit with it. It sounds trite to say so, but the EU needs our trade more than we need its, and it is therefore in the EU’s own interests to facilitate trade that is as frictionless as possible, without bullying and blustering with stupid rules such as free movement. Virtually everything that we buy from the EU can be bought elsewhere at cheaper prices. There are also massive gains to be made from rebuilding our fishing industry that the EU destroyed. The only thing standing between the UK and prosperous global trade is the cabal of EU boot-lickers.

  3. Posted 14/04/2019 at 18:04 | Permalink

    May I bring your attention to Article 2 of the WTO Agreement on Subsidies and Countervailing Measures which defines a prohibited subsidy as “a payment to a specific entity within the jurisdiction of the granting authority”. Thus it would be perfectly legal to refund foreign importers the tariffs they have to pay to their own governments on our exports since such payments would not be within our own jurisdiction. We can therefore declare unilateral free trade for our exports not only to the EU but across the whole world, and we can pay for those refunds out of the £25bn or so of import tariff revenues the Treasury will receive.

    It would not be in our interests to negotiate any sort of free trade deal with the EU while we still have such a massive deficit with them, as that would just magnify the deficit. Only when we have eliminated that deficit would it be in our interests to do so as when we are in surplus the cost of refunds would exceed the revenues from import tariffs.

    The real damage our membership of the EU is doing to our economy is the way it has dragged our trade into deficit and locked us into stagnation. Since WW2 all the most successful economies have run balance of payments surpluses. We must make Britain a surplus nation or continue falling down the standard of living rankings where we are now 24th and falling. The only escape route is a No Deal ‘unilateral’ Brexit with export protection added.

  4. Posted 14/04/2019 at 19:58 | Permalink

    Interesting thesis. The important distinction between pre and post Brexit negotiations is the important option of walking away if a win win solution is not negotiated. The essence of a negotiated deal is that both sides acknowledge that any other solution would be non optimal oor disadvantageous. The withdrawal agreement tragically does not pass this test.

  5. Posted 14/04/2019 at 21:59 | Permalink

    Dear Mr Niemietz, About the only statement in your article that I could agree with is that there is, indeed, Brexit fatigue. A fatigue generated by 450 parliamentary remainers who refuse to acknowledge the “will of the people”. I will not discuss in detail your projected “course of events” following attempts to develop a trade agreement with the EU. Suffice it to say that the EU has a lamentable record in achieving trade agreements and those countries who do trade with the EU do very well with very minimal or no trade agreements at all!
    The important point, of which you should be aware, is that the single market is not a valuable asset. Indeed, it is the opposite. By being a member of the single market we are shooting ourselves in the foot; along with the other members of the EU. You need to make yourself familiar with the work that has been done on trade flows following the introduction of the single marke n 1991. You will find a very good illustration of this in the work of Michael Burrage (published through Civitas). Most remainers are what one might term religious or theological believers. They BELIEVE; full stop. If one is going to use the “single market” as a principal argument for staying in the EU then one has to be able to justify the value of the single market. Sadly, even the EU itself has been unable to demonstrate this.
    Please do some serious research and then revise your article.
    Yours faithfully CSB

  6. Posted 12/06/2020 at 03:07 | Permalink

    These thoughts were before the world went skint through the virus, britain will now find it very different to try and get a good trade deal with other skint countries,it will be 75% in there favour on any deal done, also we will certainly lose being the financial centre of Europe and all its power, the city of London is now doomed for the future as companies realise that most of their staff can work from home and dont need expensive office space anymore, and that the country is being run by a think he knows it all dictator and compulsive liar doesn’t help for the future of britain.

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