No Deal Brexit Is a Win-Win For The EU

The EU does not want a No Deal Brexit. It would involve disruption for EU member states. The EU, holds out the prospect that the UK will pull back from the brink, either because parliament will force that on Johnson, or because, Johnson, knowing that a No Deal will be catastrophic, will look for some means of avoiding it, especially when, the markets begin to factor in the likelihood of No Deal, and the Pound tumbles, and financial markets crash. Their preference is that Brexit should not happen at all, but that if it does, it will be based on the deal they already negotiated with May. They hope he might yet, take up the baton from Theresa May's deal, and be able to get Tory Brextremists to back it. But, the EU will not give Johnson further concessions. They certainly will not drop the backstop, let alone any of the other demands that the ERG are making. The EU, will not destroy itself on the altar of avoiding a No Deal Brexit. After all, in the end, if a No Deal does happen, it will be a win-win situation for the EU v UK. 

In a No Deal Brexit, the EU will face some inconvenience, but the UK will face chaos. Brexit itself means that trade between the UK and the EU will be hit, but a No Deal Brexit would mean that it would immediately suffer a dislocation. But, the EU is a $14 trillion economy, whereas the UK is a $2 trillion economy. Besides being able to continue trading inside the single market unimpeded, the EU has trade deals with over 40 countries, and economic blocs around the globe. The UK has negotiated just four, and they are with places like the Faroe Islands. The longer term effect on Ireland would be more significant given its degree of trade with Northern Ireland, and the rest of he UK, but in the event of a No Deal Brexit, its likely that things will never progress to these long-term effects. 

In the case of a crash out t, the chaotic effects will manifest themselves quickly. A crash in the Pound, collapse of UK financial markets, and the property market, will already have occurred, but will be accompanied by soaring inflation, and interest rates, as a result both of the crash in the Pound, and of the shortage of basic necessities such as food, medicines and possibly energy. The chaos will be manifest immediately in the fact that many UK planes will be grounded, even ferries may not have the right certification. That will apply to UK registered lorries and so on. 

Although Ireland, will suffer, in such conditions, because of the degree of its trade with the UK, and Northern Ireland, it will not be the one suffering from its planes and ferries being unable to move; nor will it be unable to continue getting medicines, and so on, precisely because it is in the EU, and will continue to have all the necessary certification etc. So, whilst Britain goes into large-scale chaos, and Northern Ireland, which depends overwhelmingly on an open border and trade with the Republic, will go into meltdown, the immediate effects on the Republic will be relatively mild during that period. Similarly, although the EU will also face some short term disruption during that period, it is nothing its much larger economy cannot handle, and it is quite able to also provide support for Ireland during this period too. Indeed, the EU appears much better prepared for a No Deal Brexit than does Britain, despite requiring less preparation for its effects. 

The EU does not want a No Deal Brexit, because it will mean disruption, whereas some kind of negotiated Brexit would create conditions under which Britain might slowly slide back into the EU over the next decade, as the current elderly British Tory voters, who pushed through Brexit, die out, and the younger Labour voters, who back EU membership by around 80%-20%, throw their weight in further elections behind pro-EU parties. But, the EU are not going to make concessions to Johnson and his government to avoid No Deal. It would mean undermining the EU Single Market, and thereby the EU itself. So, if Johnson is daft enough to push the No Deal button, they will let him. 

The EU knows what the consequence will be. It will be chaos and disaster for Britain, which will cause short term disruption only for the EU and particularly Ireland. The EU knows that the almost certain consequence of the kind of chaos that will unfold in Britain will be civil unrest, and clamour for the government to go. The play book for these kinds of situations has been drawn up over long periods to deal usually with left-wing nationalist governments, but it works at least as effectively against right-wing nationalist governments. The first thing will be a run on the Pound. Although that often causes the FTSE 100 to rise, because the heaviest weighting in the index is large companies that make most of their profits overseas, this is misleading, because a look at the FTSE 250, of smaller companies shows that their share prices usually fall as a result of such falls in the Pound. 

A falling Pound means that the vast amount of goods that Britain has to import, especially food, as we come into the Autumn and Winter, becomes much more expensive. But, immediate Brexit chaos at the ports will mean that a lot of the food never gets to supermarkets anyway, and shortages will lead to hoarding, and profiteering, pushing prices much, much higher. To protect the Pound, the Bank of England will have to raise interest rates. That will crash financial and property markets even more. Already, we have seen property prices falling significantly in London, and across the country a similar picture has been unfolding over the last year. All of those elderly Tory homeowners that voted for Brexit, will soon begin to scream when they see the price of their house collapsing. 

If Johnson's government could hold out for more than a fortnight in such conditions it would be surprising. He might go for the use of the Emergency Powers Act, to introduce Martial Law, to quell the civil unrest, but that would spell the death of the Tories forever. The inevitable consequence would be the fall of Johnson's government, as the labour movement would, even with its current lacklustre leadership, be in the realms of opposing it with a General Strike, and action on the streets. Labour would undoubtedly win any election with a landslide, and would have to call for an immediate re-admittance to the EU, on whatever terms could be obtained. 

For the last 200 years, France and Germany have taken it in turns to try to create a unified European state, under their respective leaderships. Britain's role, as first the primary global imperialist power, and then as second fiddle to US imperialism, has been to try to prevent that from happening, and Europe becoming the dominant global power. A Britain mortally weakened by Brexit would be see the end of its historic role in the world. If Britain drifts off into the Mid-Atlantic, it will have destined itself to irrelevance; if it has to apply for readmission to the EU, it will do so as a supplicant, and having lost all of its current status within the organisation. 

Suffering even significant disruption for a few weeks, whilst Britain goes through such death agonies, will be a small price to pay for the EU, and particularly France and Germany, to see their old enemy Britain so severely reduced in stature. A few weeks of inconvenience for the EU, will be well worth it, if it leads to Britain having to crawl back in, which will mean that the problems that would have affected Ireland in its longer-term relations to Britain, would then not happen, and as one consequence could be a United Ireland, it would forever change the balance of relations between Ireland and Britain. 

But, it has other short term benefits for the EU too. In the EU elections the rise in support for the far right populists that had been predicted by many pundits did not materialise, as in fact I had said it would not. Instead, it is more radical pro-EU forces that became more dominant. Pro-EU sentiment is stronger across the continent than it has ever been, including in Britain. As the EU's peoples see the disaster that Britain has imposed on itself as a result of Brexit, no wonder they have no desire to follow in that path. Brexit will have acted to damage the right-wing populists in Europe more than anything, and a chaotic and disastrous No Deal Brexit will damage them even more. 

The EU does not want a No Deal Brexit, but if Johnson and the Brexiteers think the EU will save them by offering them a deal, they are sadly mistaken.