Britain is being led to an epic act of national self-harm

Will Hutton in The Guardian

Every day in Britain, 14,000 trucks come from and head to the European Union. If there is no Brexit deal with the EU, is every one of those trucks going to be inspected as they bring vital food and goods into the UK to see that the right tariff is being charged and correct regulation observed? If some trucks get delayed or traffic volumes plummet, who will organise food rationing in our supermarkets? Five days before a general election called to give the government a negotiating mandate for leaving the EU, is anyone aware of the risks? 

Equally, a quarter of British exports with the EU pass through one single port, Calais – £3bn a month – with zero border controls or inspection. Who in Calais is going to inspect these goods to see if they correspond to EU rules if we crash out with no deal? Has France any interest in investing quickly in the customs structure to keep British exports flowing? The M20 and M2 will become gigantic truck parks as drivers wait to be inspected. You might think that, just as a precautionary measure, as the prospect of the exit talks collapsing is less than two years away, the UK government would be investing in customs inspection depots in our great ports and along the land border with Ireland and also offering to build similar structures in France to ease the inevitable congestion on UK roads. Surely someone, somewhere might have asked these questions?

Nothing is being done at all. Mrs May and her breezy lead negotiator, David Davis, offer platitudes about Britain embracing the globe and no deal being better than a bad deal, but even the most innocent negotiator in the EU team can see this is vainglorious posturing. They are betting on a deal being struck – negotiators with few cards, nor making sure they hold better ones. As matters stand, the consequence of no deal would be calamitous.

For there are multiple areas where the same logic applies. It could be landing rights at EU airports or the export of drugs, suddenly to be treated as needing regulatory approval because they will come from a foreign country. There is the vast trade in dealing in euros in the City of London, surely certain to be repatriated to an EU member state. British universities will be barred from bidding for research grants. Some 55,000 EU nationals work in the NHS: are they to return and who is to replace them? An estimated 5,500 firms in financial services hold 330,000 passports to allow them to sell financial products across the EU – one of our few successful exports – with no questions or inspections asked. Again, this privilege is about to go in under two years. Companies with multiple operations around Europe, including Britain, will find that freely moving parts, people and data suddenly cannot be done.

For more than 40 years, Britain’s industrial policy has, in effect, been membership of the EU; 485 multinationals have their global or regional headquarters in the UK and core parts of manufacturing have been revived by foreign investment. At best, that now stagnates; at worst, they leave. There is no corner of British economic life that does not face disruption bleeding into mayhem as a consequence of no deal. The politician who declares that no deal is better than a bad deal is either supremely ignorant – or lying.

Which is why any economic forecaster who looks coolly at the facts has to project a fall in British trade. The World Bank believes that if Britain switches from single market membership to trading with the EU on World Trade Organisation terms – the “no deal” option – then British trade in goods with the EU will halve and trade in services will fall by 60% as these effects work through.

Yet that is only the beginning of the disaster. To keep exports of goods and services flowing to the rest of the world on the same terms as now, even before negotiating new deals, Britain will have to renegotiate 759 agreements with 168 countries that are now held by the EU, as the Financial Times disclosed last week. That is 759 opportunities for other countries, knowing our plight, to try to negotiate something better.

The clock is ticking. Decisions on where companies place exports and source imports in 2019 have to be taken in 2018. In reality, Britain has to find solutions to all these issues in less than 12 months.

It simply can’t be done within the time, nor is any network of replacement deals going to be superior to the ones we already have. Britain’s growth rate is at the bottom of the G7 and investment is falling. The Conservative manifesto commitment to leave the single market and customs union and seek a trade relationship outside any of the EU’s frameworks – not the EEA or even Efta – is a declaration of economic war upon ourselves. We are heading towards a first-order economic debacle. In Whitehall, morale is at rock bottom. Any civil servant who dares brief the prime minister or her inner circle on these realities is frozen out.
The EU could negotiate a British specific trade deal if it chooses, but there will be a high budgetary price. Britain, in essence, will be required to carry on contributing to the EU budget at current or even higher levels if it wants to keep vital goods flowing into the country in a customs deal, no less vital exports flowing out and some transitional arrangement during which we can try to renegotiate 759 trade agreements. Services, ranging from finance to the creative industries, in which Britain has a competitive advantage, can just take their chance. All influence on EU decisions will be lost. Some “deal”.

Britain will have to accept whatever the EU offers at whatever price. If the right of the Tory party and its media allies declare it unacceptable, the EU will shrug its shoulders and walk away. In any case, the European parliament, whose assent is required under article 50, will want tough terms to deter others from leaving. Nor will the government find popular support for no deal: Leavers voted to take back control, not for economic calamity.

A YouGov poll reports that 50% believe Britain should stay in the single market – only 29% do not and a narrow majority would even accept freedom of movement as the price of staying in. On these questions, Mr Corbyn and his party have been limp.

Britain is about to embark upon a national act of self-harm on an epic scale. The country, as it makes its decision on who it wants to lead the most important negotiations since the war, deserves to be warned. Instead, silence reigns.