Economic realities should push the UK and EU towards a trade deal – compromise has to come

Accounts vary, but some say that the prime minister is usually the most “Brexity” person in the room, even when that room contained the architect of EU withdrawal himself, Dominic Cummings. 

Boris Johnson, indeed, won the leadership of his party and the premiership last year precisely because he was prepared to countenance a no-deal Brexit when others were not. The threat to calmly walk out of talks was supposed to make Michel Barnier and his team flinch, and cave in to Britain’s demands for a free trade deal on British terms, the so-called Canada model. As deadlines have come and gone, the tactic has not yet succeeded. 

Mr Johnson’s pitch was always that Theresa May failed to negotiate a suitable deal for Britain after she abandoned her old mantra that “no deal is better than a bad deal”. Mr Johnson in effect reinstated that stance when he took over from her, and it is to be tested to destruction in the coming days. Is Britain about to find out whether that is in fact true?

The next few days, culminating in an EU summit on Thursday, should settle matters, though there have been many such “crunch” meetings in the past, when no crunching actually happened. On balance, the terms of trade in these negotiations has probably tilted towards a deal, with compromises being made on both sides.

The arrival of President-elect Joe Biden has killed the idea, always fanciful, that an economic partnership with the United States could compensate for the loss of European markets. The UK can no longer use the special relationship to push the EU towards a deal. The new president has made it perfectly clear that he puts paramount importance on the Good Friday Agreement and the Irish protocol in the UK-EU Withdrawal Agreement. That has weakened London’s leverage.

The coming of a Biden administration may have had something to do with the going of Dominic Cummings and other members of the old Vote Leave gang from Downing Street. At any rate not having the troublesome Mr Cummings about will make Mr Johnson’s life less complicated if he does want, in the end, to give some ground and to avert the extreme economic – and political – damage that will be inflicted by a no-deal Brexit. As Mr Johnson once remarked, a no-deal Brexit would be a “failure of statecraft” – his failure.

The economic pressure on both sides has been greatly exacerbated by the second wave of Covid-19 advancing across the continent. Brexit is a lose-lose negotiation, but the losses for all involved are intolerable when piled on top of the economic consequences of coronavirus. No-deal Brexit would mean long-term damage to investment, jobs and living standards in the UK, but also further immediate chaos at the ports. This is reportedly already happening, with shipments for British shops diverted from Felixstowe to Rotterdam.

The fact is that given the disparities in relative size of the EU and UK economies, and their performance due to Covid, the British have always had proportionately more to lose from a hard Brexit than the Europeans. Now the balance has tipped even further in Europe’s favour. Mr Johnson’s best option would appear to be to get whatever he can, give in on the rest, sign up, declare victory and move on; it is in fact precisely what he did with the withdrawal agreement a year ago.

The realities behind trade diplomacy should push both sides to some kind of agreement on free trade this week. Yet a fully detailed legal text may still be lacking, with little time for ratification by all the national and regional parliaments that have the right to do so. That includes the British parliament, and the awkward fact is that Mr Johnson put the date for the end of the Brexit transition period into law. That has only served to limit his options. 

There is already talk of Northern Ireland being granted a grace period to implement a new and very complicated customs regime: a similar arrangement for adjustment could easily be agreed for  the wider UK and EU. Whether it is described as an extension of the transition period or not, that is what it amounts to. The law will gave to be amended, and Mr Johnson may have to rely on opposition votes to defeat his rebels. He’d probably get them.

Above all, the British public are weary of Brexit. If compromises need to be made, time bought and words eaten, then that will be a modest price to pay for some sense of stability. Brexit has proved to be a five-year nightmare for the British people and they yearn for an end to it. Nigel Farage might whinge and the disant Spartans of European Research Group will fulminate about betrayal; but Mr Johnson should not suffer too much of a backlash from the electorate over the arcanery of fishing quotas and arbitration machinery. 

To borrow a phrase, now more than ever, they want to get Brexit done.