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15 December 2017

Theresa May has achieved “sufficient progress” but there is one big Brexit fight left

Trouble ahead.

By Stephen Bush

Theresa May has achieved a big Brexit victory in securing “sufficient progress” on legacy issues – that is the payment of the United Kingdom’s outstanding liabilities, the fate of the British diaspora in the rest of the European Union, the rights of the three million EU citizens living in the United Kingdom, and the question of the Irish border – to move on to talks over the framework of the final deal.

It’s an open question as to whether or not May herself bears any particular credit for that achievement. On one reading, the government stamped its feet to no good end, only to concede to the European Union on every issue with the exception of citizens’ rights, where the EU27 is now closer to the original British proposal than the one first put forward by the European Commission.

On another reading, May has successfully dragged the bulk of her party, including the Brexit irreconcilables, to a point where they have effectively sold the pass on the questions of money and regulatory freedom while preserving the one pro-Brexit cause capable of commanding any significant support in the country at large – a harsher and tougher regime towards people coming to Britain from the rest of the EU.

Whether May is doing a good job or is stumbling through is an interesting question, however, it is one we will never be able to satisfactorily answer until the 30-year-rule – the publication of unedited diaries and so on – gives us more information. Even then, we might not be able to answer definitively one way or the other.

Honouring May’s promises both to the EU27 and to her party – the UK out of the customs union and single market, no new border between Northern Ireland and the rest of the UK, but no physical infrastructure between Northern Ireland and the Republic of Ireland – means that for all the cabinet has yet to discuss its preferred end state, there is really only one real-world destination that keeps all those promises: regulatory and customs alignment with the European Union, but without membership of the single market.

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The buzzword among both British and European politicians for this has become “Canada plus”, after the EU-Canada trade deal, the deepest trade arrangement yet agreed by the European Union with a third country. Effectively the task that May is pursuing is “as close as possible without being in the single market”.

We know that there will be some economic price, whether that is just slower growth or a downturn, but it is not clear how serious it will be or where that price will make itself felt. The whole endeavour is unprecedented, as no trade deal before has sought to increase the number of barriers to trade, as the United Kingdom’s deal with the European Union will do.

However, as the political demands of the referendum result – in which “immigration” was the biggest driver behind Leave votes – mean that the United Kingdom can’t really stay in the single market, it’s the least economically damaging option for both sides.

The difficulty will come over the issue of transition, which both sides say they want to be clearly time-limited. But neither side will want a cliff-edge if in two years, or three, if the new trade deal is not quite ready either, so there will need to be some mechanism to extend transition. And that will raise the fear among some Brexiteers that transition will be forever – so whether May has got here through luck or skill, she may need more of one or both of those to head off one more crisis in the Conservative Party before Brexit is done and dusted.