The UK government’s Brexit strategy: What we know so far

It has been a long summer for those of us wondering what exactly Brexit is going to mean in practice. Since the initial commotion over the appointments of Boris Johnson (Foreign Secretary) David Davis (Brexit negotiations) and Liam Fox (International Trade) subsided, there has been an eerie quiet over the summer break about what the UK’s strategy would be for the forthcoming negotiations.

Beyond Prime Minister Theresa May’s mantra that ‘Brexit means Brexit’, a drip feed of economic information showing that the anticipated post-Brexit crash in consumer confidence has not – for now – emerged, and speculation about whether May’s summer holidays in Switzerland were in part spent studying the EFTA model, there has been precious little actual information.

The past few days have felt like something of a watershed – a genuine start of term – with Theresa May’s visit to the G20 meeting in China, and the House of Commons debate on a petition for a second referendum forcing the government to unveil a little of what they are thinking. So what do we know now that we didn’t before?

The million dollar question on the UK’s negotiating stance has been whether Britain will pursue a ‘hard’ or ‘soft’ Brexit – or in other words, whether it will prioritise strong immigration controls and a substantial reduction of contributions to the EC budget over continued access to the single market (especially in regard to financial services).

Any compromise on the former is likely to create outrage among Brexit voters, but the latter is considered to be vital by Chancellor Philip Hammond. Finding a balance between these competing demands would effectively constitute the ‘unique’ deal that Theresa May claimed ahead of the Hangzhou G20 that she wants.

It is highly improbable that EU leaders could satisfy the twin desires of the UK without boosting insurgent parties in their own countries.

EU leaders want to remain on good terms with a UK outside the EU. They have indicated privately over the summer that the UK is an entirely different case to Switzerland, Norway, Iceland and Lichtenstein – and that it probably merits different treatment.

However it seems highly improbable at this point that they would be able to go far enough to satisfy the twin desires of the UK without boosting insurgent parties and anti-EU sentiment in their own countries by making exit look like an attractive proposition. For leaders of the EU27, their responsibilities are firstly to their own domestic constituencies and secondly to the future of the European project. Achieving a positive new relationship with the UK falls well below these priorities.

How May’s government can square this circle is still an enigma, and is likely to remain as such for years. Article 50 negotiations, the UK’s trade deal with the rest of the EU, and then bilateral deals with other member states on citizens’ reciprocal rights are all yet to be hammered out, but a few clues were dropped yesterday by political leaders from the UK and elsewhere:

–      May seems to be looking for a compromise around freedom of movement. In ruling out an Australian-style points-based system as unworkable for the UK, she refused to rule out some kind of preferential deal for EU citizens in the Britain’s future migration policy. It is possible that the idea of trying to negotiate the freedom to come and do a job in the UK already secured (as distinct from the right to come and seek work) may be on the table for her. If achieved, this would likely have reciprocal implications on the rights of UK citizens in other member states, as explored in ECFR’s Brits Abroad report earlier this year.

–      There is clear pressure on Theresa May from her colleagues in Parliament to find some way of staying in the single market. In addition to the statements in favour of retaining access to at least key parts of the single market heard in yesterday’s debate, Nicola Sturgeon and SNP politicians responded overnight saying they were firmly of the view that this was in Scotland’s best interest and were willing to work across party lines to secure this.

–      David Davis’ vision of a UK with ‘huge and exciting opportunities’ falling at its feet as a result of the Brexit decision is going to be difficult to realise. Ahead of the G20 summit, the Japanese government issued a memo setting out serious concerns about the global uncertainties created by the Brexit decision. President Obama also reiterated his pre-referendum view that Brexit was the wrong decision, and that a UK-US trade deal would not be among the US’ immediate priorities.

–      Despite the official subject of the debate in the House of Commons being the petition to hold a second EU referendum, which has amassed over 4 million signatures, it seems very unlikely that the government will commit to either Parliament or the UK people having a second vote. This seems to apply equally to the Brexit decision itself, the Article 50 process (as advocated by March for Europe demonstrations over the weekend) and even the exit deal that the UK eventually secures with EU colleagues. A vote on the latter was advocated by MPs from across the benches in yesterday’s debate, but David Davis’ only concession was to commit to keeping Parliament “regularly informed, updated and engaged” on the process.

It seems very unlikely that the government will commit to either Parliament or the UK people having a second vote.

Following the debate in Parliament, David Davis has come in for criticism from the UK’s Labour Party for “more empty platitudes”. The few crumbs of information outlined above underline, firstly, how little we know about how the Brexit process is going to work; and, secondly, what a long and tortuous business this is all going to be.

This is frustrating for observers and policy wonks, but the uncertainty has more worrying ramifications for the Brexit process itself. EU leaders’ exasperation at the apparent indecision and unpreparedness of the UK government is growing. Ultimately, this could erode their early willingness to cut a deal in line with the UK’s interests.