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04 Jun 2021


UK-EU Relations

Australian Brexit” used to be an upbeat euphemism for a “no deal” Brexit outcome. Now, Australia promises a far more profound insight into the true nature of Brexit.

The free trade deal being negotiated with Canberra will give a first inkling as to the economic implications, and ultimate meaning, of the decision to leave the European Union.

The deal led to angry skirmishes in cabinet. On one side were a set of ministers favouring a zero-tariff agreement. For them, trade deals are a way of taking on entrenched lobbies and beginning the profound reform of the UK economy for which Brexit was simply an overture.

On the other were those, chiefly George Eustice and Michael Gove, worried primarily about the effect on agriculture, but also about the fact that the impact of cheap beef imports from Australia may well be disproportionately felt by Scottish farmers.

The argument seems to have been won by those favouring liberalisation. In purely economic terms, the stakes are low, but trade is just the opening salvo in the post-Brexit economic battles to come.

It is striking that four out of five of the authors of Britannia Unchained – a totemic work that called for aggressive deregulation of the UK economy – now sit in senior cabinet positions.

For believers in such ideas, trade liberalisation represents merely the first step on the path towards more fundamental economic reform.

Certainly, circumstances have changed since Kwasi Kwarteng, Priti Patel, Dominic Raab and yes, Liz Truss, laid out their ambitious economic manifesto.

As James Forsyth has argued, both the pandemic and the rise of China have contributed to a reassessment among Conservatives of the appropriate role of the state in economic management.

This makes the choice created by pursuing this deal even more profound. Put simply, the deregulatory agenda inherent in pursuing this agreement runs counter to the government’s interventionist post-pandemic economic agenda.

The fact that such choices have not yet been made (or even properly debated) is both remarkable and completely unsurprising. After all, a major feature of the 2016 Leave campaign was a refusal to define what, precisely, Brexit would mean.

Cultivated ambiguity was a necessary means of maintaining a disparate coalition, comprised of proponents of a liberal, free trading Britain free of the “shackles” imposed by Brussels, and of those arguing in favour of a future that would insulate the UK from the pernicious consequences of globalisation. In many respects, these agendas were incompatible. The Leave coalition was always wider than it was deep.

And that coalition presents another obstacle to economic reform. The Conservatives, judging by their electoral base, are now far more clearly the party of Leave than of a small state. There is no public appetite for the kind of deregulatory initiatives favoured by some in government.

Nearly nine in 10 are opposed to allowing the import of hormone-treated beef, three quarters feel the same about chlorinated chicken and more than half are in favour of the ban on GM crops (the figures for Leave supporters are 86 percent, 72 percent and 60 percent respectively).

Nor are red wall voters likely to share the enthusiasm of right-wing Tories for a smaller state or fewer protections for workers.

The kind of economic reform long dreamt of by Conservative Eurosceptics and which would, for instance, make it much easier to strike an ambitious trade deal with the United States, risks not merely antagonising voters, but splintering the Leave coalition.

Yet inaction, too, would have wider implications. After all, if regulatory divergence is not the ultimate objective of Brexit, then why has the government insisted on its right to diverge, with disastrous implications for many sectors and firms that rely on trade with the EU?

As Daniel Hannan has put it, there is “no argument whatever for abandoning the advantages of membership and then ignoring the opportunities of withdrawal”.

Moreover, if the government does not intend to break with the EU’s model of economic governance, why risk continued instability in Northern Ireland, when an agreement to keep the UK in sync with EU rules on plant and animal imports would address most of the concerns about the operation of the Northern Ireland protocol?

It is hard to see Leave supporters marching en masse to protest such a limited and technical move. To fail to diverge while paying the political and economic cost of demanding the right to do so is, to say the least, an unconventional strategy.

And so, some five years into the Brexit journey, we may finally be at the point of knowing what, precisely Brexit means. It is only then that we will come to know who, ultimately, Brexit is for. Ambiguity has run its course.

Choices will have to be made, and free trade agreements signal the first of these. Will Brexiters have the courage of their convictions?

By Anand Menon, director, UK in a Changing Europe. This article was originally published by the Independent.


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