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16 August 2018updated 20 Aug 2021 8:49am

Leaving on WTO terms has the same problem as any other form of Brexit deal

Iain Duncan Smith’s wizard wheeze to save the Brexit talks has a few holes in it.

By Stephen Bush

Leaving the United Kingdom without a deal has gotten a makeover, thanks to Brexiteers. We would instead “leave on WTO terms”: essentially, both sides would accept that reaching any meaningful agreement on a deep and meaningful trade agreement was politically impossible and do a skeleton deal to ensure that airplanes continued to fly, goods continued to flow (albeit with heavy tariffs on both sides), and that the vital materials needed for hospitals to function kept coming into the United Kingdom.

Could it happen? It’s certainly possible that both the UK and the EU27 realise that the political deadlock in Britain means that no final deal is capable of commanding a majority in the House of Commons.

That leaving without a deal containing even basic provisions to prevent airplanes being grounded would be significantly worse than a skeleton deal might be enough to persuade pro-Remain Conservatives to vote for it, come the crunch. When you speak to MPs in this group they reject the idea they would, but it is not unreasonable to expect that opinions might change facing the cliff-edge. What I’m less convinced by is that a skeleton deal would be able to command the support of enough Brexiteers to pass the Commons.  

Any deal – including a skeleton deal – would require the honouring of Britain’s financial commitments to the European Union. (The UK agreed to an EU budget that ends in 2020 before voting to leave and has committed to honouring its net contributions up until that point.) But one of the many unforced errors that Theresa May made was helping to create and sustain the idea that this so-called “divorce bill” was about being charged to leave, or that its size bore any relation to what type of final relationship the EU and UK end up striking. Continuing payments to the European Union after Brexit are a powerful card that the United Kingdom retains, provided it continues to be one of the continent’s largest economies, but settling its accounts for the end of the 2013-2020 budget period is not.

But May has allowed that notion to take root and for many Conservative MPs, they see the exit bill as something directly linked to the final trade deal and its quality. Will a skeleton deal pass if it comes with a £40bn bill attached? It doesn’t seem likely.

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Don’t forget, either, that the parliament in Westminster isn’t the only parliament that has to vote on the final deal: the European Parliament does too. There are a number of competing interests represented in Westminster, but it is hard to see how a barebones deal that creates a hard border on the island of Ireland, and causes economic harm to various nations within the European Union will easily pass.

And that’s the problem with a skeleton deal: it has the same difficulty as the Chequers deal, staying in the EEA or extending the transition: there aren’t the numbers in parliament to see how it can happen.