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31 August 2016

Theresa May will struggle to keep her promises on Brexit

The government's stance keeps the Conservative party together. It probably won't fly in Brussels. 

By Stephen Bush

So it won’t be Norway. Britain will, instead of seeking an existing model for what leaving the European Union looks like, seek its own deal: with the priorities control over the movement of people and the ability to trade with the European Union.

That’s not a particular surprise: Theresa May has been clear in her public pronouncements that control over Britain’s borders is an essential part of an exit deal, and in private, has long believed that the mass immigration that followed the accession of the 2004 EU states is driving support for the populist right.

It also has the effect of delaying division with the Conservative party over which is more important: border control or maintaining the primacy of the City of London as a global financial centre.

But it puts Britain in the unnerving position of relying on the good will of its European neighbours.

Tony Blair once compared David Cameron’s approach to negotiation at Brussels to the behaviour of the sheriff in Blazing Saddles, who “holds a gun to his own head and says, ‘If you don’t do what I want I’ll blow my brains out’”.

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The danger, Blair observed, was that one of the other 27 states of the European Union would say “go ahead”.

In the end the voters pulled the trigger for him.

But Cameron’s biggest problem wasn’t a bad hand – although he had one – or a bad strategy – though he had one of those too – it was that he spent a great deal of time talking about the supposed “problem” of the Eastern European states, and not very much time talking to the leaders of those nations.

The risk now is that Britain’s Brexit negotiations go the same way. It’s fairly clear what Britain’s economic and political imperatives are, at least as far as the government is concerned: maintain single market access of one kind or another, most importantly the passporting regime that allows British-domiciled banks free access to the single market, and control over the movement of people

It’s less clear what, if anything, the United Kingdom has to offer the remaining 27 nations to make such a deal acceptable to them. For the nations of “new Europe”, anything which makes it harder for their own citizens to work in the United Kingdom will need to be accompanied by a hefty “price” for Britain to avoid domestic blowback. For the countries of “old Europe”, the risk of anti-European sentiment spreading if Brexit means Britain gets a better deal on immigration are very high. As far as cards available to the British government, the economic hit to both sides that Brexit on World Trade Organisation terms would represent to both Britain and the remaining 27 nation-states of the EU would be a much bigger blow in Britain than in Europe.

You can see how, if the Italian banking crisis spirals out of control, Britain might get a better than expected deal just because the 27 nations are keen to get the problem out of the way. But absent a crisis, it feels likely that the government has set itself a bar that it cannot possibly hit.