Morning Call: pick of the papers

The ten must-read comment pieces from this morning's papers.

1. Have a happy Christmas – things can only get worse (Guardian)

From local government to health, spending plans show the deepest cuts are yet to come, writes Polly Toynbee. This is bad news for Labour.

2. A case remains for economic liberalism (Financial Times)

The philosophy’s basic tenets hold sound despite the financial crisis, argues Samuel Brittan.

3. The west can’t direct the Arab Spring, but we can support it (Independent)

You can't expect mature politics to be practised in countries like Egypt where political parties have been banned for 50 years, says Adrian Hamilton.

4. British secret agents need protection from lawyers (Daily Telegraph)

We have been too slow at giving our spies vital protection against predatory lawyers, says Fraser Nelson.

5. NHS privatisation fears? Grow up (Guardian)

Competition works, says Ian Birrell. This bizarre, nostalgic prejudice against profits only damages the health service.

6. That speech on Europe ... can we put it off? (Times) (£)

The Prime Minister is in a fix, says Philip Collins. There is nothing sensible he can say about the EU that will also satisfy his backbenchers.

7. America’s fiscal fix could help Britain too (Daily Telegraph)

Flatter taxes are one of the best ideas for raising US revenues – so let’s try them here, says Jeremy Warner.

8. Patten must take the blame for a sorry saga (Daily Mail)

Everyone, according to Lord Patten, was to blame for the BBC’s shortcomings over the Savile and McAlpine scandals but the Trust chairman himself, says a Daily Mail editorial.

9. Britain’s middle class is not just squeezed but deceived (Independent)

The odds have always been weighted against the “little people”, writes Mary Dejevsky. But the disparity in power has grown since the banking crisis.

10. The BBC and bad public sector management (Financial Times)

High pay at public bodies stinks - they have taken the worst practices of the private sector, writes Andrew Hill.

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.