Self-Inflicted Chaos

The snap election in the UK ws supposed to give PM Theresa May her own mandate, and a strong one with many more seats that would provide her with the numerical support when it comes to Brexit negotiations. The outcome of the elections defied her expectations. In short time she has become a ‘dead woman walking’ who will definitely not be PM when Brexit negotiations conclude. What kind of negotiations will we see?

At this point, Theresa May clings to power by arranging a confidence-and-supply agreement with the Northern Irish Democratic Unionists Party (DUP). What in terms of domestic politics would be a further shift to the right is in terms of attitudes towards EU membership a quagmire: The manifesto of the Tories asks for leaving the Common Market as well as the Customs Union (CU). The DUP wants no new border on the Island and thus seems to favour staying in the Customs Union. This should make a working g confidence and supply agreement impossible. We don’t know about the substance of sich an agreement yet but obviously it would demand for substantial compromises. As it stands, the Tories are prey for the DUP, and thus the compromise will have to be offered by the Tories. Given the close majority of votes of an DUP-supported Tories’ government, such a compromise would mean to stay in the Customs Union.

The CU is a rather comprehensive institution, though. At face value it implies the abolishment of all tariffs of member economies and the instalment of a common external tariff. Moreover, members of the EU CU are giving up the right to negotiate their own trade agreements something Theresa May and her crew were extremely eager to do. The CU comes with critical elements that – according to the Commission – ‘extend to all aspects of trade policy, such as preferential trade, health and environmental controls, the common agricultural and fisheries policies, the protection of our economic interests by non-tariff instruments and external relations policy measures’. In other words, staying in the CU contradicts close to everything the Tories wanted to achieve with their version of Brexit. The EU CU does not imply free mobility of labor, though, and this may be the life line for a ‘soft’ version of Brexit. The political problems with such a path, however, are enormous as a strong number of MPs of the Tories are in stark opposition to such a compromise. If May would go down this path she would lose support and as a result the minority government would come to a quick end.

Brexit negotiations are supposed to start on June 19th. Already before we learned about the outcome of the snap election the concern was that the concrete negotiations line of the British government was rather murky. After the snap election, concerns turned into alarm as it is totally unclear what the minority government actually wants to achieve. Does it even have the political will and ability to accept the EU step-by-step approach that implies that both sides agree first at all on the divorce bill? Not to talk about the the actual British goal of the negotiations. This is a perfect political storm that will result in new elections soon. There is no guarantee, however, that voters will overcome the stalemate. So far, the debates about the implications of various forms of Brexit have been under-complex, to say the least. Both large political parties were enormously dishonest when it comes to the economic consequences of ‘softy’ as well as of ‘;hard’ Brexit versions. From a purely economic perspective, the idea of leaving the EU was always a stupid idea. However, the ghost left the bottle time ago and both parties are not in a position to get it back in. Another example, what it means when ideology guides political decisions.