3 Brexit Futures: Stories from Next Year

by Benjamin Studebaker

In Spring 2019, the UK is meant to leave the EU. Prime Minister Theresa May soldiers on, but many think she can’t get the job done. Former Prime Ministers John Major and Tony Blair gave ruthless speeches again May, and EU’s lead Brexit negotiator accused May of being “vague” and “not credible”. Major–a member of May’s own party–was especially vicious:

It all has me thinking about what comes next. How might these Brexit negotiations conclude? Three possibilities stick out to me.

The Brexit many people hoped May might do–a soft Brexit, in which Britain retains the customs union and access to the single market–was never really in the offing. The EU would never agree to such a deal unless Britain agreed to retain free movement. The leave faction of the Conservative Party would never support a deal which retains free movement, and the leader of the Conservative Party relies on the support of the leave faction. To make matters worse, this sort of deal would have left Britain subject to most of the EU’s rules while depriving it of the opportunity to influence those rules. The British would have gone from citizens of Europe to subjects of it. On the European side, this kind of deal wouldn’t be disruptive enough–the Europeans needs to demonstrate to Euroskeptics that there are serious costs to leaving the EU, and those costs aren’t demonstrated if Britain leaves in a nominal way, retaining most of the benefits. It’s become increasingly clear that the negotiations aren’t headed this way. This leaves us with three real options…

May’s Hard Brexit

In this scenario, May negotiates a more limited deal or even no deal at all. Britain is mostly locked out of the single market, left to trade with Europe as if or almost as if it were a third party country like Canada. Such a deal would satisfy the leave base within the Conservative Party, but it would draw genuine opposition from the Lib-Dems and SNP, and at least opportunistic opposition from Corbyn’s Labour Party. To pass, it would require the support of the Democratic Unionist Party (DUP), the Northern Irish Party which supports keeping Northern Ireland within the UK. This reliance on DUP complicates things. To support any deal, Ireland will demand an open border between itself and Northern Ireland. But for the UK to meet this demand while at the same time meeting the demands of the Conservative leave faction, it would need to set up some kind of border control within the UK between Northern Ireland and Great Britain. The DUP is sure to oppose this, because it would make the North Irish border more open than the internal border within the UK, pushing Northern Ireland closer to unification with Ireland.

This is a nasty dilemma. If May keeps both borders open, she effectively agree to free movement–Europeans could make their way into the UK via the North Irish border. That would likely cost her the support of many Conservative leavers. If May closes the UK/Northern Ireland internal border, she likely loses DUP. If she closes the Northern Ireland/Ireland border, Ireland likely vetoes the deal, forcing a no-deal Brexit. The limited deal which Ireland would approve would likely fail to pass the House of Commons or produce a leadership challenge within the party, and a Brexit which Ireland doesn’t approve would have to be no-deal, which could lead to a revolt from the remainer Conservative side.

It seems unlikely that May can pass a Brexit plan which Ireland, the DUP, and leave Conservatives will all approve. If somehow she shunted this through, Britain would be desperate to find new trade partners. Since President Trump took office, May has tried much harder than almost any other leader to get Trump to like her. Even when Trump acts against the British interest–as he did this past week by announcing plans for new steel tariffs–this draws only muted opposition from the British PM. When they meet they discuss increasing trade, and while May tries to keep mum about it the president is not so coy:

One thing that will be taking place over a number of years will be trade. Trade is going to increase many times…I look forward to that… the discussions… that will be taking place are going to lead to tremendous increases in trade between our two countries which is great for both in terms of jobs. We look forward to that and we are starting that process, pretty much as we speak.

Influential US and UK right wing groups are already talking about shredding the British regulatory state in a future transatlantic deal. May herself has refused to exclude NHS contracts from future trade deals with America.

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TTIP, the trade deal the US is negotiation with the entire EU as a collective block, already poses major threats to European regulations and worker protections. A single European country will have much less leverage, especially a single European country which has been isolated by its neighbours. In a bilateral deal, America will take Britain for all she’s worth. Subjected to competition from American firms subject to much lower standards, British firms will follow suit and British laws will come to accommodate that. While the soft Brexit left Britain in hock to Europe, the hard Brexit leaves Britain in hock to Donald Trump. Instead of getting independence, Britain would just change which large, unwieldy union dominates its affairs.

Gradually this would become evident. Perhaps there would be a backlash. Perhaps the Conservatives would lose an election to Jeremy Corbyn. At that point we’d switch stories…

Corbyn’s Hard Brexit

In this story, the Conservative government has achieved Brexit, but has been destroyed in the process, culminating in the rise of Prime Minister Corbyn.

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Instead of seeking trade deals with the treacherous Americans, Corbyn tries to implement a Scandinavian model in the UK. He increases taxes, nationalises the railways and the utilities, increases NHS spending, and invests in infrastructure. The bankers flee London, attempting to take all of their capital with them. If Corbyn lets them go, he has to come up with creative ways to replace the revenue and economic activity they generate. Maybe he resorts to People’s Quantitative Easing, in which he has the central bank print money for the government to spend. Maybe he just runs up some deficits. He could attempt some balancing act, allowing inflation to rise some to combat deficits. But if deficits and inflation both rise together too far too fast, he’d have to raise taxes and that would cut growth rates.  Alternatively, he could try to trap the bankers and their capital with capital controls–but this would isolate the UK economy further. If he’s in a coalition with the SNP or the Lib-Dems, his ability to pursue the most radical solutions would be limited. Maybe he’d attempt to cooperate with France, Southern Europe (Spain, Portugal, Italy, Greece), and the Scandinavian countries to set up agreed minimum tax rates and regulations and to confront Germany over its relaxed labour market laws. This kind of cooperation would give rebellious bankers fewer alternatives and make it easier for European governments to extract revenue from their financial elites without capital flight. But the success of such a venture would depend on the governments in power in these particular countries at the time. Corbyn would likely need a reliable partner in the French president in particular. If the French president is a right-winger who prefers the company of the Germans, Corbyn is screwed. Macron is probably too right wing, and there’s little chance of a new French president until 2022. Outside of that, Corbyn would be left to hope that someone friendly to him would rise to the top of American politics with enough support in the legislative and judiciary branches to get things done. A left-wing American government could begin creating an international environment that is friendlier to Corbyn’s project. But how likely is it that a Bernie Sanders type will take the presidency in 2020 along with a massive wave of Berniecrats? There are many alternatives there–a Sanders type could take the presidency, but without enough seats to act. A traditional Democrat could take the presidency. Trump could win re-election. Dependence on the Americans is not a good bet.

It gives me no pleasure to say it, but if Corbyn becomes Prime Minister in 2019 or 2020 after a Conservative government implodes, he probably won’t have enough support in the international community to successfully pursue his domestic economic model. Britain has become very dependent on London, and London has become incredibly dependent on the financial sector. If right wing governments seek to pilfer Britain’s wealth, Corbyn will struggle to get control of the revenue and capital he needs to make democratic socialism work. If he tried to look for money outside of the western sphere–from China or India, for instance–he would just leave Britain in hock to yet another foreign union in which the UK has precious little influence.

Which means after a good-faith attempt at Corbynism, Britain would likely slide back into the Conservative hard Brexit model. The British left would become a victim of its own success–it’s because it’s doing so much better domestically than the left in other western states that it’s likely to come to power without an adequately favourable international environment.

But wait. There’s another way.

Second Referendum + Corbyn

The bad deal that May is likely to negotiate could fail to pass. Most British people are likely to find the deal May negotiates to be deeply disappointing. In that environment, it might become possible for parliament to reject Brexit, or to push for a referendum on the deal which would lead to its rejection. If the May government failed to pass Brexit, it would probably face political oblivion. May would likely face a leadership challenge and then there would likely be a new election. Corbyn could win that election. Think about it–if the Conservatives field a Brexit hardliner after a bad deal has been rejected in referendum, that person has no chance of negotiating anything better. If the they try to field a remainer Conservative, who is left who is young enough to do that? The Notting Hill set–David Cameron’s peer group? They’re the ones who got Britain into this mess. Ruth Davidson? She’s not even an MP at the minute. No, if May is replaced her replacement is very likely doomed. The stench of failure and incompetence will have infected both sides of the Conservative Party–the remainers for having been in power when the first referendum was held and having failed to win it the first time, and the leavers for having failed to negotiate a decent deal or present a feasible vision for what one would look like.

Corbyn has consistently been opportunistic and pragmatic with respect to Europe–he takes whichever position on it he deems politically expedient. In this environment–with the Brexit deal having come to grief in a second referendum or parliamentary vote–Corbyn’s best move politically is to be the grown up and put an end to Brexit. Even if Corbyn were reluctant to do this, if he came into power in coalition with the Lib-Dems or the SNP, he would have to do so. With Britain still in the EU, it would still have access to the European markets and could adopt a more gradualist and less desperate approach to its leftward move. A Labour government could bide its time, waiting for allies to show up in the right places (most crucially France or America) while setting a positive example for other European states. If the right combination of governments arises it could then seek help reshape the international sphere in a way which would allow it to move further left.

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In the right hands, the EU could develop into a device for protecting the European social model from erosive global forces. Perhaps it could even develop this model further. The EU doesn’t have to be an institution which compels nation-states to turn their economies into copies of Germany’s. But this requires more than just one left-wing government in London–it needs a network of left-leaning governments working together to reshape the European project. Those governments all have to show up together. One or two will just get isolated and destroyed.

There is of course no guarantee that this combination will arise. Other European states may ultimately go in a far-right direction. The recent election in Italy shows just how far the left has yet to come in some places. But a Labour government in the EU has the best chance of surviving long enough to give this combination the opportunity to develop. The alternative is the fragmentation of Europe and the domination of European states–including the UK–by external powers. Trump. Xi. Putin. Merkel. Modi. Not the most reliable crowd, is it?