Beyond the negotiations with the EU, what
do you think are going to be some of the
biggest Brexit-related issues the British
government will have to tackle over the
next two years? What challenges might
they face in Parliament?
The Brexit negotiation is going to unlock a
series of internal political debates in the
UK that the United Kingdom has not had to
focus on since it has been an EU member.
This will be part of ‘taking back control’,
but taking back control also means
reengaging in a domestic debate about
potentially contentious issues.
A key element is passing the Great Repeal
Bill, to be submitted on 30 March, where
thousands of pieces of legislation which
currently reside under the European
Communities Act 1972 are brought over
into domestic law.
This step will smooth over the post-Brexit
transition for companies that need to trade
products and services between the UK and
the EU under the same regulatory
standards (although UK-based exports to
the EU will still need to be certified as
being compliant with EU regulations). But it
will not absolve the government from the
need to undertake complex domestic
legislative work to embed some of the key
frameworks of policy that have been under
EU auspices into British law.
These are likely to include a legislative
framework for agricultural subsidies, for the
benefits available to EU migrants, UK
commitments to global climate change
targets, sanctions on Russia, and re-
codifying the customs duties and tax
arrangements under which the UK
undertakes foreign trade.
So, while everyone is talking about how the
UK negotiates its Brexit bill, the future
rights of EU and UK citizens, or the
framework for a future UK–EU trade deal,
the British government will have to engage
in a heavy parallel domestic legislative
agenda over and above the normal
business of government. And it will have to
do so with a small majority in Parliament.
For at least the next two years, the prime
minister may find herself negotiating on
two fronts simultaneously, with potential
insurgencies behind the Brexit front lines
that are as intense as the negotiation she
has to undertake with the rest of the EU.
Do you think that the UK government needs
to consider more seriously the post-Brexit
effects on the politics of Scotland and
Northern Ireland?
Nicola Sturgeon has claimed Theresa
May’s decision to pursue a ‘hard Brexit’ –
giving up membership of the single market
and the customs union – is the ‘material
change’ in circumstances that creates the
need for a second Scottish referendum.
This means that Theresa May is going to
need to think carefully about the type of
deal she brings back at the end of the
negotiations.
But I don’t think she will adjust her
approach to the EU negotiation to one that
includes the devolved administrations in a
more active way than they are already,
especially given the fact that she will
already be managing a complex domestic
negotiation alongside the external
negotiation.
However, a key question she will have to
consider throughout, for the survival of the
Union, will be: what happens to trade
across the Northern Ireland border on Day
1 of Brexit? Other elements – for instance,
how much agricultural spending might be
decided by Stormont, what fisheries
responsibilities might Scotland have – can
be figured out later on, once they have
been negotiated on behalf of the United
Kingdom as a whole.
The government has talked up the
prospects of a ‘Global Britain’ outside the
EU. What do you think is necessary for the
country to fulfil that ambition?
It is going to be difficult to turn the idea of
a more Global Britain into reality during the
process of the Brexit negotiation. The
Brexit negotiation is probably going to put
serious discussion of future bilateral trade
agreements on hold rather than mark their
kick-off. Those who have said they are
interested, like the Americans and
Australians, will wait to see what kind of a
detailed deal the UK strikes with the EU
before they go beyond the preliminary
conversations that have already been
announced in this ‘phoney war’ period.
Where Global Britain can best be
manifested in parallel to the Brexit
negotiation, if the government has the
bandwidth and the energy, is by focusing
on the UK’s strengths as a security actor:
by demonstrating the value of its role in
the defence of eastern Europe, by trying to
engage Turkey despite the country’s
internal contradictions, by helping manage
unregulated migration towards Europe, by
remaining actively involved in
counterterrorism operations and
strengthening bilateral defence cooperation
with its EU partners… The first
responsibility of a Global Britain will be
meeting its responsibilities as a European
power.
At the same time, the UK will need to
sustain a strong international voice,
whether in the UN Security Council or in
helping the world meet the Sustainable
Development Goals, and demonstrate that
it is not completely obsessed by resolving
its relationship with the EU.
This will include being a trusted interlocutor
and constructive rather than subservient
partner to the Trump administration on the
world stage.
Do you think there is any scenario ahead
under which Britain does not actually leave
the EU?
There are only two scenarios under which I
would see Britain not leaving the EU in the
next 2-3 years.
One is if there were to be some
unexpectedly bad downturn in the British
economy during the course of the
negotiations as a result of some
combination of domestic and international
factors. It would probably originate from
some external shock that then flows into
the British economy. For instance, a crisis
in China’s economy, Germany all of a
sudden looking vulnerable economically,
the negotiation with the UK then suddenly
being pushed to the bottom of the agenda,
and this making global markets concerned
that the EU can’t deliver the type of
pragmatic deal with the UK that markets
are hoping for.
And, of course, the UK outside the EU will
be more vulnerable to global markets if
they were to test the strength of the
pound. If it took a further drop, inflation
could go up, interest rates might go up – a
key vulnerability for the UK given its high
level of home ownership. If that were to
happen, the government might be forced to
call a snap election – at which point the
negotiations might be put on hold.
The only other scenario I could see
stopping Brexit would be a really
devastating series of terrorist events in
Europe, or a major crisis with Russia that
made it impossible for EU governments to
sustain a parallel negotiation – something
really serious at a geopolitical level. It
would take something that big, in my
opinion, for the negotiations under the
Article 50 process to be suspended.
How could Brexit change the direction of
European integration for the remaining
member states?
Brexit, the rise of populist parties across
Europe and Trump’s election have
galvanized the debate over the future of
the EU. We’ve seen the president of the
European Commission and Chancellor
Angela Merkel talk about the need for a
‘multi-speed’ Europe. Although there is very
little public support for deeper integration
at the moment, Brexit plus Trump, plus a
threatening Russia and ever-more powerful
China are making continental European
governments circle the wagons against
these external threats. Just as external
threats have driven Europeans together in
the past, so they are doing the same now.
But EU governments know they have to be
thoughtful about pushing for further
integration, even if they are determined not
to let European integration go backwards.
That being said, we’re in a slightly artificial
period, with the French and German
elections due over the next six months. If
the EU gets through those two elections
with a centrist like Macron winning in
France and a CDU- or SPD-led coalition
emerging in Germany, then EU
governments could try to complete some
of the practical initiatives that would
demonstrate that the EU can deliver
results and thereby regain the trust of
European citizens. These initiatives might
include completing the digital union or the
energy union and perhaps undertaking
some initiatives that the Brits might have
blocked, such as a joint unemployment
scheme, or that the Germans have resisted
hitherto, such as greater financial
backstops in the eurozone. The idea of
restructuring Greek debt to make it
sustainable might even be on the table
after the German election.
My big worry is that, without Britain in the
EU, a united Germany will be seen to be
more dominant. At the moment, a united
Germany is balanced structurally by both
France and Britain – given the fact that
Italy, because of its economic and political
troubles, has dealt itself out of the
equation for the moment. Without Britain,
you could end up with an insecure France
sitting next to an overly powerful Germany.
How do other countries react to that? Do
they team up with Germany? Do they try to
balance against it? Central and eastern
European countries that are against further
political integration might feel that they
need to resist German leadership. France
may feel it has to surround itself with allies
to prevent being dominated by a German
EU. Britain can’t help manage these
concerns anymore.
Another concern is that, without the UK at
the table, the EU continues to avoid
opening up fully its capital and services
markets. Those two reforms will be critical
for long-term growth and employment in
Europe, but have been viewed suspiciously
by both France and Germany. Without a
British spur, they may languish.
What do you think is the most likely status
for the relationship between the UK and EU
on 29 March 2019?
I am in the small camp that believes it is
possible to do a fairly complete deal by 29
March 2019. I think that the more
threatening external environment I
described earlier – the new leadership in
the US, Russia, mass migration, the
terrorist threat – will serve as a disciplining
force both on the EU27 and the UK,
compelling them to agree deal that avoids
Britain falling off 'the cliff edge'. And
further delay is not really an option – the
EU27 want to embark on elections to the
European Parliament without the UK, and
Theresa May knows that politically she
must be able to stand before the British
people on 29 March 2019 and say, ‘We
have left the EU.’
So I think in two years we will have a
completed divorce agreement and a legally
binding commitment to create a
comprehensive free trade area, even if the
trade agreement requires several more
years to complete.
The divorce settlement will include an
agreement on how much the UK will pay
the EU. Agreement might be secured by
finessing the length of time over which the
sum is paid and by the UK remaining
engaged in some of the things it pays into,
like joint R&D programmes and the EU
energy market. It will be underpinned by an
agreement on the rights of citizens in each
others’ countries and by the UK organizing
a preferential movement of labour system
for EU citizens. The UK will be able to say
that it has control over immigration and
then use that control to give preferential
access to EU workers.
The likely framework for the free trade
agreement will include zero tariffs on the
trade in goods, but with important
protections for the EU on rules of origin for
its imports from Britain. Agreeing on the
arrangements for the trade in services will
be more complex, even if the UK abides by
all current EU regulations. I think there will
be restrictions or frictions on the way that
professional and financial services are
traded between the two sides. Ultimately,
the UK will have to abide by many EU
regulatory regimes long after it has left the
EU. But the government will be able to
argue that it has regained sovereignty over
non-tradeable aspects of its economy and
its social policies.
I do not underestimate the complexity of
securing a meaningful agreement in 18
months – thereby leaving time for
ratification by both sides. But the one
thing we know is that, if politicians want to
arrive at a deal, national and EU officials
and their ranks of legal advisers will be told
what that deal should be and to find a way
to make it work.