Theresa May is secretly seeking an EU customs union – my general theory of Brexit

Many areas of life are so complex that trying to come up with an overall account of the many and varied forces at work is almost impossible. Both writers and academics tend therefore to take the sensible decision of only analysing niches and particular aspects of the whole. But occasionally someone steps forward and tries to […]

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Many areas of life are so complex that trying to come up with an overall account of the many and varied forces at work is almost impossible. Both writers and academics tend therefore to take the sensible decision of only analysing niches and particular aspects of the whole.

But occasionally someone steps forward and tries to illuminate the whole thing. One thinks, in economics, of John Maynard Keynes and his General Theory of Employment, Interest and Money. Naturally, the general theory did not quite live up to its billing, but it still succeeded in highlighting the impact of hitherto unappreciated factors such as a deficiency of demand and the “animal spirits” of potential investors.

In physics, work continues on a so-called “theory of everything” that I cannot pretend to get my head around other than to say it is clearly ambitious.

So, at the risk of falling flat on my face and having my every contention disproved in the coming weeks, I feel the time has come to offer a general (political) theory of Brexit.

I think I have finally figured out what is going on sufficiently to at least have such a theory. Though, as you will see, that theory does not lead to a definitive conclusion about what will happen. Anyhow, let me set out its main constituent parts.

Point One: Theresa May wishes to reach a final endpoint of Brexit – a new equilibrium if you like – that involves a customs union with the EU. Her ministers such as Greg Clark and Philip Hammond have in fact given big corporate employers private assurances that this is what the Government is advancing towards.

But she cannot be open about this because a customs union is a particularly red rag to at least 80 of her MPs and any whiff of Brexit dilution or betrayal causes general outrage among most Tory voters.

So she has decided to take baby steps and take them slowly too. A huge deception of the British public is in fact in progress. Thus May was happy to agree not only the indefinite backstop but also the EU’s preferred sequencing of topics for agreement, with the Northern Ireland border and the financial settlement sorted out before any commitments on trade.

She did this because she wants to lock negotiations onto a path that inevitably leads to a customs union with the EU – despite this being the opposite to her stated policy – however unhappy this makes Brexit purists.

So she absolutely does not want a sunset clause date in the backstop or a unilateral exit mechanism and despite the Brady Amendment passing, has not even asked for either of these things to be inserted into the Withdrawal Agreement. Either of them would allow the Moggites in her party to argue for leaving the backstop to pursue a genuinely independent trade policy if or when future relationship talks get rough.

However, a codicil to the Withdrawal Agreement carrying legal weight and stating the backstop is not intended to be permanent does work for her because it allows for a formal customs union to be mutually agreed later as the way out and that is something that both May and the EU prefer to the backstop in any case.

As EU deputy chief negotiator Sabine Weyand put it: “We should be in the best negotiation position for the future relationship, this requires the customs union as the basis for the future relationship”. As Olly Robbins, the UK chief negotiator, put it in corroboration in comments overheard by the journalist Angus Walker, the backstop was always intended to be a bridge to the final arrangement, not a safety net for the Irish border.

So the policy that May is pursuing, albeit not openly declared, is in fact remarkably close to the one that Labour formally advocates – a permanent customs union that somehow has a bit of give in it letting the UK pursue other trade agreements around the world.

Point Two: There is in fact a large natural majority in the Commons for May’s policy and intended end state. But it has not coalesced into a real thing for two reasons. First, she is unwilling and unable to explicitly set it out because of her own secretive nature and for fear of causing uproar in the Tory grassroots and among pro-Brexit Tory MPs and ministers. Secondly, about half of the natural supporters of this deal are Labour MPs. As such they have been whipped against it by their party leadership.

Given May’s secretive nature and her Tory status, she would indeed be asking a lot to expect “soft Brexit” Labour MPs to back her deal without her openly setting out how it ends with a customs union. As we have seen, she has not surmounted these hurdles yet.

Point Three: Jeremy Corbyn and his inner circle are Brexiteers all day long. They do indeed consider the EU a corporate club that would prevent them from imposing “socialism in one country”. But they are aware that 95 per cent of Labour MPs, about 90 per cent of Labour members and maybe 75 per cent of current Labour-leaning voters are Remainers, many passionately so.

There are a variety of outcomes that Corbyn and his team would be content with. One would be a chaotic no-deal exit if they could be sure that the Conservatives would get the blame and be split by it. Such an outcome might increase the chance of a future Corbyn-led government entirely unencumbered by EU rules on state aid and all the rest. But it carries a big risk of May successfully wrapping herself in the flag, unleashing a wave of patriotic support and actually rising in the polls; a non-violent “Falklands factor”, if you like.

Another good outcome for Corbyn is Theresa May postponing Brexit in clear breach of her promised 29th March leaving date. This would be bound to gain massive traction with the electorate at large, being not about some arcane jargon regarding customs unions or single markets, but being a date in everyone’s diary. It splits the Tory Party and puts Corbyn in the driving seat for the next election, whatever the Tories eventually salvage from the ruins of their reputation. I think this is in fact the best outcome for Corbyn and the one he is working towards.

A third goodish outcome for Corbyn would be May’s deal going through with Labour votes in time for Brexit to take place this spring. This splits the Tory Party and disillusions its supporters and leads inexorably to the kind of “soft” Brexit that Corbyn has promised Labour supporters he will fight for. But it does not hurt the Tories nearly as much as if May has been forced to delay Brexit first and Corbyn will in any case be loath to explicitly endorse May’s deal.

Point Four: Labour MPs who opposed Brexit in the referendum are now deeply split into two tribes. The first recognises Brexit must formally happen but just wish it to be “soft”, i.e. embracing a customs union. The second shares Tony Blair’s messianic zeal that Brexit can and must be stopped altogether via the so-called “People’s Vote”. These MPs, probably numbering 150 or so if you count in SNP, Lib Dems, hardcore Tory Remainers etc, need Brexit delayed significantly in order to have any chance of success.

Oddly, this means that in the very short-term, their interests on this coincide with Corbyn’s: defeat May’s Withdrawal Agreement all the way to 29th March and make her postpone Brexit.

Point Five: But this is a huge call. Nobody knows for certain that Mrs May will be able or willing to call off Brexit just a week or two before it is due to take place. This would be a political calamity for her with her political tribe. It would almost certainly lead to a massacre of Conservatives in the big round of local elections on 2nd May. It would be an ignominious decision to take. So there is a chance that, backed into a corner, May would indeed wrap herself in the flag and go “No Deal”.

Point Six: This is where an intriguing and for me very worrying possibility arises. That mainstream Labour MPs who would be content with a “soft” (customs union) version of Brexit but appalled by No Deal decide at the eleventh hour to swing behind May’s deal en masse, reckoning that it will eventually take the country to their desired end state. Most such MPs detest the Corbyn Labour regime, so would regard it as an added bonus that them doing this might make Corbyn appear to have lost his grip on their party. Given that May’s deal passing under such circumstances also splits the Tories long-term as the future partnership talks wend their way towards a formal customs union, it would seem a winner all round for them.

However, it would need at least 100 Labour MPs to back May’s deal to get it through and unless the People’s Vote brigade acknowledge that the game is up and go down this route instead, those numbers look very ambitious.

So, what will happen? My advice is not to focus on the obvious cross-party political dalliance between the pro-EU People’s Vote zealots like Chuka Umunna and Anna Soubry, but any similar dalliance emerging between the more pragmatic likes of Nicky Morgan and Lisa Nandy. Henceforth the number of Labour MPs backing May’s deal has been very small. But a lot could come over at once as the pressure escalates. And escalate it will. May is keeping a poker face – about the one key political skill she can claim genuinely to have mastered. She is indeed running down the clock. This is going to mid-March at least.

And this is where my general theory of Brexit proves to have its limitations. Because we are dealing with a situation in which multiple groups have multiple interests and imperfect information about each other or the likely political impacts of each possible path.

Would “no deal” help the Tories politically (as I believe) or be a disaster for them (as Oliver Letwin believes)? Will May be able to give sufficient informal assurances to Labour MPs that she is going to deliver a customs union in the end? Might May’s stubborn streak mean that in her mind her 29th March deadline is an actual red line which cannot be rubbed away?

So all I can give you is my view of the probabilities, give these underlying and inter-playing currents.

My odds: 40% that Labour MPs will break in big enough numbers for May’s deal in the next three weeks or so to get it through.

Another 40% that not enough will come across and that May will indeed ask for and be granted an Article 50 extension either of her own volition or because some version of Yvette Cooper’s amendment has been passed that arguably compels her to do so.

And alas just 20% that, having been backed into a corner, May has the guts to stick to her word on 29th March and on no deal being better than a bad deal and delivers a WTO Brexit that genuinely fulfils the instruction given to the political class by the British people on 23rd June 2016.

Yet unless this final path does transpire, we will soon be in need of a General Theory of Brexit Betrayal. I will do my best to oblige.

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