At the Conservative conference in Birmingham, the Prime Minister not only reaffirmed that the United Kingdom will leave the European Union but began to explain how it will do so. The era of Brexit is upon us, and the negotiations will be tortuous and all-consuming.
A Great Repeal Bill will formally end Britain’s membership of the EU and enshrine existing European legislation in domestic law. Article 50 of the Lisbon Treaty – under which the UK serves notice that it will leave the EU – is to be invoked by the end of March 2017, after which the government will have only two years to negotiate a new settlement. Most significantly, Mrs May will make an end to free movement a non-negotiable demand. That implies leaving not merely the EU but the single market, which would be deeply regrettable.
In common with 48 per cent of voters, we favoured the Remain campaign, while conceding that the EU had been destabilised by its own internal contradictions and overreach. Brexit will almost certainly prove to be one of the greatest acts of economic self-harm committed by a modern democracy. However, politicians cannot ignore the unambiguous message from the referendum: the British people want immigration to be controlled and our borders to be less porous.
This is part of a global revolt against neoliberalism and globalisation. Hungary’s rejection of refugee quotas in a referendum on 2 October (by 98 per cent to 2 per cent), and the emergence of populists such as Donald Trump and Marine Le Pen
and the likes of Alternative für Deutschland, exemplify this. The era of integration has given way to one of disintegration.
Mainstream parties, and the centre left most of all, face a severe threat to their legitimacy in these new times. Progressives can no longer afford to dismiss controls on immigration as reactionary. It is inconsistent to oppose the free movement of capital (as Jeremy Corbyn does) yet dogmatically defend that of people. In both cases, the state has a duty to regulate markets in the interests of social cohesion and greater security. Only by achieving trust on the question of immigration can politicians maintain support for established redistributive welfare models.
Yet reforming free movement does not mean one should accept economic myths or scapegoating of migrants. It has become commonplace, for instance, to speak of foreign workers depressing incomes, but the evidence does not support this conclusion. A 2016 study by the London School of Economics found that British towns and cities that experienced the biggest rise in EU migration had not suffered sharper falls in pay or job opportunities than others. The pressure on wages came from the enduring effect of the 2008 financial crisis.
As for freedom of movement, it could be controlled through an “emergency brake”, which was David Cameron’s original proposal. This would allow trade to continue as before but hand the government the power to intervene if regions or industries were under pressure. It draws on existing EU law, making it more palatable to European negotiators.
Another option, favoured by dogmatic Brexiteers such as Iain Duncan Smith, is to introduce a system of work permits. A fast-track regional version of this could help appease Scotland and Northern Ireland, where a majority of citizens voted to remain in the EU.
The political imperative of limiting immigration must be balanced by the economic imperative of supporting growth. Nissan’s decision to defer further investment in its Sunderland plant demonstrates the chilling effect that Brexit could have. We welcome Philip Hammond’s abandonment of George Osborne’s arbitrary surplus target, but the recovery remains fragile. Sterling’s sharp depreciation has helped exporters, but rising inflation will depress consumer spending if action is not taken to support living standards.
The highest-voting Leave areas, such as Boston in Lincolnshire and Great Yarmouth in Norfolk, were rarely among those with the highest levels of immigrants. Rather they were often those where demographic change has happened fastest. In conditions of insecurity, the human desire for “control” is understandable. As well as delivering Brexit, Mrs May must address the conditions from which it sprang.