You have to admire poor Theresa May, the British prime minister blundering her way through the Brexit file. It was her former boss, David Cameron, not her, who had demanded the Brexit referendum in 2016. She was a Remainer, even if she lacked preacher-like conviction. As leader of the government and the Conservative party, she has been fighting battles both with the European Union and the hard-core Brexiteers among her party ranks -- an impossible situation.
A lesser prime minister would have thrown in the towel a long time ago. She looks exhausted, yet she persists, vowing to deliver some form of Brexit that will neither wreck the economy nor split off Northern Ireland, which dreads a hard border with the Republic of Ireland in the post-Brexit world. She needs a breakthrough to survive but is unlikely to get one as the clock winds down to March 29, when Britain is to bid adieu to the EU.
British Prime Minister Theresa May makes a statement on Brexit negotiations with EU, Sept. 21, 2018 in LondonJack Taylor/Getty Images
Employers and captains of industry are trembling. The exit date is close and there is still no clarity on what will happen when the clock strikes midnight. No one even knows whether Ms. May’s government will be in power in six months. How’s that for uncertainty when you have to meet payroll?
The EU will not come to Ms. May’s rescue. In spite of accusations to the contrary, the EU has proven to be utterly consistent and has never “ambushed” her with a sudden change in strategy, as her supporters have charged. Go if you must, the EU has always said, but membership has its privileges and those privileges can’t be retained automatically if you do bolt. If you want frictionless trade, join the European Economic Area (as Norway and Iceland did), which is technically out of the EU but still subject to most of its rules and restrictions. Or hit the road and rely on World Trade Organization rules, or negotiate a “Canada-style” trade deal, either of which would come with varying degrees of trade friction.
By now, Ms. May must realize that her defiant attitude toward the EU can no longer be taken seriously at home or in Brussels and that the EU will win any standoff; the EU needs Britain less than Britain needs the EU, despite the assertions of hardline Brexiteers. Yes, the EU as a whole will lose, economically speaking, when the second-biggest economy leaves the club. But no one country in the bloc is going to suffer a lot, and what’s left of the EU could even benefit in some areas. Banking jobs have been migrating to Frankfurt and Paris, and will continue to, as will jobs manufacturing. And will BMW, Mercedes and Volkswagen really lose sales in post-Brexit Britain?
Nor will Ms. May’s party come to her rescue. It’s simply too divided, with the Europhobes manoeuvering to install Boris Johnson, the government’s former foreign secretary, as Tory leader. They deem him electable, unlike Ms. May (who lost her majority in 2017’s snap election). In a 4,600-word essay published Friday in the Brexit-loving Daily Telegraph, Mr. Johnson slammed Ms. May and her government for its “appalling and inexplicable delay in setting out a vision for what Brexit is,” labelled Ms. May’s so-called Chequers soft-Brexit plan “disastrous” and called for a “SuperCanada” trade agreement with the EU – precise definition to come – evidently inspired by the Canada-EU trade agreement, known as CETA.
As Ms. May’s government lurches from one Brexit-inspired crisis to another, the Labour party, under Jeremy Corbyn, has been on the rise and is polling roughly equally with the Conservatives. For Britain’s business world, the immediate concern is not that Labour will win the next election, renationalize everything, raise taxes and do weird stuff such as force big British companies to hand over 10 per cent of their equity to employees – which is really what Mr. Corbyn wants – the concern is that Labour MPs will lead the charge in killing any Brexit plan presented to Parliament.
The math doesn’t look good for Ms. May. You can assume that the vast majority of Labour MPs will vote against any plan, as would MPs from the Scottish National Party and the Liberal Democrats, both of which are anti-Brexit. That scenario would mean that only a small number of Tory naysayers would be sufficient to send Ms. May’s Brexit plan, whatever it is, down the toilet.
What would happen next is anyone’s guess. There could be a hurried new general election, second referendum or a no-deal scenario that would see Britain crash out of the EU, shutting down trade with the EU in an instant. That scenario was unimaginable not long ago. Now it’s a distinct possibility, with British employers now making crash-scenario contingency plans, such as stockpiling parts for factories.
Even the fudge scenario, which would see Britain beg the EU for a transition period of, say, four years, during which time Britain stays put in the free market and the customs union while it figures out a workable Brexit plan, would be damaging for business. Why? Because it just extends the uncertainty pretty far into the future.
In the two years since the Brexit referendum, the British economy has held up pretty well. The economy is still growing, unemployment is at its lowest level since the mid-1970s and housing prices, while softening, are still robust. There has been a sense that Britain would somehow muddle through Brexit and emerge largely intact on the other side. Today, with Ms. May’s Brexit plans in a shambles, the Tory Europhobes plotting like Othello’s Iago and Labour rising, Britain Inc. is finally getting the message that this little diversion called Brexit will not end well.