Expect a shift in the politics of Brexit

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It’s the summer holiday season, which lends an air of somnolence to all things, including Brexit. Even the fractious debate over Northern Ireland’s trading arrangements has been temporarily suspended after the European Commission decision to pause legal actions against the UK over the vexed protocol.

But the summer snooze button is just that, a temporary period of dozing before the familiar questions are reawakened when Brussels gets back off the beach in September and the new Westminster parliamentary session begins on September 6.

The Ireland situation will have to be resolved, but domestically there are also some intriguing signs that a Brexit debate that has been heavily muffled by dealing with the Covid-19 pandemic could take a different tack in the autumn.

Over the past eight months a generous furlough scheme and the huge success in delivering a coronavirus vaccination programme have enabled the government to obscure some of the practical effects of its rather minimalist Brexit deal, for traders and tourists alike.

But as travel and workplace restrictions lift and the fiscal anaesthetic of furlough starts to wear off alongside inflationary pressure linked in part to labour shortages caused by the ending of free movement, there may yet be space for a shift in the politics of Brexit.

There are signs that the opposition Labour party might be prepared to enter back into a Brexit debate that it has largely avoided, as it tries to recapture those in the “red wall” that it lost to the Tories in 2019.

Labour’s reticence is understandable, since the delivery of Brexit became an issue of trust among those new Tory voters. But, as the lived experience of Brexit feeds through to businesses and workplaces, there is scope for that conversation to change.

Sir Keir Starmer, speaking to my colleague George Parker last week, said there was “space to talk about Brexit and the Brexit deal”, echoing the line of his shadow chancellor Rachel Reeves, a former Bank of England economist who has talked about the need to fix “gaps” in the Trade and Cooperation Agreement (TCA) brokered by Lord David Frost.

That call to fix the gaps in areas such as veterinary deals or mobility agreements is one that business has been pushing for a while behind the scenes, though with relatively little success given the ideological red lines of this government.

But that doesn’t mean they should give up. The government has opened a consultation over a permanent domestic advisory group for business on the implementation of the TCA. That could just be an empty talking shop, but it doesn’t have to be. 

And even if it starts that way, it can evolve under pressure. This week James Ramsbotham, the outgoing chief executive of the North East England Chamber of Commerce, was doing just that with a letter to Boris Johnson urging him to take steps to mitigate the impact of Brexit on manufacturers in that part of the country.

The letter (worth reading in full) raises issues that will be familiar to Brexit Briefing regulars — from customs delays to rules of origin complications and trucker shortages — but really makes the more fundamental point that the politics of Brexit need to reconverge with the economics.

As he concludes: “Damaging the ability of businesses who create wealth for our nation, to do so, will make this country so much poorer. To do so when we are striving to recover from the pandemic, with all of its resulting debt, will burden this nation for decades.”

Speaking to the Briefing, Ramsbotham is clearly exasperated with a government that, when confronted by business with practical problems created by Brexit, “just doesn’t listen to what it doesn’t want to hear”.

Still, we are in very early days, and as the economics of the post-Brexit world start to shift post-pandemic, so might the politics.

One of Ramsbotham’s members who believes this is Heather Mills, the vegan entrepreneur who grew up in the north-east and employs 400 people in her three UK factories that export vegan products all over the world, including the EU, the US, Australia and the Middle East.

She’s had a miserable Brexit, she tells the Briefing, saying that relatively speaking it is now a “breeze” exporting to distant countries such as Australia, the Middle East and the US compared with the nine EU countries on her doorstep that take her products, thanks to the barriers thrown up by the TCA. 

This, she says, is clearly not a sustainable or sensible state of affairs. As one example, Mills cites a recent £250,000 consignment of vegan cheese samples that was destroyed after wrongly being put in a freezer while waiting to clear EU customs formalities: you can’t freeze cheese, vegan or otherwise, she explains, since it just turns to a useless crumble if you do. 

“It’s essential the deal is fixed,” she said, welcoming both Ramsbotham’s letter and his decision to speak plainly about basic problems. “I love how vocal and straight-talking he is, and there is not enough of that going on from business.” 

She also believes, based on interactions with many of her workers, along with old school and family friends from her home town of Sunderland who voted for Brexit, that the government would be unwise to believe that the economics of Brexit can be perpetually obscured by hyping the identity and sovereignty aspects of the decision to leave the EU.

“The government needs to be less arrogant. People I know voted for Brexit and Johnson because he told them it would bring better jobs and more of them. And they believed him. Now I hear a lot of them say they feel duped,” she said.

It may be that Mills is hearing what she wants to hear (Brexit is full of echo chambers) but it may also be, as Starmer and Reeves alluded to in recent interviews, that space can emerge to fix practical things that obviously need fixing, while the political gloss of identity and sovereignty can still be liberally applied. 

Those two aspects of Brexit were never mutually exclusive, in my view, despite Frost’s decision to do a deal that prioritised notions of political sovereignty over market access. After all, did anyone really vote for Brexit to see their vegan cheese destroyed in a customs’ warehouse freezer?

Do you work in an industry that has been affected by the UK’s departure from the EU single market and customs union? If so, how is the change hurting — or even benefiting — you and your business? Please let me know and keep your feedback coming to [email protected].

Brexit in numbers

One hard thing for the government is that, unavoidably, the frictions caused by Brexit are front-loaded, while any of the benefits of regulatory independence from the EU will take longer to emerge, and are frequently overstated by politicians. 

As my colleague Attracta Mooney reports in a piece on the investment world, the search for dividends from regulatory divergence always has to be counterbalanced by diverging unnecessarily for firms operating in global marketplaces, and by rules that are often in practice set in Washington and Brussels.

The investment industry, which has transferred more than £100bn in assets and funds from Britain to the EU in response to Brexit, broadly welcomes moves to make the City more competitive, but also wants the unintended consequences of any unilateral UK regulatory moves to be carefully considered.

In practice, many expect regulatory divergences to be small, but they may still be vital in helping the UK steal a marginal advantage over competitors, particularly in emerging fields such as artificial intelligence, fintech and net zero, where new regulatory architecture is going to be required.

And, finally, three unmissable Brexit stories

The good news about Brexit, writes Helen Thomas, is that there are some areas of financial regulation everyone broadly agrees can be changed to the benefit of industry and the economy. However, she has bad news too: that there is looming tension between the hopes of businesses, concerns of regulators and the politics of a push for “competitiveness” for Global Britain. It’s time to stand by for a City tussle over regulation, she says, in her latest column.

It seemed like a success for Brexit Britain — the rollout of mass vaccination was heralded as something that simply could not have occurred if Britain had not left the EU. However, as the FT editorial board writes today, the EU campaign to vaccinate its population against Covid-19 has turned into a success. The bloc as a whole has overtaken the US in terms of first and second doses per 100 people and should surpass the UK very soon. Can Europeans take comfort from this?

Kellingley Colliery was Britain’s last deep coal mine and when the 450 workers at the North Yorkshire pit hung up their hard hats six years ago, it represented the end of a long industrial — and political — tradition. The surrounding area has become increasingly Conservative as its employment base has diversified and mining fades into history. But when Sebastian Payne spoke to local residents last week, a comment by the prime minister had infuriated them. Find out why it reflected a bigger problem for the Conservatives.

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