Close alignment with the EU is likely to become less attractive (not more) – and other misunderstood Brexit matters

Close alignment with the EU is likely to become less attractive (not more) – and other misunderstood Brexit matters

One of the most provocative refrains in the extended Brexit row is “people didn’t know what they were voting for”. I run a political intelligence agency that is briefed by officials on both sides of the Channel and, while our clients know what’s what, I fear it’s too often it’s the politicians who are in the dark.

For example, here are three key factors that seem to be misunderstood in parts of Westminster: first, even if we revoked Article 50, the EU27 would not allow the UK to resume full membership; second, close alignment with the EU is likely to become less attractive, not more; and third, No Deal would not be as disruptive as some people fear – but the UK would have to pay through the nose for that.

On the absence of any prospect of resuming full membership, it’s important to understand what the EU27 wants to achieve out of the Brexit process. The EU27’s primary objective is to retain regulatory influence with a UK government that makes ongoing financial contributions to institutions in which it has limited voting rights. That’s the basis of the draft Withdrawal Agreement.

The Commission and the most influential Member States want to pursue a more integrationist agenda for themselves, involving greater use of Qualified Majority Voting, a joint eurozone budget and a pan-EU fiscal, industrial and social policy. Despite claims that the UK is still a full participating member of the EU until the day we leave, the EU27 can already take decisions without the UK regarding all areas of policy-making, budgets and appointments – and they do. Even if the UK were to ask to stay on as a Member State, it would not be allowed to resume its veto over a project that is picking up pace.

In fact, some Member States see the prospect of the UK adopting de facto EU membership minus voting rights as a potential future model for other third countries that want to associate with the EU. They want that model to become semi-permanent and more widely used.

We also need to understand that close alignment with the EU is likely to become less attractive for the UK over time, not more so. Many EU27 national governments believe it is only a matter of months before the bloc suffers a significant economic downturn – with all eyes currently on Italy and the risk that it sets off a domino effect caused by a toxic combination of bad debts, weak financial instruments and cross-border institutional exposure.

Economically, it is not possible to pull up the drawbridge and immunise the UK economy from continental problems (and, arguably, we may be better off trying to get involved to limit the damage). But politically, it will become a much harder ‘sell’ to persuade voters that the UK should be permanently aligned with the EU – it could be like trying to convince people to rent a room in a house that’s already on fire.

So, what would happen if the Government goes the other way and the UK makes a ‘clean break’ with the EU27 this year? The answer, in many ways, is not much.

In the event of ‘No Deal’, the Commission expects Member States would act bilaterally to counter some potential economic shocks. Indeed, legislation has already been passed in a string of EU countries – including Germany, France, Holland, Italy, Spain and even Ireland – to do exactly that. Moreover, the Commission would be unable to obstruct or censure these bilateral actions as, in the Commission’s own words, they would be taken under “the derogation provided in existing legislation”. In most other areas, the Commission itself would preserve status quo arrangements – and even try to use those measures to expand its own remit through the use of emergency ‘Implementing Acts’.

There is a catch, though. In fact, three of them.

Mitigation measures would only have a temporary legal basis, with the Commission setting the limit for most no-deal programmes at between six and twelve months. The Commission would also try to focus any disruption on specific and contained areas to create incentives for the UK to reopen talks based on the Withdrawal Agreement – the Commission doesn’t want to mitigate all risk, but to be able to decide where that risk should be borne.

And, most significantly, the UK would be made to pay an extraordinary amount of money to the EU27 ‘in return’ for those mitigation measures – even though a direct link between the two would never be made. The Government could expect its third-party contributions to various EU programmes (especially those concerning development objectives and research) to go through the roof – and Parliament wouldn’t have much chance to stop it.

Whatever happens this autumn, negotiations between the UK and EU27 will continue. Brexit is a process, not an event. But I’m reminded of the Military Intelligence Corps motto that I served under years ago: ‘Manui Dat Cognitio Vires’ or ‘Knowledge gives strength to the arm’. All of our political leaders must make sure they have a true knowledge of the Brexit situation, or else they risk missing the whole picture – and they would be considerably weaker for that.