Brexit trade deal: What Price Sovereignty?

The last time I wrote about Brexit was on 31 January 2020.  That was the official date of the U.K.’s divorce from Europe and the start of 11 months of transitioning to something else.[i] 

All 12 of the pandemic articles that I have published since March have gone viral thanks to a Covid-19 setting.  The opportunity now is to bookend 2020 with another look at our place in Europe.  Symmetry might give an impression of order at the end of a chaotic year – to take back control?  Wishful thinking, probably.

Flash back 12 months to December 2019.  The U.K’s undervalued nurses in the underfunded NHS took the unprecedented action of going on strike.  And the Government with a new PM - the Conservative Party’s third leader in three years – called a pre-Christmas General Election in pursuit of the U.K’s quest for sovereignty. 

Just three months into Westminster’s new Parliament Covid-19 struck, gradually absorbing everybody’s attention month by month almost to the exclusion of all else.

Agreeing on a Deal

As deadlines for reaching a trade deal at Halloween came and went, continuing right up to Christmas Eve, it was looking a lot like Christmas Brexit would ring in the New Year with crashing alarms bells.  Britain wanted access to the EU Single Market, its largest trading partner, at the same time as keeping itself sovereign beyond the control of the European Court of Justice. 

A Brussels-based journalist[ii] explained the mutual exclusivity of Britain’s twin aims.  On 24 June 2016 when the Brexit referendum result was announced, the President of the European Council advised the 27 EU leaders that the U.K. would have to decide how many obligations it accepts to enjoy the rights of single market access.  This became known as the “level playing field.”  

Subsequently, in October 2019 Brussels and London published the Joint Political Declaration agreeing to the definition of that term.  Both agreed to uphold the common high standards in state aid, competition, social and employment standards, environment, climate change and taxation.  One recalls the rhetorical vassalage being projected by PM Johnson to complain about being bound by the rules it has no voice in making.

Fortunately the worst case prospect of a chaotic crash-out will not happen.  Literally at the eleventh hour, compromises were reached on the outstanding issues of the level playing field and of fisheries.  The EU was able to publish a 1,246 page tome late on Christmas Eve detailing the trade deal, with the U.K now recognised as a third country.

On Christmas Day the EU’s chief negotiator briefed ambassadors in Brussels about the deal. The next day, the U.K Government Minister Michael Gove with the imposing title Chancellor of the Duchy of Lancaster wrote an article in the Times[iii] about the great future ahead for the U.K.  In full rhetorical flow he wrote that

“the greatest prize is the chance to renew our country and help it recover from the ravages of Covid-19...to spread opportunity more equally across the U.K....with a good trade deal we can tackle the injustices and inequalities that have held Britain back...”

Pause for a moment to assess Mr Gove’s new objectives.  On the one hand, his ambiguities - either intentional or accidental - in connecting Britain’s EU membership with its handling of the pandemic and also to Britain’s north/south rich/poor inequalities are worrying.  On the other hand, it’s refreshing to hear a senior Minister admitting that he has

“made more than (his) share of mistakes or misjudgements through the past four years...” 

Two questions arise from Mr Gove’s declaration.  Firstly, could his confession of mistakes include the absurdity of his referendum campaign claim that U.K voters are sick of experts, used as an excuse to discredit empirical evidence of Brexit’s adverse consequences?  And secondly, how exactly is the so-called levelling-up agenda related to the U.K’s leaving the EU?  Action to address regional and other inequalities has always been a cornerstone of European polity.  The U.K. doesn’t have to wait to leave the EU before tackling domestic problems.

Give and take

The path to achieving agreement and an orderly exit has necessitated compromises.  The UK, for example, conceded on the PM Johnson’s “go whistle” taunt about not having to pay a divorce bill, the sum being £39 billion.  Another was PM Johnson conceding on PM May’s “threat to the UK’s constitutional integrity” by agreeing to keep Northern Ireland within the EU customs territory covering goods, resulting in customs and regulatory checks between Great Britain and Northern Ireland. 

A year ago Northern Ireland’s only pro-Brexit party, the DUP, dubbed Westminster’s Withdrawal Act as the “betrayal act” on the grounds that the UK Government signed up to “a border in the Irish Sea.”  Nevertheless, UK/EU agreement was eventually reached about the protocol’s detail in the closing weeks of negotiations, just ahead of the eventual sticking points - the level playing field and fisheries.

In the final days of negotiations, the reality of the U.K’s ability to take control of its borders as a sovereign nation was exposed by a non-Brexit matter.  A mutation of the coronavirus estimated to be 70% more contagious than the original was discovered in Britain.  As a result, one by one all EU countries closed their borders to British traffic to protect public health. This was an example of sovereign nations acting independently of each other.  It was not a good look internationally for the port of Dover as it wilted under enormous pressure to take control at the end of the nation’s transition.  

 

Press reaction

Reacting promptly to the deal, the journalist Max Hastings made some apposite comments,[iv] such as

·         questioning the PM’s assertion about taking back control – of what, he asks, since our vast service sector remains at the EU mercy;

·         Britain, he argues, will become progressively poorer than it would have had we retained EU membership.  This chimes with data from the UK Government’s forecaster, the Office for Budget Responsibility, which estimates that the UK/EU trade deal will cost 4% in permanently lost GDP;

·         exporters and importers will face a blizzard of new paperwork and red-tape costs;

·         we shall become less important allies for the US because of our forfeiture of influence in Europe;

·         we shall have no power to influence on new EU decisions on trade, environmental and health standards; and

·         our new-found independence does nothing to resolve non-EU immigration.

Two of these points chime with Fintan O’Toole’s analysis.  The one about losing international influence echoes the comment[v] about Britain’s “unique loss as a free country negotiating itself out of a position of influence to one of vulnerability;” and likewise his comments about powerlessness over EU decision-making on standards echoes O’Toole’s conclusion[vi] that “the trade deal ensures that there is no clean break, Britain is wedded to current EU standards.”

The first journalistic reaction which I read, and even quicker out of the blocks than Max Hastings, was the London correspondent of the New York Times.[vii]  He describes how

·         British distributors are scrambling with less than a week to prepare the first of thousands of new export certificates to allow meat fish and dairy to be sold to the EU.  Coincidentally Michael Gove issued unprecedented warnings (28 Dec) about having paperwork in order, or otherwise do not travel;

·         British food businesses now face the same burdensome checks as European imports from Chile or Australia;

·         Echoing Max Hastings, but with added quantification, he explains how Britain’s services sector was largely left out of the 1246 page deal despite accounting for 80% of British economic activity.  Britain sells $40 billion of financial services to the EU annually profiting from an integrated market.

·         Britain ran a surplus of £24 billion on trade in financial and other services with the EU in 2019 but a deficit of $129 billion on goods’ trading; and

·         he quotes the former director of the Institute for Public Policy Research who says that the EU retains all of its current advantages in trading especially with goods while the UK loses all of its current advantages in the trade for services.  

How can it be that the U.K. has omitted its largest business sector from the deal?  This omission sounds like a fatal flaw in the agreement.  How can Westminster claim that the U.K economy will prosper from 1 January 2021?

Miscellaneous points

Pundits predict that “the devil will be in the detail.” A flavour of this follows.

The Times policy editor reveals[viii] that

·         it will become harder for UK citizens to work in the EU because UK qualifications will no longer be recognised in the EU.  Is this a good thing?

·         higher costs for the transfer of animal products from the UK to the EU are likely because the EU did not agree to recognise UK standards as equivalent to theirs.  Is this a good thing for the UK?

·         the UK agreed to follow EU rules on road transport such as the hours allowed to be worked by drivers;

·         whereas the UK will no longer take part in the EU-wide Erasmus university exchange programme, Northern Ireland students can continue to participate with their fees paid by the Irish Government.  Given the DUP’s policy on regulatory NI/GB alignment, will they support this concession?

·         the UK can exchange information from the EU criminal records database without oversight from the ECJ, but will have to follow EU rules on the exchange of air passenger name records.

An analysis by the Observer of unresolved issues[ix] includes comment that

·         “Britain’s law enforcement apparatus is diminished (under the deal).”  This conclusion is based on two security matters; 

·         UK policing has forfeited its use of the Shengen Information Systems (SIS), the database with real-time alerts to locate serious criminals and terrorists.  On average, British police access SIS more than 1.65 million times daily;

·         the UK is losing its seat on Europol, the EU’s policing agency; 

·         The Observer also highlights the need to negotiate a deal for services which has been left out of the deal.

 

Parliament may have approved the rushed UK/EU Brexit deal with little scrutiny or evidence of taking control.  U.K. citizens are entitled to ask if this trade deal will best serve Britain’s national interest – never mind those of its neighbours.  

What price sovereignty?

 

©Michael McSorley 2020

 

Postscript:-

This Brexit series comprises of the following articles:-

Brexit 25 July 2016[x]

Global Populism 27 Feb 2017[xi]

Brexit 14 Months On 30 August 2017[xii]

Our Precious Union 29 August 2018[xiii]

Arguments for/against Brexit as Parliament debates UK/EU Deal  7 December 2018[xiv]

Brexit Briefings to DUP MP Jan/Feb 2019  5 March 2019[xv]

Brexit lampooned 27 April 2019[xvi]

How can the UK’s new PM resolve the Brexit conundrum?  23 July 2019[xvii]

Omnes ad Unum Conservatives and DUP 24 September 2019[xviii]

Election Communication 8 December 2019[xix]

Leaving Britain Undone 31 January 2020[xx]

The Price of Sovereignty 30 December 2020

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[i] https://michaelmcsorleyeconomy.blogspot.com/2020/01/brexit-leaving-britain-undone.html

[ii] Tony Connolly RTE.ie “The level playing field: Brexit for slow learners”  12 December 2020

[iii] The Times 26 December 2020 Michael Gove “We have taken back control, now we can level up at home”

[iv] The Times 26 December 2020 Max Hastings “Brexit leaves more questions than answers”

[v] The Irish Times 19 December 2020 Fintan O’Toole “Let Britain think it’s great”

[vi] The Irish Times December 29 2020 Fintan O’Toole “Brexit was based on fantasies of triggering EU’s dinintegration”

[vii] New York Times 25 December 2020 Benjamin Mueller “Brexit Deal Done, Britain Now Scrambles to See How It Will Work”

[viii] The Times 26 December 2020 Oliver Wright “How Britain and Europe agreed to differ”

[ix] Observer 27 December 2020 “The deal is finally done – but many crucial issues still remain unresolved”

[x] https://michaelmcsorleyeconomy.blogspot.com/2016/07/brexit.html

[xi] https://michaelmcsorleyeconomy.blogspot.com/2017/02/global-populism.html

[xii] https://michaelmcsorleyeconomy.blogspot.com/2017/08/brexit-14-months-on.html

[xiii] https://michaelmcsorleyeconomy.blogspot.com/2018/08/our-precious-union.html

[xiv] https://michaelmcsorleyeconomy.blogspot.com/2018/12/arguments-for-and-against-brexit-as.html

[xv] https://michaelmcsorleyeconomy.blogspot.com/2019/03/brexit-briefings-to-dup-mp-jan-feb-2019.html

[xvi] https://michaelmcsorleyeconomy.blogspot.com/2019/04/brexit-lampooned.html

[xvii] https://michaelmcsorleyeconomy.blogspot.com/2019/07/how-can-uks-new-pm-resolve-brexit.html

[xviii] https://michaelmcsorleyeconomy.blogspot.com/2019/09/omnes-ad-unum-conservatives-and-dup.html

[xix] https://michaelmcsorleyeconomy.blogspot.com/2019/12/election-communication.html

[xx] https://michaelmcsorleyeconomy.blogspot.com/2020/01/brexit-leaving-britain-undone.html

Brexit leaving Britain undone

Introduction

I recall watching the Prime Minister of the UK, Harold Wilson, appearing on television in May 1974 to denounce the Loyalist Workers strike and his use of the word “spongers.”   

The strike crippled daily life and brought down the fledgling power-sharing Government established under the Sunningdale Agreement.   

The collapse took place the year after the UK joined the European Economic Community.

Move forward to January 2020.  Will Northern Ireland experience a year of perfect vision and will there be another new beginning?  

The initial relief felt by the hard-pressed public when Northern Ireland politicians returned to Stormont after a 3-year paid absence was soon interrupted.  It only took a few days before MLAs, Members of the newly reconvened Legislative Assembly, began complaining about insufficient money from Westminster to govern.

At times one wonders what the citizens of Great Britain must think of us across the Irish Sea.

December 2019

Step back to the previous month.  

People throughout the UK were thinking not about divisive topics like politics or politicians but about joyful activities such as Christmas and family togetherness.  The prospect of a General Election slap bang in the middle of the festive month, however, couldn’t easily be ignored even if it ranked as an unseasonal inconvenience.  

Devolution was looking unviable, a hopeless case of incompatible differences, where paralysis had produced hardship and deterioration in public services.

When I wrote to my Westminster MP[i] five days before the 12 December General Election, I asked about her party’s campaign boast to have delivered £1.5b of extra funding for Northern Ireland.  

Was it, for instance, additional funding over and above the Barnett formula used for allocation across the UK.  

Where had it been spent, if indeed it had ever transpired?  

Had Economic Appraisals been carried out on projects funded as required by HM Treasury etc?

At the time of writing to her,15,000 nurses had begun a strike for the first time ever, there being no prospect of their pay being aligned to Great Britain’s nurses. What about her party’s trumpeted imperative for regulatory alignment with the UK?

I also asked about the party’s campaign pledge “to protect Northern Ireland’s place in the union.”  

How would Brexit protect the union since it has been shown by reputable bodies (the NIESR, the Office for Budget Responsibility, the Bank of England, the Treasury, the ESRI and others) that it will diminish UK GDP; and what sort of advertisement for “strong unionism” was her support for the illegal prorogation of Parliament that inflicts reputational damage on the Monarch of a divided kingdom?

Three days before polling day, I was delighted to receive a considered reply. 

To my surprise it had been sent just before half six in the morning, even using first names.   

It provided detail of some allocations of the £1.5b to health projects.  

The list shows a total of £116 million allocated to five health areas (none of which were nurses’ pay). On my calculations, helpful as this detail is, the figures account for 7.73% of the £1.5 billion.

Questions arising include: what about the other £1.384 billion; and given the parlous state of the health service in Northern Ireland, what difference, if any, has the £116m made?

Regardless of that and in retrospect, I am glad I put the case at the time, not least because the electorate voted to return a different party and candidate to represent Belfast South.

M.P’s reply

Michael, 

There was a UK wide people’s vote, the people of the UK voted to leave the EU.  Implementing the decision of the people is about honouring democracy.  However, the DUP have made clear that we wanted a sensible Brexit deal that respects East, West and North, South relationships.  

The extra money is verified by FactCheckNI, it is worth checking this out.  It was allocated to the Northern Ireland departments as additional to the block grant and the Barnett Formula did not apply to the funds so a proportionate amount did not go to other UK regions.  This was an additional amount just for NI.  

The money went with the high level condition (so much for heath, so much for broadband etc) however, within some of those high level areas, the Northern Ireland civil service and departments could spend against priorities and pressures.  All departmental expenditure is (should be) spent in accordance with HMT guidelines and procedures.  I assume these have all been followed.

The adjustment to the tariffs on RHI will now mean there will be no overspend, in fact, Northern Ireland is projected to only draw down part of the NI allocation directly from HMT.  There will therefore be no ongoing cost to the NI block grant. 

The DUP Team at Westminster has been strong as we have delivered extra funding, succeeded in lifting the 1% pay cap for the entire UK, protected the pensions triple lock for the entire UK, protected the Winter Fuel Allowance for the entire UK, secured the City Deals for NI and more.  

I attach some information about the expenditure of the additional DUP C and S funds in Health.[ii]  

Kind Regards,

Emma 

The New Year

Since the General Election and a big victory for the Conservative Party, Westminster has passed the Withdrawal Bill (dubbed the "Betrayal Act" by the DUP) with Royal Assent granted on 23 January.   

Northern Ireland’s restored Assembly got down to work prioritising the case of the valiant nurses with a popular decision to award them a pay rise.  

Polemic ensued, however, over Westminster’s funding support for devolution.  Whereas MLAs are keen neither to fall out with each other (yet) nor to bite too hard on the hand that feeds them, especially after three years off, there is debate and disagreement about the regional Government raising funds locally to pay for essentials.

British voices

Is the British public again tiring of the price of bolstering its loyal Northern Irish territory?  

If so, perhaps it may be explicable in the face of major needs in the NHS (remembering the Brexit red bus pledge of Boris Johnson) and from the Government’s new support base in the north of England, the former “red wall,” where delivery is sacrosanct.

Coming just as the UK exits from the EU with its potential ramifications for the continued existence of a Kingdom United, the spats at Stormont critical of Westminster’s lack of funding largesse have provoked reactions from important voices in Britain.  

One, for example, comes from the former PM Gordon Brown, another comes from the experienced Times columnist and former Conservative MP Matthew Parris.

Gordon Brown argues that the UK needs a “Constitutional revolution” to rescue the union.[iii]  “The risk,” he contends, is that “getting Brexit done is leaving Britain undone and, by destabilising the careful balance between the Irish and British identities in Northern Ireland, threatening the very existence of the United Kingdom.”  

Jonathan Powell, the UK Government’s chief negotiator on the Good Friday Agreement has made a similar point.  He also argues[iv] that there is a good chance of a border poll and a united Ireland within ten years.

This is emphatic stuff.  Brown’s case carries an implicit reminder that it is going to take a year of transition (possibly more) to agree a new trade deal with the EU and to achieve the objective of completing Brexit in an orderly and satisfactory manner.

On hearing that Conservative Party Election mantra “Getting Brexit done,” I was reminded of the rather more subtle line by the metaphysical English poet and Anglican cleric John Donne.  Punning his own surname, he wrote:-

            “When thou hast done, Thou hast not done, For I have more.” 

Thinking about transition and the negotiation of complex trade deals, might Donne’s lines be an epitaph for the UK post-Brexit?

Matthew Parris writes that “faster than many realise, the time is coming to think dispassionately about the unification of Ireland.”[v]

Parris’s evidential base includes Lord Ashcroft’s poll in October 2019. As he says it was “taken before we knew a border was to be established in the Irish Sea” showing a slender majority for unification.  

For good measure he quotes Dominic Rabb, now the Foreign Secretary, who says that non-divergence from the EU is good news for Northern Ireland. 

Parris adds that goods will travel freely across the land border; that polls show a change of mood in Ireland in favour of unification; and that Northern Ireland “has failed spectacularly with regional subsidy” and has been “a bottomless pit.”   

He concludes that at £12b net annually, “Northern Ireland costs the taxpayer slightly more than our net payments to the EU.”  Britain, he writes, pays more to keep NI in the Union than it will get back by leaving the EU. 

Wasn’t it a similar line of thinking that persuaded 52% of British voters to divorce the EU?

What adds authority to comments like these is that they are articulated, not by politicians or commentators in Ireland north or south, but by Britons with close connections to and experience of the UK’s economy and governance.

©Michael McSorley 2019

References

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[i] https://michaelmcsorleyeconomy.blogspot.com/2019/12/election-communication.html

[ii] Emma Little Pengelly 9 December 2019, Examples of DUP allocations to Health from Confidence and Supply fund (See table below)

[iii] Observer 19 January 2020 p 10 Michael Savage “Constitutional revolution needed to rescue the union, warns Brown”

[iv] BBC Newsnight 13 December 2019 J Powell interviewed by Emily Maitless

[v] The Times 18 January 2020 p 31 Matthew Parris “A united Ireland would be good for everyone.”