Article 50, Brexit, British Government, Referendum, Single Market, Theresa May

Après Honda, Le #Brexit Deluge?

This blog was written on Feb 19, 2019
nissan_logo_leaflet
A section from a pro-brexit referendum leaflet – it has not aged well…

I suppose that the modern equivalent of the old phrase “O that mine enemy would write a book” would roughly translate as “Just let them go ahead and Tweet that”.

For, despite the “right to be forgotten,” our tweets have a habit of following us around. Even if you delete them, someone, somewhere has them. As Terry Benedict might have said in Ocean’s 11 “On Twitter, someone is always watching”.

Sure enough, Monday last, the day the news broke that Honda intends to shutter its Swindon plant with the loss of 3,500 direct jobs, and thousands of indirect jobs, someone dug up this old, 2015 Tweet from Daniel Hannan, one of the original Brexiteers:

That idea that car manufacturers might disinvest after we leave the EU? It’s a – what’s the word? – oh yes. Lie.

That doesn’t seem to have aged well. Nissan, Ford, Jaguar Land Rover (JLR) have all announced production switches or cutbacks. Now Honda.

Of course, Brexiteers were quick to say that Honda’s decision had nothing to do with Brexit. It was global trends in the motor industry, the falling demand for diesel cars. Maybe the EU/Japan free trade agreement which will see the elimination of tariffs on cars imported from Japan phased out over the next few years had something to do with it.

But blaming the closure of Honda on a free trade agreement is difficult for Brexiteers. Because, apart from the ending of the free movement of people between the EU and the UK, the overarching justification for Brexit now appears to be that it would allow the UK to cut its own trade deals. Free from the dead hand of the EU the UK would be able to do such deals faster and more nimbly than the EU. Isn’t that why they object to the Irish backstop? Because, they allege, it would keep the UK “trapped” in a customs union with the EU and prevent it from doing all those swashbuckling deals.

So, if Brexiteers try to blame the Honda closure on the EU/Japan FTA they set themselves up to be asked by UK voters: “Well, if that’s the case, why are you pushing to leave the EU to do our own trade deals? Would we not be better off leaving the EU so we don’t have to be involved in trade deals at all?” (See this Twitter thread from the Financial Times Tokyo bureau chief Robin Harding here)

The Brexit coalitions was always an uneasy mix of “Left Behind Leavers” and what might be described as “Bollinger Brexiteers.” The former, the Left Behind, are to be found in the UK Midlands and in the North. They are mainly working class, often Labour voters, who believe that “globalization” has crushed their life chances and the life chances of their children. They would like to see a “drawbridge economy” put in place, one that keeps the jobs in and people out. If they were Americans, they would probably identity as MAGA.

The comfortable Home Counties is where you find the “Bollinger Brexiteers”. As Roland Smith, a fellow with the Adam Smith Institute, noted on Twitter, such people…

[live]… in c.£750k – £5m+ houses in the leafy commuter belt around London and in similar places across the country. Second, the demographic can be cast as: over-40, mostly Conservative-voting, financially secure beneficiaries of capitalism and globalisation… they are the kind of people prepared to “roll the dice” in pursuit of change… they are risk takers/disrupters… They believe they’ll be fine, come what may. That change always brings opportunities, which they feel adept at ‘riding’.

Oh, and they dislike the EU as well because it is the EU. However, for want of a maid or a gardener, they have no real issue with freedom of movement.

A big move like Honda cracks this coalition.

Why?

Because while the Nissan decision that it would move the production of future models elsewhere means lost future job opportunities, the Honda decision sees the disappearance of real jobs involving real people in the here and now. Monday, some 3,500 people, their families and all those dependent on Honda know that in a couple of years’ time they will be out of a job. Jobs like those at Honda do not grow on trees.

If Honda is going to go, writing off the massive investment involved, who else is going to go?  Well, many have already gone, quietly, below the radar. Death by a thousand job cuts.

A few here, a few there, a couple of dozen to Dublin, a few hundred to Frankfurt, 250 companies talking to the Dutch government about relocating there. The cuts are so thin you barely see them. Like waking up one morning and realising that your baguette, or your salami, is half the size it used to be. As it shrank a tiny bit every day you just never noticed.

In the longer term, the Nissan decision, more so than Honda, is the template. Given the sunk costs of many investments, companies are not going to close overnight. They will run down existing plants over time. There will be precious little new investment. It will go elsewhere. Not just because of the new barriers to trade with the EU that Brexit will bring. But because Brexit guarantees years of political turmoil as the UK engages in a never-ending negotiation with the EU.

There is no going back to politics as they were before Brexit. There is no going back to the status quo ante. All is changed, changed utterly.

I suppose if you are a “Bollinger Brexiteer” there are some prices worth paying to “take back control”. But if you are one of the “Left Behind” and you see more and more good job opportunities disappearing by the day there comes a time when you have to ask if Brexit is worth it? Sure, ending freedom of movement will stop those Europeans coming here but if exiting the EU to achieve that means the jobs are going what’s the point?

I suppose it must be hard to take when your own union leader is supporting the very Brexit that is now destroying your job. While your immediate Honda union representative tells the BBC that “This closure is undoubtedly because of Brexit”, your pro-Brexit general secretary puts out a Tweet which says:

Very grave news emerging about Honda in Swindon. @unitetheunion is seeking urgent clarification of the situation. It is disgraceful that yet again hard-working, loyal workers hear fearful rumours about their futures via the media.

Not a mention that Brexit has created the conditions in which this decision was taken. Certainly, there may be other factors in play but the years of uncertainty that lie ahead as the UK struggles to define a new, and lesser, relationship with the EU market than it now has cannot have helped. Brexit may not be the only reason for the Honda decision but it may well have been the issue that tipped the balance.

As the former Labour Europe Minister, Dr Denis MacShane, put it:

Normally the UK’s main carworker union, Unite, would be exploding about the Honda plant closure. But Unite backs Brexit so has nothing to stay… Sad, they can’t tell truth

Despite the developing jobs carnage the UK political class still appears to have little idea what to do. I suspect that the reason for that is that they never bothered to learn about how the EU works in general, and, despite deciding to leave, never thought through in detail the actual leaving process.

A few days ago I read this tweet by Hillary Benn, chair of the House of Commons Exiting the EU Committee:

The basic problem with where we are on Brexit is that we have absolutely no idea what our future relationship with the EU will look like because we haven’t even started negotiating it yet. It’s like moving out of your own home before you’ve found somewhere else to live.

Now, Benn is one of the better-informed MPs and is widely seen as someone who regrets that the UK is leaving the EU. Yet a person of his intelligence does not seem to fully understand the A50 process.

In essence, that process specifies that you only get to negotiate your future relationship with the EU after you have actually left. You can negotiate the “framework” of that relationship before you go, but the granular detail only gets worked out after you have left and become a “third country”.

Keep in mind that it was the British that insisted on the inclusion of Article 50 when the Lisbon Treaty was being negotiated. They wanted a mechanism to exit the EU built in. In fact, it was a British diplomat, Lord Kerr, who actually drafted Article 50. You reap what you sow.

It had always seemed to me that a country leaving the EU should know in advance what it wanted its future relationship with the EU, post-exit, to be. It would have fully discussed beforehand the political and economic trade-offs involved. The people at large would be aware of the consequences of the decision they had made.

Brexiteer leaders in the UK, as a matter of deliberate policy, decided to avoid all discussion of future relationships between the EU and the UK less it split the leave coalition. They sold the UK electorate a “black box Brexit”, only to be opened and the contents revealed when the decision to leave had been taken. When the black box was actually opened it turned out to be empty. Theresa May, by then Prime Minister, quickly filled it with her own extreme definition of Brexit.

Her interpretation of Brexit, out of the single market, out of the customs union, as well as out of the EU’s political structures, was not grounded in any broad consensus. It has been suggested that the speech which set out her “red lines” was drafted by her then political advisor, Nick Timothy, without any consultation with her cabinet, never mind the wider Tory parliamentary party. Still less the Opposition.

The real problem that confronts the UK, even at this very late hour, is that there is still no broad consensus among politicians as to what relationship the UK should want with the EU after it has left.

Unfortunately, the British political system is a “winner take all” game where a party that wins a majority on the House of Commons can do pretty much as it wants. Torturous, months long negotiations to form a government, a la Belgique, par exemple, do not form part of the UK’s political DNA. Negotiations and consensus are not for the British.

ABBA summed it up: The winner takes it all, the loser standing small.

In the UK all politics is seen through this prism. If someone wins, then someone has to lose.

From the moment of the 2016 referendum result the upcoming negotiations between the EU and the UK were seen in this “winner take all” light. Of course, the UK would be the winner because, as the UK cabinet minister, Michael Gove, said “it held all the cards”.

Andrew Neil, a respected right-of-centre journalist and commentator, said on the night of the 2016 referendum:

“The European Union will be divided on how it should now deal with Britain. France & Germany will be divided – the North & South will be divided on what their negotiating position should be”

Talk about calling it wrong.

EU unity has been rock solid, while at times it has seemed that every UK cabinet minister, indeed every politician, had their own view of what Brexit should mean and they have not been slow in expressing it.

Such disunity has taken the UK to where it is today: weeks away from leaving the EU, the biggest constitutional and economic wrench since WWII, and still with no settled position on how to handle the matter.

While politicians dither over voting, business is already voting with its feet.

The sound of running feet will only get louder in the weeks ahead.

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