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Article 50

Article50

No deal is incompatible with Theresa May’s claim that “everything depends on getting the Brexit negotiations right”

The UK’s Government is wrapped in a contradiction on Brexit. On the one hand, Theresa May states that no deal is better than a bad deal. On the other hand, the Conservative Manifesto also states that getting the Brexit negotiations right will define “our economic security and economic prosperity”.

brexit means brexitSince the Lancaster House speech earlier this year, Theresa May has been consistently and repeatedly stating that the UK would be prepared to walk away from the Brexit negotiations. What only became clear during the election campaign is that the UK Government directly links the future prosperity of its citizens to the outcome of the UK negotiations with the EU.  This is important because for the Conservative Party to argue that “getting the Brexit negotiations right is central to everything – our economy, our finances, our position in the world. Get Brexit wrong and we get everything else wrong. From looking after our elderly to educating our children, everything depends on getting Brexit right”, fundamentally contradicts the rationale for no deal. Indeed, underlying that the UK needs to “get the Brexit negotiations right” to secure its future security and prosperity implies that no deal is in itself the bad deal.

During last week’s BBC Leaders Special on Question Time David Dimbleby asked the PM “what is a bad deal? People are very confused, you talk all the time about a bad deal which you won’t accept. Can you explain what in your mind would be a bad deal?”. In her response Theresa May said the following: “Well yes. I think on the one hand, David, you have got politicians in Europe, some of whom are talking about punishing the UK for leaving the EU, I think what they want to see in terms of that punishment would be a bad deal, and secondly, you have got politicians here, in the United Kingdom, who seem to be willing to accept any deal, whatever that is, just for the sake of getting a deal, and I think that the danger is they would be accepting the worse possible deal at the highest possible price”. A few minutes later, a member of the audience asked the PM to “quantify in billions of pounds what is a good deal” regarding the so-called Brexit bill. The Prime Minister’s answer: “well the… I am not going to give you a figure on that . . . because we need to go through very carefully what as part of the negotiation what rights and obligations the United Kingdom has”.

brexit billThe PM’s response further confirms her ambiguity in defining what a bad deal is and the rationale to walk away from the negotiations with no deal. In her response to the member of the audience, Theresa May seems to accept that there will be a Brexit bill to be agreed (which depends on agreeing the rights and obligations of the UK in the EU). However, in her response to David Dimbleby, the PM states that the “punishment” (the Brexit bill) is a bad deal and therefore no deal would be a better outcome. Paradoxically, in another response to a member of the audience, May also states that “several EU politicians want to get on with trade talks very quickly”. This reinforces the view that when May talks about the “punishment” that European politicians want to inflict on the UK she is not referring to the possibility of the talks on the trade deal to collapse but, rather, to what the EU will demand for settling the UK/EU accounts on previously agreed commitments (the Brexit bill). What is important to note here is that the EU has stated that this financial settlement must precede and be agreed before any trade talks begin. As such, the refusal of the PM to quantify what the UK is willing to accept paying suggests either the UK Government has not given much thought about the issue (in fact, the possibility of a Brexit bill was not even mentioned during the EU referendum campaign), or that its intention is to use the Brexit bill as a reason for walking away from the negotiations with no deal.

But when  ”sufficient progress” regarding the Brexit bill (as well as on EU/UK citizens rights) has been achieved, which will allow the negotiations to proceed to the next stage, then the question is what constitutes a good (“right”) and a bad (“wrong”) Brexit deal? Interestingly, the UK Government is somewhat clear on what it seeks from the Brexit negotiations. As it is stated in Theresa May’s Article 50 letter, the goal of the UK is to establish a “new deep and special partnership” with the EU “in both economic and security cooperation”. In economic terms, “getting Brexit right” means, in the words of David Davies (Secretary of State for Exiting the European Union), retaining the “exact same benefits” of membership of EU membership of the Single Market  By the same token, “getting Brexit wrong” means getting a Brexit deal where these exact same benefits are not guaranteed. Crucially, as a no deal will put the UK and EU trading under WTO rules those tariff and non-tariff access will be lost. As such, accordingly to the UK’s Government own terminology, no deal also means “getting Brexit wrong”. In other words, no deal is also a bad deal. Therefore, the open question is which outcome is worse – no deal or a deal that does not deliver the “exact same benefits” of EU membership?

An important caveat here: walking away from the Brexit negotiations table with no deal will not prevent the EU from taking action against the UK in international courts. That is, the financial accounts between the UK and EU will have to be settled regardless whether the UK leaves the negotiation table or not. As such, no deal is the worst possible deal for it not only does not avoid the Brexit bill, it also prevents a (soft) Brexit deal on trade, security and on UK/EU citizen rights deal with the EU to come about, and finally, it also breaks a key pledge of the Leave campaign – a comprehensive free trade agreement with the EU. One thing is certain though: the Conservative Party’s threat of walking away with no deal (the hardest form of Brexit) is incompatible with the same Conservative Party’s goal of “getting the Brexit negotiations right”.



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