Why Labour Leave believe the Government must prioritise preparing for a no-deal outcome

Why Labour Leave believe the Government must prioritise preparing for a no-deal outcome

Regretfully, Labour Leave believe Britain must now make its priority preparing for a ‘no deal’ outcome: reverting to standard global trade, under WTO rules. Our proposal is the following: take the £60-100 billion that the EU wishes to extract from us and pay it to ourselves instead – to smooth over the transition to WTO – a ‘transition fund’.

If the EU wants to come to a reasonable agreement in good time – so much the better. But we should assume firstly that it has no intention of doing so; secondly, that it is much more likely to if Britain is genuinely preparing for ‘no deal’; and, finally, that reverting to standard trade is really not the calamity it is depicted to be – it is the basis on which most of the world trades.

It seems quite clear now that the central aim of the EU is to punish Britain: to extract as much money as possible, to refuse to negotiate in a grown-up way by insisting we agree a fee before discussing what we get for our money and to make Brexit so calamitous for the British people that no other country will ever want to leave. Of this there can now be little doubt.

Yanis Varoufakis, the former Greek finance minister, told Radio 5 Live recently that the EU doesn’t want a trade deal with the UK:

Brussels does not want a mutually advantageous deal and London has not realised it … the fallacy lies in the presumption that those who are conducting the negotiations from Brussels and their political masters in Berlin and Paris, are interested in an economic outcome. They’re not. They’re far more interested in making an example of Britain so that others around the European Union get a lesson that anyone who opposes their authority gets crushed.”

In late October, Donald Tusk, President of the European Council, raged that unless the EU27 remain united, “the negotiations will end in our defeat”. His words reveal more than he intended. For the EU, this is a battle – not a negotiation to find mutual benefit. One side must be ‘defeated’ and it’s not going to be the EU.

The director of a pro-EU think tank reported that this summer the Polish foreign minister told him that “the EU27 may disagree on everything but they agree on one thing, which is that the UK should pay as much as possible for as long as possible”. This is an odd way to talk about a ‘friend’ and ‘neighbour’, and makes clear the EU’s goals for these talks. It came as no surprise to learn the EU was attempting to overcharge Britain by as much as £7 billion on pension liabilities.

In September the former Governor of the Bank of England, Mervyn King, warned that the talks are a waste of time:

“The European Union is a political construct and they have political objectives… I think the idea that we’re going to get soft treatment from the rest of the EU is false.”

All the while, parallel negotiations have been ongoing between the EU and our more militant Remainers: Blair, Clegg, Clarke, Adonis, Corbyn and more have all been along for meetings with Barnier and Juncker. Calls for a second referendum from senior Remain politicians are now regular. It’s not rocket science to see what is afoot: a co-ordinated effort to offer Britain the most punitive terms imaginable, with which the British will then be presented in a second referendum – crawl back to the EU or face a financially ruinous bill to trade.

Calls to ‘rule out no deal’ must be understood in this context – it is simply begging the EU to give us the worst possible deal, and everyone knows it. The EU’s apparent concessions in October are simply theatre to keep Theresa May in place – they have no desire to reach a reasonable deal.

We cannot continue walking into this trap. Instead, we propose the Government starts immediate preparations for reverting to standard global trade, the basis on which both the US and China trade with the EU, and create a ‘WTO transition fund’ with the money the EU is demanding: likely to be around £60 billion or more. Britain does, after all, do more trade with the rest of the world than it does with the EU under the cherished Single Market.

Because the UK has a large trade deficit with the EU, our exports would incur tariffs of around £5 billion while our imports from the EU would accrue tariffs of £13 billion, an £8 billion a year surplus. Add to this savings from our net contributions to the EU, around £9 billion a year, and in rough terms, we could create a four-year transition fund of £108 billion.

Plough that money into smoothing the process: stimulus spending, state assistance to industries most in need, state aid where suitable – the WTO’s rules on which are far less onerous than the EU’s – rebooting our fishing industry, upgrading our customs infrastructure and much more besides.

This is a far more attractive a prospect than being shafted by Berlin and Paris in a last-minute ambush. Britain can then negotiate a free trade agreement with the EU at a more leisurely pace – if the EU wants one, of course. With no ticking clock hanging over us, we would be free to negotiate on the basis of mutual interest – even if it took some years.

We want cultural exchange, academic co-operation and immigration to continue; Britain is and will remain a European country. We want Britain to be a very close friend, neighbour, ally and trading partner to the EU. But because of the EU’s behaviour thus far, however, we now feel the approach outlined above is the best way to achieve that.