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12 October 2017

Brexit is failing because it’s being negotiated in the interests of the Conservative Party

The desires of people who voted to Leave, let alone those who wanted to Remain, take a back seat to the party's own priorities and hang-ups. 

By Stephen Bush

How worried should we all be? Michel Barnier and David Davis have confirmed what we all expected: that there has not been sufficient progress on talks between the United Kingdom and the European Union for them to move on from the terms of separation to the future relationship.

This makes it more likely that businesses will go into the first quarter of 2018 without clarity on what the EU-UK relationship will look like after March 2019, which increases the chances that 2018 will see jobs being relocated, either to elsewhere in the European Union or to financial services hubs outside it, such as New York, Zurich or Geneva, where the relationship between them and the EU is already agreed and established.

Or at least, that’s all true on paper. But the British government could make a decisive move to end the stalemate and unblock talks by December.

As far as what the average voter wants out of Brexit, the ask from the EU27 is simple: control over immigration and an end to the free movement of people, without economic dislocation.

The political difficulty for the European Union is that once you establish the idea that you can have the benefits of some of the four freedoms – of capital, goods, services and people – without following all of them, others may try to unpick them.

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This is a risk for the United Kingdom, too. The bulk of the British economy is in services, so Britain benefits from the free flow of services. (Britain benefits from the free movement of people, too, but there are considerable political headwinds against any government that wants it to continue.)

But if a precedent is set that you can excuse yourself from one of the four freedoms, why wouldn’t other nations in the EU seek to escape freedoms that the British economy enjoys and needs?

On the EU side, the other creditor nations of the European Union have a vested interest in a deal that doesn’t see them have to pay more, while the other net beneficiaries have no desire to become creditors. And everyone, whether in the United Kingdom or the EU27, has an interest in continuing to have the same high level of trade as currently exists.

The economically sensible answer for both sides is clear: for the United Kingdom to pay a larger net sum than it does now, follow the strictures of the European Court of Justice, but have an arrangement where citizens of the EU can no longer move freely to the UK and where British citizens can no longer move freely in the EU.

The UK would remain in the customs union as most British voters tend to oppose the concessions – more visas in the case of an India trade deal, chlorine-washed chicken in the case of an American one – that Britain would have to make outside it, and the economic benefit is in any case marginal. That would, at a stroke, solve the question of the Irish border, too.

All this causes a measure of economic harm – because, to repeat, the free movement of people is a good thing, socially and economically – but it meets the desires of most British voters, regardless of whether they backed Remain or Leave, and does so with less disruption than the government’s proposals would. 

But the difficulty is that the loss of political sovereignty this involves is unsatisfying to the Brexit elite – perhaps 1 or 2 per cent of the population at best – who are in the main unworried about immigration, inoculated from economic harm, but obsessed with sovereignty and free trade. (They are also boosted by a small but significant chunk of pro-Remain politicians who dislike the idea of being subject to European rules they can’t shape any more.)

There is the potential for a settlement in December. But we shouldn’t forget that the reason why the Brexit talks are unlikely to deliver what the bulk of voters, Remain or Leave, want is because they are being shaped not by the interests of the 52 per cent who wanted to leave or the fears of the 48 per cent who opted to stay, but by the minority interests of a small group of Brexiteers, largely concentrated within the Conservative Party.