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19 October 2019

We don’t know whether this deal will pass. We should talk more about what do know about it

We don't know who will win or lose in the Commons, but we do have a pretty good idea who would win or lose from this deal.

By Stephen Bush

There has been a lot of discussion about the political, constitutional and economic consequences for Northern Ireland of Boris Johnson deciding to hive off the country into its own regulatory and customs zone, and a little about the political repercussions for Scotland and its continuing membership of the United Kingdom. 

But very little has written about the economic consequences for Wales. The reaity of putting a regulatory border in the Irish Sea is that the border is not “in the sea” as such: it is at ports, many of which, particularly as far as trade between Northern Ireland and Great Britain are concerned, are in Wales. It is Holyhead, in Welsh Labour MP Albert Owen’s Ynys Môn constituency, which is the number one destination for shipping between Northern Ireland and the rest of the United Kingdom.

There are potential economic benefits to the greater freedom to seek trade deals for the United Kingdom’s knowledge economy – which, of course, includes Cardiff’s burgeoning start-up scene, in which the artificial intelligence company Amplyfi has produced what many Welsh politicians believe will be Wales’ first technology “unicorn”. Yet if you are a part of an integrated Europe-wide supply chain – like Milford Haven, the UK’s largest energy port, in Conservative MP Stephen Crabb’s Preseli Pembrokeshire seat – then the loss of the United Kingdom’s membership of the customs union and single market is a lose-lose proposition. 

The downsides are particularly acute for Holyhead. As with all British ports, it will have to take on greater infrastructure to deal with the greater trade friction and larger volume of customs checks entailed by taking the United Kingdom, which will be a boost for its local construction industry. Yet it is also uniquely exposed to the development of further disincentives to trade between Northern Ireland and the rest of the United Kingdom (which will be created if the British government wants to meaningfully realise those economic benefits for Cardiff and further afield), draining the amount that goes through it.

And that, in microcosm, exposes the problem with the “is Johnson’s Brexit deal good or bad?”, just as there was a problem arguing about whether one of George Osborne’s budgets was “good or bad”. George Osborne’s budgets were great if you were a dual-earner couple earning above average with no children or a pensioner. They were terrible if you were the working poor. They were terrible if you had left-wing, pro-redistributive instincts and fantastic if you had tax-cutting, state-shrinking ones.

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But the media debate about Johnson’s deal, particularly from the broadcasters, is near incapable of covering Brexit as it would any other policy debate, and instead prefers to focus solely on the question of whether it will pass or fail.