Harline Leave campaigners are blocking the way to a Brexit deal with Brussels.
In a speech at the London School of Economics on Thursday, September 13, the President of the Eurogroup Mario Centeno reiterated a call for a Brexit deal. The “conditions” for that to be achieved are in place, Centeno said, expressing concerns for a failure to do so, especially for the financial sector. But that “conditions in place” appears to be wishful thinking.
Talks of Leadership Succession
Few kilometres away, a member of the UK House of Commons, Mr George Freeman, was putting himself forward as a candidate for the Leadership of the Conservative party, that is, “if people want me to in Parliament.”
Of course, there is zero chance Mr Freeman will lead the Conservative party. However, his audacity suggests he thinks of Theresa May as a leader on borrowed time that should set a date for her departure.
On Tuesday, September 11, 50 Conservative Members of Parliament gathered in European Research Group (ERG) event to discuss the need for “a clean break” from the EU and Theresa May’s successor.
The number 50 is significant.
Under Conservative rules, 15% of the parliamentary group can trigger a leadership vote. There are 315 Conservative MPs, 15% of whom is equal to 48.
The Conservatives will hold their annual conference from September 30 to October 3rd. Hardline Conservatives are calling on Theresa May to scrap the agreed “backstop” on Northern Ireland, which commits the UK to a no-border policy in Northern Ireland. They call for a hardline negotiating position, which would put the onus on Dublin and Brussels to build a physical border in Northern Ireland.
In sum, hardline Leavers are setting the stage for a disorderly Brexit.
Something will happen after Salzburg
The UK government is negotiating on the basis of a rejected blueprint that would be quickly dismissed in parliament, does not enjoy the support of half the UK cabinet and is already rejected in Brussels.
“No deal” is a good deal, some are arguing.
The “Economists For Free Trade” think tank argues that the UK has “nothing to fear” from a clean break from the EU. To the contrary, the economists project the UK will “save” £80bn in contributions to the EU budget and will be able to cut consumer prices by 8%. That is not a credible projection argues Chancellor Philip Hammond.
However, Theresa May may well succumb to pressure from her backbenchers when it becomes clear, once again, that the EU will not offer the UK a bespoke deal. Clearly, the EU will not offer a bespoke deal.
In his State of the Union address on Wednesday, September 12, the President of the European Commission Jean-Claude Juncker pledged to work for closer trade ties. However, Juncker made clear there will be no compromise on the structure of the Single Market.
The Commissions’ chief negotiator, Michel Barnier, said on Monday, September 10 that a Brexit deal is possible “within six or eight weeks” if negotiators were “pragmatic.” Pragmatic means a clear choice between either a Norway or a Canada style agreement.
Barnier is ready to offer a “Canada dry,” modelled after the CETA agreement. Such an agreement would not have the additional “plus, plus” elements desired by Brexiteers, allowing for selective “associate memberships” of EU bodies and a borderless Ireland.
In sum, Theresa May will not be given a lifeline from her EU partners and may well be forced to succumb to pressure to work towards a “clean break” scenario.
If that is to happen, it would be following the informal meeting between EU heads of state or government in Salzburg (19-20 September), hosted by Sebastian Kurz.
When Theresa May comes back empty-handed from Austria, she will need to make a choice. Will she succumb to pressure from hardliners or reach out to the opposition? The answer to this question will determine her backbenchers’ reaction. 50 letters are stamped and ready to post. However, who will lead the party and hold it together.
No Deal Brexit
Unions, industry and the Governor of the Bank of England Mark Carney belies that “no deal” – and no transition – will be catastrophic. Carney warned on Thursday that under a no deal scenario house prices would fall by as much as 35% over three years, the BBC reports.
A Canada dry agreement would mean deindustrialization, tension in Northern Ireland, and an ugly standoff. It is likely that such an offer could degenerate to no deal, no transition, and no divorce deal.
However, Tory Eurosceptics have repeatedly denounced Carney as “the high priest of Project Fear.” They are likely to maintain a “fight them on the beaches” spirit.
And without a lifeline from Brussels, May has the choice between succumbing to pressure or threatening to call elections and/or a referendum. In that case, hardliners may prefer a weak Theresa May to the prospect of elections, at least until March 2019.
As long as London is negotiating with itself, no one is effectively negotiating with Brussels. The clock is ticking and time is working in favour of a “clean break” scenario that everyone should expect would be quite messy.