The UK and the EU are nearing the end of the Brexit negotiations outlined in Article 50 of the EU Treaties. Yet, disagreements persist, with Michel Barnier explicitly rejecting the UK Government’s white paper for a future trade relationship, commonly referred to as the Chequers plan. The white paper proposed two crucial features. Firstly, partial membership of the single market for industrial and agri-goods. This would avoid the problem of regulatory border checks in Ireland. Secondly, there would be a ‘facilitated customs partnership’, removing the need for border checks in Ireland due to differing external tariffs between the UK and the EU after Brexit. Separately and crucially, the white paper also made clear the need for the Government to step up preparations for a scenario of leaving the EU with no formal agreement and, therefore, relying solely on our mutual WTO relationship with the EU.

With this plan now formally rejected, Theresa May finds herself in an incredibly difficult position. To reach the compromise that the Chequers plan entails required gruelling negotiations within her cabinet and party, resulting in the resignations of two Brexiteer cabinet ministers (David Davis and Boris Johnson) and extreme resentment within her own party at what many consider to be a betrayal of the Brexit vote. For that plan to be rejected now leaves her with perhaps three choices.

Firstly, May could compromise further with the EU, opting for full single market membership through continued membership of the European Economic Area (EEA) Agreement (we are already party as an EU state), with all the compromises that that option is widely (though often inaccurately) viewed to entail. This is an option that the EU has indicated repeatedly that it would be willing to accept as the basis for a future trade relationship. However, this would likely tear her party apart, perhaps the reason May has ruled it out continually from the start. Moreover, it is unclear if May could command parliamentary support for such a move, given that the Labour party is officially opposed to continued EEA membership.

Secondly, she could, instead, stand her ground on the white paper’s proposals and insist that the EU considers it more generously. However, this would continue to strain her party and of course has no guarantee of succeeding with the EU.

Finally, May could scrap the white paper proposal and declare an intention for a looser relationship with the EU, perhaps along the lines of the rumoured alternative white paper that David Davis’s old department is alleged to have been preparing. This may have the advantage of at least not violating the EU’s red lines in the way that the Chequers plan does, but it also would likely leave the Irish border situation unresolved, as well as leave the UK economy potentially vulnerable in other areas.

As mentioned at the start, she could utilise the increased preparations that the Government is making after Chequers in what is essentially a game of chicken with the EU. May would be gambling that if it were to come close to no deal, the EU would eventually agree to her proposals rather than risk a no deal scenario. With the recent interventions of Liam Fox and Jeremy Hunt, it would seem that this is May’s preferred strategy, with the proposals in question continuing to be the Chequers plan.

With such restricted options for the Government, there is a separate argument that the only way out of this deadlock is either through a general election in the Autumn, or a referendum on the terms of the UK’s exit. However, another referendum would suffer from some problems, one being that in order to vote on a deal to leave, there would need to be a feasible deal to leave in the first place. As the rejection of the Chequers plan has made clear, we are at the very edge of that being possible. It could not, for instance, be the case that one option in a three-option ballot was the Chequers plan, as the EU has already said that they would not accept it. Instead, one of the options would need to be a feasible deal, such as full EEA membership.

As for the option of a general election in Autumn, it’s not clear that this proposal would solve anything either. Labour’s Brexit position is as incoherent as the Conservatives’, their policy now being, like the Conservatives’, substantially different to that outlined in their last manifesto. It is hard to see any incentive in a general election for either party to put forward realistic (and therefore inevitably compromising) proposals on Brexit. In fact, the British Election Study found that, in the 2017 General Election, Labour’s deliberate ambiguity over Brexit helped their result.

Fundamentally, what is required is a degree of honesty that the Government and the opposition is simply incapable of or unwilling to engage in. May has come closest with her Chequers plan, making it clear, however belatedly and however flawed the plan may have been, that regulatory alignment is a necessity to avoid a problematic border in Northern Ireland. That, at least, was a step in the right direction.

She is, however, still stuck, unable to compromise further in order to achieve a Brexit that the EU could accept according to its current negotiating mandate and unable to retreat to a looser relationship without severely risking the Irish border in the future. This is in no small part due to the need to appease her own hard Brexit MPs, who airily described a no deal scenario as ‘nothing to be frightened of’, but simultaneously criticised the government for not adequately preparing for this apparently harmless Brexit possibility. As such, her current approach of accepting no deal unless the EU accepts the Chequers plan seems to be the only move she has left politically.

But, rather than play a game of chicken with the EU which has no guarantee of not ending in no deal and thus severely risking the UK economy, May (or perhaps a different conservative leader) could commit to remaining in the single market through the EEA Agreement. This at least can give the country the certainty of being accepted by the EU and remain and leave voters, as a compromise solution to a close referendum result, whatever the ideologues on both sides may say. Because the Government has wasted so much time already, it may unfortunately be the case that we need to seek an extension to the Article 50 negotiations to facilitate this change in direction or, instead, sign the EU’s proposed withdrawal treaty, including the transitional period and the EU’s Irish border backstop. The UK could then negotiate the EEA solution during the transitional period.

Either way, we are no longer at a point where we have the time for easy options. They are all difficult and they are all going to upset different groups of people. But most people, I would think, would prefer a compromise that everyone can gain something from, rather than the economic catastrophe of no deal that benefits no one.


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