MICHAEL KEATING. The British Election and Brexit

Jun 12, 2017

Mrs. May called the election ostensibly to strengthen her mandate in the forthcoming Brexit negotiations. Although she failed to strengthen her majority, it is doubtful if the election result will have any impact on the Brexit negotiations.

The British election was ostensibly called by Theresa May to strengthen her hand in the Brexit negotiations. On election night, when it became obvious that she no longer led a majority government, Mrs. May opined that the election result would make no difference to the Brexit negotiations. Both statements cannot be right, so which is closer to the truth?

The fact is that from the time that Mrs. May became Prime Minister, following the ‘Leave’ referendum, she made it clear that Britain would pursue a ‘hard Brexit’ and insisted that no further election was necessary.  But that begs the question of what exactly does a ‘hard Brexit’ actually mean, and how much room does Britain have to negotiate with the EU?

From the information available I suggest a hard Brexit is distinguished by:

  1. Most importantly, Britain will have sole control over the flow of migrants into Britain,
  2. Britain will no longer accept the jurisdiction of the European Court of Justice, affecting in particular trade disputes over common standards,
  3. Britain will cease all payments into the European Budget,
  4. Britain will then cease to have access to the European single market.

The first three conditions are consistent with the fundamental objective of the ‘leave campaign’ that Britain re-establish control over its own borders. While the fourth condition recognises that access to the benefits of the single market could no longer continue if Britain is not prepared to accept the above three pre-conditions for that access. Indeed, other non-EU countries that have accessed the EU single market, such as Norway and Switzerland, have been required to give way on the above three preconditions.

But given the acceptance by all parties to the prospective Brexit negotiations of these four key features of a ‘hard Brexit’, I suggest that there was little left of a material nature left to negotiate. In these circumstances no-one needs a mandate, big or small, to negotiate, because there is nothing very significant to negotiate.

During the election campaign, some UK commentators who mostly disapproved of Brexit (for example, The Economist) suggested that if Mrs. May’s majority was increased following the election, that might give her the capacity to stare down her colleagues, and negotiate for a ‘softer Brexit’.  The idea was that this softer Brexit would ensure a better subsequent trade deal between Britain and the EU, and help preserve some of the role of the City of London as a European financial centre. What is curious is that this idea of a softer Brexit has now been taken up by some commentators since the election, who suggest that only a softer Brexit will be able to command a Parliamentary majority.

To the extent that ‘softer Brexit’ were ever possible, and I would not rate its chances highly, then a bigger Tory majority after the election might have made some difference. But now that the Tories barely have a majority, what will be critical to obtaining Parliamentary endorsement for the Brexit terms will be to lock in every single Tory member’s support, and now more than ever that will only be possible if a ‘hard Brexit’ is negotiated.

Thus, I think the British negotiators are locked into seeking a hard Brexit, which means that there will be very little to negotiate over. At most they will be reduced to negotiating over such second-order issues, as the rights and entitlements of British expatriates who have already retired to live in Spain, and their EU counterparts who are presently working in Britain.

But on the big issues, identified above, I can see no reason why the EU will be prepared to discuss future relations, including most importantly trade and financial relations, until after the Brexit negotiations have concluded. Furthermore, it should be remembered that in this case, it is Britain which is seeking future access to the EU, not the other way around, and Britain is therefore the supplicant and not the EU.  While the EU for its part will want to drive a ‘hard exit’ in order to discourage any other members who might be tempted to follow Britain’s example.

In sum, the Brexit negotiations are not going to be the most important issue on the British policy agenda over the next few years. The key decisions have already been made. Instead, the future British Government needs to heed the real lesson from this election.  Too many people have had enough of hardship and austerity, while the rich get ever richer. Greater government intervention to improve equality of opportunity and thereby income equality will be critical to sustaining future demand and future economic growth. Furthermore, it was this rolling popular discontent that first produced the majority in favour of Brexit, and the discontent is not going to go away if nothing is done to address it effectively.

Micheal Keating is a former Secretary of the Department of Finance and of the Department of Prime Minister and Cabinet.

Share and Enjoy !


Receive articles straight to your Inbox

How often?

Thank you for subscribing!