The Bear’s Lair: Take the half-loaf Brexit, then come back

Teresa May’s Chequers Brexit proposal is a pathetic thing, which will doubtless be made more pathetic by Brussels before next March. Yet the crucial factor is momentum. Once even a Chequers-Brexit has taken place, Britain will be separated from the European Union, the “Remainers” will no longer have an option to offer and Britain will be able to enter partial trade deals with other countries. Brexiters should take their half-loaf on March 29, 2019, unattractive though it is, knowing that time and momentum will enable them to work for more.

The most attractive Brexit alternative would have been a “Canada-plus” free trade agreement with the EU. Under such an arrangement, Britain would not have been limited in its dealings with the EU to the uncertainties of WTO rules, especially inadequate when it comes to regulatory barriers to trade, which the EU is especially adept at erecting. Britain would then have been completely free to enter into trade agreements with other countries, some of which, notably the United States and Australia, have showed themselves remarkably willing to enter such agreements with Britain.

While there would have been initial disruptions from such an arrangement, the long-term benefits would have been huge. For one thing, Britain could through imports from Canada, Australia and New Zealand have reversed the sharp increase in food prices that was imposed on it in 1973 through the EU’s Common Agricultural Policy. That would result in a considerable improvement in living standards for low-income Britons, in terms of overall welfare far outweighing income losses for the few bank traders forced to move to Frankfurt or open an inferior restaurant.

A “No-deal” Brexit is considerably less attractive than the Canada-plus alternative, but it is still very much worth going for in the long run. In the short run, however, the disruption would be considerable, as companies doing business with the EU would be subject to its most egregious regulations and tariffs with no protection. There is no question, however, that a “No-deal” Brexit would be infinitely better than no Brexit at all, in all but the shortest term. Jacob Rees-Mogg has said we will only know the true costs and benefits of Brexit in 50 years. He is far too pessimistic; if Britain does Brexit properly it will see massive benefits such as cheaper food in five years.

The problem is that the Remain forces are very strong in Britain. They are a majority of Parliament (although there are a modest number of MPs who, although supporters of Remain, are prepared to go along with the electorate’s expressed preference for Leave). Even more dangerous, it is not entirely clear that, if a second referendum were held, the Leave voters would win. Certainly, if the decision to be taken by the electorate was not a straightforward one, as I shall suggest below may be manipulated to be the case, the outlook would be very uncertain indeed. There is also the problem that the process is being directed by Teresa May and her faithful stooge Olly Robbins, i.e. one moderate Remainer and one fanatical one – the department nominally charged with negotiating Brexit has been thoroughly sidelined.

Then there is the problem of the Northern Ireland border, used by the EU and the Remainers as a wedge to prevent a clean Brexit. Given the trouble Northern Ireland has caused for the rest of Britain in the last 50 years, the British electorate undoubtedly does not care about this – erect concrete barriers, barbed wire, machine gun posts and Checkpoint Charlie between Northern and Southern Ireland and it would be OK with them. The border-free agreement negotiated in 1998 is no more sacred than any other action of Tony Blair’s ghastly government (can we have the real House of Lords back, please?)

However, in the long run, Northern Ireland’s current position is probably untenable. The percentage of Catholics in the Northern Irish population is steadily rising, because of their higher fertility, and is now around 42%, higher than the percentage of non-Catholic Christians since about 2015. The Catholics do not yet have an outright majority of the total population, and are not likely to get one soon, largely because of the increasing number of Millennials who don’t have a religion — indeed, they probably cannot spell the word. Nevertheless, the irreligious are not reliable votes for a British Ulster. Meanwhile Ireland is no longer the dozy confessional state it was 50 years ago. It has just brought its abortion laws in line with the sloppy secular Western norm, an indication that the Catholic priesthood has far less influence than it used to.

Thus, neither the border-free 1998 Agreement nor the current status of Northern Ireland are worth dying in the trenches for. They are certainly not sufficiently important to the rest of the U.K. to be worth giving up Brexit for. If a “No Deal” Brexit is only possible either by violating the 1998 borderless provision or by sawing off Northern Ireland from the rest of the United Kingdom, so be it; either is no more than a pity, and the Northern Irelanders should choose in a referendum which they prefer – with the provision that, given the demographic shifts, the referendum concerned should be re-run once a decade.

If we could be sure that a “No-Deal” Brexit would be allowed to happen, we should support it. It could still emerge as the only possibility, if the EU are foolish enough as to reject May’s Chequers-Brexit or punch enough holes in it that even May finds the deal indefensible. (If, for example, they insist that Britain could impose no restrictions on immigration and make no trade deals, even partial ones, with third parties, then it is unlikely May could carry enough of her Cabinet with her to force the deal though.)

If May is backed into a corner where she has no alternative but to reject Brexit altogether or support a “No-deal” Brexit, she will probably reluctantly support a “No-deal” Brexit and her own amour-propre would probably ensure that she dragged sufficient doubters across the line for Parliament to support it, if only by a tiny majority. In that case, Nirvana would have been achieved, at the cost of an unpleasant economic hiccup for a year or so as EU-dependent businesses were forced to make alternative arrangements.

However, given that Messrs. Barnier and Juncker possess considerable low cunning, it is more likely that a watered-down version of the Chequers-Brexit, a Chequers-minus-minus-Brexit, is agreed. In that case, opposing it becomes dangerous. If it were defeated in the Commons, the most likely course for May would be to arrange a 3-way referendum, in which her Chequers-minus-minus deal was one alternative, the other two being a No-deal Brexit and a cancellation of Britain’s Article 50 application to leave the EU, which would doubtless be accompanied by some additional sweeteners for the Junckers in Brussels.

Given that a redoubled “Project Fear” would be used to deter voters from the No-deal Brexit, and that Chequers-minus-minus would exist as an alternative for wimpy Brexit-voters, such a referendum would almost certainly produce a majority for Remain. One can rest assured that no further referendum on the subject would then be permitted for at least a century, and that the Brussels authorities would find infinitely many ways to exploit Britain’s new subservient position. It is also more than likely that the referendum would be stolen; that is after all the premise of Andrew Roberts’ brilliantly prophetic novel “The Aachen Memorandum,” written as long ago as 1995. (It will not however be stolen by Vladimir Putin, who appears to be a sound Brexit-er.)

Chequers-minus-minus is not a very attractive deal, to say the least, and it is unlikely that Britain’s economy would proper under it. However, it would have the enormous attraction of pushing Britain out of the EU, and of being very difficult to reverse. European elections would be held in May, in which Britain would not participate. Meetings of EU ministers and bureaucrats would be held constantly, most of which Britain did not attend.

If Britain was free to make trade treaties with third parties, it could make treaties that covered only the allowed services categories immediately, but which included contingency clauses covering other goods and services, to come into effect once Britain had broken fully free of the EU. With such treaties in place, a further move away from the EU could be made very easily, because there would be an immediate incentive of cheaper food, for example, which would far outweigh any benefit of remaining within the EU’s Single Market. A “No-deal” Brexit is difficult because Britain has been unable to make arrangements with third parties; even a Chequers minus minus Brexit would be tolerable if it gave Britain that freedom to act in preparation for a fully Brexit future.

There would be no time limit on the Chequers minus minus Brexit, because the political system and the public must be properly organized for a full Brexit. The May government is incapable of going further (but Liam Fox can usefully negotiate trade treaties with contingency clauses in them.) However, May will not be there forever. If the British public wants to elect Jeremy Corbyn, it is probably useful if it does so during the Chequers-minus-minus period, so that the destruction he will wreak on the economy can be blamed on the remaining EU obligations.

Then, if the Tories can bring themselves for once to elect a leader who is not from the extreme left of the party (no, not Boris Johnson either) a new Tory government, elected in 2027 if the Fixed-Term Parliaments Act is followed, can take Britain finally out of the EU, to a new sunlit upland of political freedom, free markets and cheap food. As to the new leader, I would go for Jacob Rees-Mogg, who should take his mocking appellation of the “Honorable Member for the 18th Century” as a guide for action – after all, Britain was very much better run in the 18th Century!

May has unquestionably made a pig’s breakfast of the Brexit negotiations, probably on purpose. At this point, however, even the lousy deal she is likely to bring back from Brussels is infinitely preferable to an alternative of eternal slavery within the EU, whose resemblance to the old Comecon grows daily.

(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)