This week in Brexitland, September 16th, 2022

1. What Liz Truss becoming prime minister might mean for Brexit

An interesting aspect of current rhetoric from the British right is that they say on one hand that Brexit is “done” (and in fact, still congratulate Boris Johnson for having got it “done” when he was PM), while on the other, asking what Truss will do in this area, suggesting that perhaps it is not “done” after all.

On top of all of the other things the incoming PM has to worry about, there is also the pressure from within her party to “get tough” with the EU on the subject of the NI Protocol. The fantasy here is that the EU have somehow violated the Withdrawal Agreement over the last couple of years, in spirit at the very least, and the UK needs to respond in some way in order to sort out perceived weaknesses in the agreement that led to this situation. It’s a strange argument that has a massive paradox at its centre - if the agreement is flawed and now needs to be amended, that’s surely the fault of those on the UK side who negotiated and agreed it, namely Boris Johnson and Lord Frost first and foremost? But no, the paradoxes in this line of thinking are wished away, as all contradictions within religious dogma inevitably are.

What will Liz Truss do on Brexit? What’s interesting so far is how many of her hardline stances she’s now being relatively flexible on. The two examples I would draw on is the energy price cap - although, I think she always had to do something here, political reality demanded it - and the pulling of Raab’s bill of rights. Although with that last one, it could have just been a personal vendetta against Raab, or she could also have something even worse in mind. Nevertheless, one can’t discount the idea that she might be more reasonable now that she’s in Number 10 just yet.

Having said that, Brexit is the area where it is most difficult to see her bending. Like May, she always has to prove she’s down with the cause given her support for Remain in 2016. It looks very much like she is going to be required to enter into a self-defeating battle with the EU over the Protocol, one that can only ever have a negative effect on the UK, if indeed any effect whatsoever is “achieved”.

The EU have made things worse for her in a sense this week by laying out a perfectly reasonable plan to minimise checks of goods flowing between GB and NI. Yet it won’t be enough for the ERG or the DUP. Of course, nothing ever would be good enough for these two groups of people. I hold out what is almost certainly a false ray of hope that a leader of the Conservative party might figure this out someday.

In conclusion, maybe there is a sliver of optimism that Liz Truss drops the Brexit extremism now that she’s prime minister. But it’s a notably tiny one and if I had to lay a bet on this, I know which way I’d go. The Brexit wars are almost certainly about to get worse before they get better.

2. Brexit red tape lowers the number of British business exporting to the EU by a third

There was an interesting article in City AM this week, stating that the number of businesses exporting goods to the EU fell from 27,321 in 2020 (when we were still in the single market, remember) to 18,357 in 2021. That’s a drop of about a third, which is massive.

I have three things to say about this.

One is that this drop is entirely intuitive. It would be odd if something like this hadn’t happened. If you put trade barriers up, trade will diminish as a result. Brexiters would do well to stop living in denial about this and dedicate themselves to figuring out how exactly they are going to find enough trade across the world to make up for being outside the single market.

Two, a lot is claimed by both sides of the Brexit debate about how much British businesses exporting to the EU has either fallen or even risen since we left the EU in terms of overall GBP amount. We’ve had Covid in there, which has massively complicated matters and allowed for cherry picking of data. One thing is clear, however (and this figure of a third of businesses that once exported to the EU and post-Brexit don’t bother is a good illustration of this point): Brexit has been bad for small businesses. Very bad. Unless all the trade you did as a small business was non-traded (ie, domestic sales only) - if a part of your business relied on exporting to the EU, you will have suffered. This makes intuitive sense as well: big businesses are equipped to get round and deal with trade barriers, while smaller businesses rely on there not being a lot of hassle involved, because their margins are tighter, because they can’t afford compliance departments.

Three, the loss of trade for small businesses in Britain is a big deal and possibly the biggest immediate impact from Brexit that we need to talk about as a country. This government wants to focus on growth - fine, but simply lowering taxes is not going to cut it. If small businesses shrink or go out of business at an alarming rate, you are going to find growth tricky, to put it mildly. That’s so basic, even saying it feels a little silly. Like so much to do with Brexit, I always want to ask this basic question: you got your Brexit, you have your sovereignty, so as a first order of business how are you going to use that to at the very least correct the problems caused by leaving the European Union? I think small business owners across Britain, more than most, would like an answer.

3. Switzerland and its relationship with the EU

I was supposed to go to Switzerland last week, briefly, but for various reasons that didn’t happen. I was going to talk last week about how in travelling between Switzerland and France, as I was meant to, there was no need to get my passport stamped as Switzerland is a Schengen country, which you wouldn’t know from a lot of pro-Brexit rhetoric. However, two things happened: my flight was cancelled and the Queen of England passed away, both of which put the scupper on that angle.

However, I still think we need to talk about Switzerland. Both before the referendum in 2016 and since, we’ve heard a lot of guff about how Switzerland flourishes outside of the EU, so why can’t we? In fact, I remember an article in a right of centre outlet during the first half of 2016 which had as its thesis, “I went to Switzerland and it was nice, therefore, Brexit is a great idea”. What these sorts of pieces never seem to tell you is, 1). Switzerland has freedom of movement and in fact, has relatively open borders with the EU (there is a customs barrier because Switzerland is outside of the customs union) and 2). Switzerland has a comprehensive deal with the EU that essentially places them inside of the single market with a few caveats.

This is all important to keep in mind given Brexiters love to hold up Switzerland as the ideal of a European country outside of the EU but still thriving - and yet they balk at freedom of movement, the very idea of a country taking the time necessary to get a decent trade deal with the EU, and certainly hate the idea of being inside the Schengen area. All of these are crucial to how Switzerland’s relationship with the EU works and indeed, why the Swiss can thrive.

If you wanted to make Britain more like Switzerland in terms of EU relations, I think that would be a marvellous thing. Joining Schengen, renegotiating the trade deal so that we are basically in the single market again and bringing back freedom of movement all sound like great ideas to me. But if they don’t sound like good ideas to the Brexiters out there, I’d kindly ask them to stop talking about the “Swiss model” as if it’s something they would ever countenance.

Thanks for reading. If you haven’t subscribed, please do, and I’ll be back next week again with the worst of Brexit.