Brexit Britain at 1: Here’s what we’ve learned

 

Brexit Britain at 1: Here’s what we’ve learned

 

POLITICO asked experts on both sides of the Channel to reflect on Britain’s push to ‘take back control.’

 

BY POLITICO

January 3, 2022 6:31 pm

https://www.politico.eu/article/brexit-britain-european-union-eu-learned/

 

As 2022 gets underway, Britain is marking its first year fully outside of the European Union. POLITICO asked politicians, diplomats and experts on both sides of the Channel to offer their take on what Brexit’s taught them.

 

Britain still needs Europe

Robin Niblett is director and chief executive of the Chatham House think tank.

 

Two lessons emerged from 2021 about the future of U.K.-EU relations. First, re-setting 47 years of economic integration will be a slow and costly process. It is hard to distinguish the economic effects of leaving the EU single market and customs union in January 2021 from those caused by the COVID-19 pandemic. But, by August 2021, Britain’s total goods trade with the rest of the world had recovered to 7 percent below average 2019 levels whereas it remained 15 percent lower with the EU.

 

Importantly, 2021 has only been a taster for the border frictions contained in the thin U.K.-EU Trade and Cooperation Agreement. The U.K.’s new customs procedures finally came into force on January 1, 2022, and present new headaches for U.K. and EU businesses alike. And the EU has started demanding formal certification of the “origins” of tariff-free imports from the U.K. on the same date. Economic disruption is likely to worsen in 2022.

 

But this is unlikely to lead to a political rupture between the U.K. and EU. The second lesson of 2021 was geopolitical: Britain can leave the EU but not Europe. The shock announcement in September of the new Australia-U.K.-U.S. security partnership confirmed for some Britain’s post-Brexit tilt to the Anglo-Saxon world as well as the Indo-Pacific. However, Russian President Vladimir Putin’s threatening military build-up on the border with Ukraine since October has brutally reminded Boris Johnson that his global ambitions can only be exercised from a secure European base. 

 

The government will have to work cooperatively alongside the EU as well as the U.S. if Britain’s successful G7 and COP26 presidencies in 2021 are to evolve into a meaningful global role for Brexit Britain.

 

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The UK's global influence has taken a hit

Nick Witney is a senior policy fellow at the European Council on Foreign Relations.

 

In early December, a Tale of Two Visits played out in Washington. EU Competition Commissioner Margrethe Vestager met U.S. President Joe Biden’s top economic team for wide-ranging discussions on digital issues — from regulation and security to competition, as well as meeting the Chinese technological challenge.

 

 

The other visitor was Anne-Marie Trevelyan, Britain’s new international trade secretary, with a narrower mission — an (unsuccessful) bid to get the Americans to remove tariffs on British steel and aluminum exports, as they had already agreed for the EU.

 

This was not how the first year of Britain’s recovered sovereignty was meant to conclude. In the Brexit prospectus, the sclerotic EU should be fading into geostrategic irrelevance, if not actually breaking apart. Yet, despite the bloc’s unpreparedness to sign up for a new Cold War with China, the U.S. and EU have recognized in each other an indispensable partner if the West is to hold its own against the totalitarians. With the battle for the future increasingly fought in arenas like cyberspace, data, artificial intelligence and their regulation, the EU finds its strengths at a new premium.

 

By contrast, Global Britain was meant to be re-emerging as a great maritime trading power, shoulder-to-shoulder with the U.S. as “indispensable allies and pre-eminent partners.” Instead, Brexit has “thumped” the U.K. economy, whilst the notion of a commercial El Dorado in the Indo-Pacific has been exposed as a pipedream. The U.S. has humiliated Britain in Afghanistan and cold-shouldered it on trade to deter further recklessness over Northern Ireland. Geostrategic irrelevance, and breaking apart, now look like the U.K.’s risks, not the EU’s.

 

Britain has what it takes to play an important and prosperous role in shaping the new rules-based international order, triangulating between U.S. and EU, on issues from the climate crisis to globalization. But only if its government sheds the Brexiteers’ nostalgic fantasies.

 

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The economic toll is real

Arancha González Laya was Spain’s foreign affairs minister during the Brexit negotiations.

 

Brexit was meant to bring back sovereignty, wealth and unity. It was meant to take back control. A year after the Christmas Eve divorce settlement, Santa Claus still hasn’t shown up.

 

The post-Brexit U.K. is poorer: a long-term drop of 4 percent in GDP is the estimated cost of leaving the EU. And this is over and above the economic cost of COVID-19. Labor shortages are the new norm. Trade with the EU is down, with small businesses finding it harder to export. Farmers and fishermen are feeling the brunt of the new relationship.

 

A year later the United Kingdom itself is less united. And more sovereignty has led to a less sovereign U.K. This is true whether on migration, climate change, innovation, the fight against coronavirus or foreign policy.

 

It is not that U.K. negotiators weren’t shrewd enough. Having negotiated with the U.K., I know first-hand that they are extremely smart. It is not that the deal was bad. It is just that it could never live up to the slogans.

 

Brexit was about sentiments and perception. The divorce deal is about the hard reality of a mid-sized country, the same one that invented market capitalism, which as we all know is based on economies of scale. It may seem contradictory but sovereignty today is not about borders but rather about size. The paradox of today’s more interdependent world is that it is pooling sovereignty that gives governments more tools to protect the interests of citizens and businesses.

 

My wish for the year: that the EU and the U.K. start building on this new relationship — and get “proudly pragmatic.”

 

 

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Brexit's example won't stop others leaving

Christian Lequesne is a professor of political science at Sciences Po Paris. He is a former visiting professor at the European Institute of the London School of Economics.

 

Brexit helps us understand that Britain is more obsessed with identity politics than liberal economy. Greatness, taking back control and national identity are what British Brexiteers are really interested in. For the Conservatives who govern the U.K., economic performance has now become a minor issue compared to the days of Thatcherite neoliberalism. The liberal discourse on “Global Britain” seems to be a big joke.

 

As for the EU, I remember a time not so long ago when I had no difficulty in convincing my students that leaving the EU was impossible because membership creates too high policy interdependence. What a mistake! With Europe now a matter of political passion rather than reason, nothing can stop Europeans from leaving it. Arguments that Poles will stay in the EU because of generous budgetary subsidies appear very weak in light of the Brexit experience.

 

When people are obsessed with national identity and sovereignty, trade and market benefits seem very weak reasons to stay in the EU. From this point of view, pragmatism being a structural value of U.K. politics seems another big myth. Who appears more emotional and distant from rationality than a Brexiteer explaining the reasons for the U.K.’s choice?

 

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2022 should give Britain the chance to make the most of Brexit

Matthew Elliott was chief executive of the Vote Leave campaign.

 

One thing alone made Brexit worthwhile in 2021 — the vaccine rollout. The U.K. led the way in Europe in getting people jabbed, enabling the government to lift coronavirus restrictions far sooner than any country in the European Union. 

 

Less progress has been made on attaining the economic benefits of Brexit, but this is understandable with the focus on fighting the pandemic, and we did manage to sign a free trade agreement with Australia and lay the foundation for further progress in 2022.

 

Some people suggest that with David Frost out of government, progress will slow on Brexit, but in appointing Liz Truss to head up Britain’s EU policy, Boris Johnson couldn’t have picked a stronger champion of business and enterprise to lead the charge. Like Frost, she supported Remain in 2016, but the zeal she has shown for free trade demonstrates her understanding of the opportunities that Brexit presents. 

 

Now we’re reaching the beginning of the end of COVID-19 (touch wood), the government will have more bandwidth to focus on fully attaining these opportunities. And with Goldman Sachs, HSBC, the International Monetary Fund and the World Bank all predicting that the U.K. will be the fastest growing economy in 2022 — for the second year in a row — that’s a significant vote of confidence in post-Brexit Britain.

 

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Brexit has shaken up British politics for good

Matt Goodwin is professor of politics at Rutherford College, University of Kent, and a fellow at the Legatum Institute.

 

Brexit has fundamentally transformed electoral politics. Both the vote for Brexit and Boris Johnson’s election victory in 2019 have led to a restructuring of left and right, whereby the Conservatives have become far more dependent upon the pro-Brexit workers and non-graduates who concentrate in the small, industrial and coastal towns whilst the Labour Party has become more dependent upon the pro-EU middle-class professionals, graduates and young millennials and even younger zoomers.

 

Many of these trends were already in place before Brexit, but the process of leaving the EU exacerbated them. This handed Johnson and the Conservatives a far more geographically efficient vote while Labour has fallen far too dependent on the university towns and the big cities (for example, of the 20 largest majorities at the last election, 16 came in Labour seats).

 

So, Brexit has also magnified some of the electoral problems facing the Labour Party. Yet it has also underlined some of the problems facing Johnson and which are now finding their expression one year on from Brexit. While he has become more dependent upon Brexit voters for support, it is these very voters who have recently been abandoning the Conservative Party. Over the last six months, Johnson’s support among Leave voters has crashed by around 20 points as they have drifted not to Labour but into apathy, no longer sure who they will support.

 

This is not just about Brexit but also their unhappiness with the coronavirus restrictions, Johnson’s failure to take back control of immigration, especially on the south coast, and his failure to carve out a message and a mantra beyond the original Brexit issue. So while we have learned that Brexit has restructured electoral politics we have also learned that these new divisions are not necessarily as static as some assumed.

 

Johnson’s future, and indeed the future of the Conservative Party, now depends heavily on whether they can find other reasons to keep these Leavers committed and motivated.

 

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Trust — at home and abroad — still matters

Anna Deighton is a professor of European international politics at the University of Oxford.

 

Trust in competence, good behavior and honest explanations are central to democratic governance — especially when there is exceptional pressure on government. Brexit plus a pandemic offers such a moment, yet trust in the U.K. government is broken inside the Conservative Party, in parliament, and in the country.

 

Trust must be rebuilt with the EU. The list of post-Brexit policy areas to be settled in 2022 is daunting. Implementing these needs mutual trust, so British diplomats must learn lessons — not least in humility. Of course, diplomacy means negotiating national interests, but bad blood makes diplomacy much harder. Northern Ireland is a test case for Brexit success and trust-building — difficult, dangerous, but essential. And policy battles between London and Edinburgh have also put the U.K.’s union under existential strain.

 

“Global Britain” is a policy of grandeur. But the reality is the U.K.’s Foreign Office is under strain. It’s had five foreign secretaries since 2016, an unpopular internal reorganization, and faces demoralizing cuts in staffing to come. Recent British trade and security deals get talked up, but their value is doubted by those who know. Can the U.K. be trusted to deliver? Right now, a future, grand Global Britain seems merely a comforting mirage. Britain is sliding towards greater but unheralded dependency on the U.S.

 

At home, Boris Johnson’s post-Brexit, post-pandemic “leveling up” agenda is not understood or trusted. Our shameful societal divide requires a social revolution, but the cost of long-term transformation will be huge, and the government is vague and conflicted on the way forward.

 

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Britain’s managed its exit well — but needs to seize the opportunities

Shanker Singham is chief executive of Competere, a trade policy and economic policy consultancy, and a former adviser to the U.K. international trade secretary.

 

The U.K. has done a relatively good job of managing the inevitable Brexit disruptions as much as it can with its new Border Operating Model, including transitional measures for the border that expired as this year began. It has also set out a laudable goal of having the best border in the world by 2025 which will require, among other things, a serious commitment to a streamlined, single trade window.

 

The U.K. has done very well on the external trade policy agenda, concluding a de novo deal with Australia in record time (with New Zealand to follow shortly), and has become the first country to have an accession group set up for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the promise of a concluded deal within a year.

 

But it’s on the domestic regulatory reform agenda where it does not yet get a passing grade. There has been almost no progress here and it’s the area where some of the biggest economic gains are to be had. Unless the U.K. uses 2022 to engage in meaningful, pro-competitive regulatory reform, starting with the body of EU acquis which has been ported into U.K. law post Brexit, the biggest opportunities of Brexit are in danger of being squandered.

 

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Real free trade is hard to achieve

Jennifer Hillman is a senior fellow for trade and international political economy at the U.S. think tank the Council on Foreign Relations.

 

Negotiating trade deals is proving to be extremely difficult and time-consuming for a Britain that is much smaller than the EU and with much less trade negotiating experience.

 

In the run-up to Brexit, Conservative leaders evoked the image of a swashbuckling “Global Britain” striking new deals across the world. To date, however, the United Kingdom has completed just one entirely post-Brexit trade deal. While new agreements will eventually be signed, the difficulties experienced this year, from the United States’ apparent lack of interest in a free trade arrangement to outcries from certain domestic constituencies, illustrate the variety of hurdles a British free trade agenda will have to overcome.

 

This year has also shown that Brussels’ influence will ultimately be difficult to escape. Part of the promise of Brexit was that the United Kingdom could eliminate what were seen as stifling EU regulations in order to unleash new growth. The EU’s size and continued economic ties to the United Kingdom, however, make major regulatory shifts in tradeable sectors like agriculture or areas like data governance difficult to envision and the exit deal negotiated by the United Kingdom seems to commit London to continued adherence to significant labor and environmental standards.

 

Of critical significance for the U.K. is the heavily regulated financial services sector, which, despite employing over 1 million people and accounting for more than 10 percent of the U.K.’s tax revenue, received less attention in the final days of the Brexit talks than fishing rights. Despite a March 2021 memorandum of understanding setting out a framework for cooperation, talks to give U.K. financial services firm clear access to the EU market are currently on hold. While liberalizing financial markets or other sectors may accelerate British growth, we should not expect a radical departure from the regulatory status quo.

 

Between the threat to tear up the part of Brexit relating to Northern Ireland and the failure to make numerous equivalence decisions in the financial services sector, Brexit remains a work in progress, with the devilish details of trade continuing to create a drag on the economy, particularly for small firms attempting to navigate through the confusion and increased administrative workload.

 

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The UK must avoid constant crisis mode in its EU ties

David McAllister is a German MEP for the European People’s Party and chair of the European Parliament’s committee of foreign affairs.

 

 

The main lesson learned from Brexit is that a complex process such as disentangling a large economy from the market it was so deeply integrated into over the past decades must be carefully assessed, planned and implemented. This process should be based on facts and not on empty promises. Apart from a somewhat abstract reference to “taking back control,” there have so far been no tangible benefits from Brexit either in terms of trade or in terms of GDP. No free trade agreement can ever match membership nor participation in the single market.

 

Secondly, the very serious practical difficulties citizens, businesses and supply chains are facing in the United Kingdom stem from the type of Brexit chosen by the U.K. government. The necessary consequences were well known in advance in London.

 

The Withdrawal Agreement and the Trade and Cooperation Agreement have to be implemented on the agreed terms and in good faith. We need to de-dramatize and de-politicize the discussions and focus on real, practical, issues. Engaging with stakeholders in an open and transparent manner is essential. The EU has shown that it can listen and has put forward an unprecedented package of measures that provide flexibility on areas such as veterinary checks, customs facilitation or medicines in Northern Ireland. Triggering Article 16 [of the Northern Ireland protocol] would have a destabilizing effect.

 

Thirdly, geographically-close neighbors and allies that share so much in terms of history and values cannot afford to get trapped in a permanent crisis mode. It is a waste of energy and resources, and also risky given the growing geopolitical uncertainties. We should seek new ways to broaden and deepen the EU-U.K. partnership on foreign affairs and defense. I am convinced it would be beneficial for both sides to maintain a close and lasting cooperation given our shared values and interests.

 

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The jury's still out on whether Brexit could have been stopped

Pasquale Quito Terracciano is the head of Italy’s new directorate-general for public diplomacy and a former ambassador to the U.K.

 

Brexit could never have happened in Italy. Not just because the EU is more popular here, but because of a constitutional safeguard which prevents a referendum on international treaties. It's a mechanism able to avoid emotional political decisions with unpredictable consequences.

 

Leaving the EU was a crucial decision, but in the case of Britain it looked irreversible. The U.K. political system left the only opposition to Brexit — the Liberal Democrats and the House of Lords — with no handbrakes.

 

No effective interference was possible from abroad. EU partners pointed out that mechanisms already exist to prevent illegal stays by EU citizens in Britain, one of the most sensitive issues for Brexiteers — and then-Prime Minister David Cameron achieved significant results in re-negotiating with Brussels. But nobody cared at home.

 

Brexit was reduced to a domestic political fight with many contradictions. Remaining in the EU was advocated by stakeholders like the financial industry, with little — or even counterproductive — influence on British voters. The big U.K. businesses were not willing to stand up for the economically wiser solution. After calling the referendum, Cameron decided to lead the “Remain” campaign, with little credibility and no government discipline, leaving Cabinet members free to stand on either side.

 

One may argue expending political capital in favor of Remain is difficult in a country where even the most Europhile of think-tanks calls for reform of the bloc in its own name. But judgement is still pending on whether Brexit was the end point of an inevitable trajectory in British history — or the result of short-term political missteps.