There are now only two weeks remaining for the UK and the EU to secure a post-Brexit trade agreement before the current transition arrangements expire. John Ryan writes that whichever way Boris Johnson and his government decide to move next, it seems inevitable the process will do irreparable harm to the UK’s interests.
Zugzwang is a situation in chess in which a player is under the obligation to make a move and in which any move available makes their position worse. Because chess players are forced to move alternately, a player in zugzwang has no option but to cause their own position harm. Guided by its red lines and hard Brexit stance, Boris Johnson’s government has manoeuvred itself into a zugzwang situation.
The main expected economic consequences of a looming no deal Brexit are that WTO tariff levels will be applied to UK exports to the EU, mostly around 5%, but 10% for automobiles, which will render UK production in this sector uncompetitive, and lead to plant closures. Looming also are devastating 40-90% tariffs on exports to the EU from sheep and cattle farmers.
Consequently, EU and international enterprises that include parts from the UK in their supply chains will switch away from the UK. The UK as a location of choice in Europe for foreign direct investment in the manufacturing industry will start to be eroded by other more attractive locations in the European Union. Big international manufacturers wanting to avoid disruption to their supply chains may move elsewhere in the EU.
There are already labour shortages in the UK, for example in the NHS, agriculture, and construction. This problem will be exacerbated with skilled labour choosing other locations in the EU. There will be a further, already ongoing depreciation of the pound, reducing UK living standards, and a probable credit rating downgrade. That will push up inflation, making the country poorer. While lower rates should boost consumer and business borrowing and spending, it will probably also mean a further weakening of the pound, making imports more expensive and pushing up the cost of living even more.
A smaller economy means fewer tax receipts, which means less money in government coffers. Prime minister Boris Johnson has suggested he will spend tens of billions of pounds that the government does not have on everything from extra expenditure on defence to building a bridge from Great Britain to Northern Ireland. Markets will probably take fright – pummelling the pound yet more and making it even harder for people to make ends meet.
The UK has benefitted from respect worldwide as a place of common sense, governmental competence, a sound legal order and trustworthiness. This will be shattered, in favour of an alternative image that has long been lurking in the background, that of an unreliable partner.
Boris Johnson pictured in his House of Commons office on 16 December 2020, Credit: Andrew Parsons / No 10 Downing Street (CC BY-NC-ND 2.0)
The Johnson government’s reckless hard Brexit stance is also putting the union of the United Kingdom at risk. The warnings are already there. Support for a second Scottish independence referendum will grow with a no deal. Support for the reunification of Ireland will also grow as a no deal Brexit leads to renewed border controls. The EU is amazed at how Johnson’s government can be so cavalier in its attitude towards Scotland and Northern Ireland.
A no deal Brexit would mean a hard border across the island of Ireland. This would now be a border between the UK and EU – and the bloc could not guarantee that goods would not be smuggled into its market if the border were open. Now, the economies of Northern Ireland and the Republic are intertwined. People and goods – particularly agricultural ones – cross the invisible frontier frequently, often many times during their production process. If border controls are imposed, both economies will be severely damaged.
While there are many factors, the UK government is ultimately fully responsible. It wanted Brexit. It created the chaos. It created the delay. It has not done the preparation. But most of all, Johnson’s government is vastly incompetent and has limited understanding of the country’s relations with the EU or experience of trade negotiations. Very few if any of the current Cabinet ministers would have made it into Margaret Thatcher’s or Tony Blair’s cabinets. The idea that in the real world it takes time, expertise and competence to make things work has clearly not occurred to them. And that is why they are to blame and no one else is.
The failure of the UK over the past four years is to realise why the whole Brexit process has been so painful – it is the balance of power of the UK population at nearly 67 million against that of the EU at 447 million. Even without the UK, the EU has a single market comparable in size to that of the US or China. Britain has made a series of painful concessions – most notably by agreeing to a separate status for Northern Ireland, which will see customs checks on goods crossing the Irish Sea, effectively dividing the United Kingdom.
The rhetoric from the UK government under Boris Johnson has been uncompromising, ready to put the fragile peace in Northern Ireland at risk, but this approach also reveals its ignorance to the wider implications of this stance. The uncomfortable truth is that the repercussions of this reckless approach would be much wider than UK-Ireland and UK-EU relations. It would put the ‘Global Britain’ vision and with it its centre piece of a US-UK free trade agreement at risk before it has even come to life. The only certainty is that whichever way Johnson and his government decide to move next, it will cause irreparable harm.
Note: This article gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: Andrew Parsons / No 10 Downing Street (CC BY-NC-ND 2.0)
Surely an academic article is suppose to explore pros and cons and reach an objective conclusion ?
It seems more like a re-hash of old scare stories – based on looking through the wrong end of a telescope.
Tariffs on exports ?
The UK makes 1,300,000 cars – of which 80% are exported.
Why can’t more be sold in the UK – tariff free ?
Lamb is a similar story. Each year around 80,000 tonnes are imported – and the same volume exported.
So farmers may have to prepare the meat differently – but how hard is that ?
Labour shortages ?
With nearly 1,000,000 extra people arriving every 3 1/2 years, why are there labour shortages ?
Because the EU’s “free movement” prevented the UK from limiting immigration to meet claimed shortages. (Surely home-grown training is preferable ?)
As a result, the UK has had to bear higher housing costs and costly pressure on public services and transport.
As for “smaller economy”, Covid lockdowns have done that.
Brexit was never likely to result in a smaller economy. Even critics only claimed slower growth.
How do these sentences fit in an academic piece ?
“The UK has benefitted from respect worldwide as a place of common sense, governmental competence, a sound legal order and trustworthiness.
This will be shattered, in favour of an alternative image that has long been lurking in the background, that of an unreliable partner.
The Johnson government’s reckless hard Brexit stance.”
“Hard” Brexit was an invention of EU-evangelists.
People voted to “Leave” – not to be subject to EU laws or the ECJ (or pay £ billions for the “benefit” of a £ 90 billion p.a. Trade Deficit)
Re-hashing “hard border” and it becomes harder to comment diplomatically !
The UK Government made it crystal clear that it had no intention of installing border posts.
And as Irish Ministers revealed recently …. they were never going to install infrastructure either.
(That said, did anyone notice the Guarda causing mile-long tailbacks at the border for Covid checks ?
Why so little comment by Brexit commentators ?)
As for “leaky borders”. Has the author been to the Swiss / German border – from Basle to Konstanz ?
Dozens of unmanned crossings. German enclaves surrounded by non-EU Switzerland.
All right in the centre of Europe – not on the periphery.
How do EU worriers sleep at night ? Why is a “hard border” ot “inevitable” ?
Lastly “balance of power”. How do population numbers outweigh the balance of Trade ?
The EU needs the UK to carry on buying its over-priced goods.
But the EU realises that without protection from the EU’s Common External Tariff, UK buyers will soon be able to buy more products from the RoW, subject to zero or lower tariffs.
1/20
“The UK makes 1,300,000 cars – of which 80% are exported. Why can’t more be sold in the UK – tariff free ?”
If that’s an attempt at a serious argument then it’s beyond clueless.
The core UK car industry is composed of foreign-owned companies/subsidiaries and car manufacturers like Nissan aren’t going to avoid exporting cars to Europe just to placate Brexiteers, they’ll move production and continue selling cars to their largest customer base regardless. Businesses don’t care in the slightest about what suits your political agenda, they care about numbers. If business conditions are worse in the UK than they are elsewhere then they have no reason to be here.
Indeed, they’re already moving – though granted, you may have missed this as you seem to be stuck in around March 2016 given the nature of the rest of your arguments.
“beyond clueless” ?? I thought personal abuse wasn’t allowed … but hey ho !
Who said anything about:
“foreign-owned companies/subsidiaries and car manufacturers like Nissan aren’t going to avoid exporting cars to Europe just to placate Brexiteers,” ???
If imports attracted Tariffs – then UK customers could switch to non-Tariff cars made in the UK (if price was determinant).
“Businesses don’t care in the slightest about what suits your political agenda, they care about numbers.”
Back at you !!!
“If business conditions are worse in the UK than they are elsewhere then they have no reason to be here.”
IF conditions are “worse” (define “worse”)
…but with pre-Covid demand at around 2,000,000 cars p.a., the UK remains a good market to be in, assuming UK consumers actually like Nissans (or whatever)
“they’re already moving”. Who is stuck in 2016 ??
“Nissan’s Sunderland plant in northeast England will play an important role in the firm’s future, executives said in May 2020, despite plans to downsize elsewhere in Europe”.