Britain has ignominiously had to remove the clauses in the Internal Markets Bill, relating to Northern Ireland, that would have meant that it had breached the Withdrawal Agreement, and thereby broken international law. This is particularly embarrassing for Boris Johnson and his government, who only a couple of days ago, reintroduced those provisions after they had been voted down by the House of Lords. The provisions were introduced as a silly piece of posturing by Johnson, in a misconceived belief that they might, somehow, pressure the EU, into making concessions in the negotiations over a trade deal. They didn't. They had the opposite effect. Now, Johnson has had to scrap them. Its the first part of a wider capitulation by Johnson in relation to that trade deal itself, and Britain's relations with the EU. Its a copy of his capitulation last year, when he had to accept the terms of a Withdrawal Agreement that even Theresa May had rejected, and which puts a border down the Irish Sea.
The fact is that Johnson is now left with a completely untenable position. Northern Ireland remains, constitutionally, a part of Britain, but, in practice, it remains part of the EU. It remains inside the Single Market and Customs Union, and subject to EU laws and regulations, and the ECJ. It is part of Britain, but, as a consequence of Johnson's Withdrawal Agreement, and NI Protocol, is walled off from it, by the border that now runs down the Irish Sea. It is a part of Britain that will forever be a part of the EU. The EU has officials stationed there to ensure that Britain complies to EU rules and regulations. It is an EU outpost, ensconced within the British state, much like Hong Kong was within China.
In some ways, Northern Ireland can be said to have the best of both world having unfettered access to the British market, and to the EU. In practice, the requirement for British exports to Northern Ireland to be checked, the requirement to comply with all EU regulations, and be subject to tariffs, in the absence of a trade deal, means that many exports to the province will become impractical, as is being seen with supplies to NI supermarkets. Inevitably, this means that Northern Ireland will increasingly obtain these supplies from the Republic rather than Britain, so as to avoid all these checks and expenses. It means that NI is increasingly incorporated into the Republic, making a border poll, and a United Ireland inevitable within the foreseeable future.
But, the fact that these arrangements are in place for NI raises the question of why similar arrangements should not be in place for Scotland and Wales. If being in the Single Market and Customs Union is accepted as being a benefit for NI, which it is, why on Earth would you not want to have the benefit for the other countries in Britain? Well, obviously because what that means is that Britain as a whole should have negotiated to remain inside the Single Market and Customs Union, and if you are going to do that then there is no point to Brexit at all!
So, again, we get back to the crux of the matter that Brexit is an idiotic policy. It amounts to simply cutting your nose off to spite your face. The whole Brexit strategy was based on a fantasy and delusion, shared by both Tories and Labour, that it was possible to negotiate a have cake and eat it Brexit, in which Britain would have all the benefits of EU membership, but with none of the responsibilities. John Caudwell on Newsnight repeated this same delusion, and seemed genuinely puzzled by the fact that the EU had not fallen over themselves to do a deal with Britain, on Britain's terms.
He really couldn't seem to grasp the idea that, just because the EU has a huge trade surplus with Britain, they hold all the cards. The EU will continue to have a huge trade surplus with Britain deal or no deal, simply because its economy is seven times bigger than Britain's. Its on Britain's doorstep and accounts for around 40% of Britain's trade. Britain will continue to buy most of its imports from the EU whether there is a deal or not. If Britain puts tariffs on those imports, it will only succeed in raising the cost of those goods for British consumers, leading to its own higher costs, lower profits, rising inflation, a falling Pound, and rising interest rates.
By contrast, the EU's exports to Britain account for only around 6% of its trade, because a much larger part is comprised of its internal trade via the single market, and its trade with other large economic blocs, and super-states like the US and China. If Britain put tariffs on EU goods, the main effect would just be higher UK import prices, but for the small loss of sales suffered by EU economies, they could easily make up for this by alternative markets within the EU, or globally. Similarly, the EU can impose high tariffs on UK export, because it can substitute quite easily for them from within the huge EU economy.
In short, Brexit will have some small, short-term effects on the EU, but nothing worth it offering privileges to the UK to avoid, or putting its single market at risk for. By contrast, the weak and declining UK economy, will suffer dramatically from Brexit in the short-term, and will continue to suffer from it in the longer-term. As with NI increasingly obtaining its requirements from the Republic, so increasingly businesses in the UK will relocate to the EU. Already, we've seen Honda closing down production, because of difficulty obtaining parts. Simple things like such delays, and increased costs from transport and storage, the slowdown in the rate of turnover of capital, and need to hold larger stocks for longer, will reduce the mass and rate of profit in the UK, as British capital becomes increasingly uncompetitive. Indeed, it was for all those reasons that British capital pushed for EU membership in the first place!
So, the capitulation over the IMB is likely just the first act in this play, with Johnson capitulating in relation to the trade deal itself in coming days and weeks. But, in many ways, I hope he doesn't. I hope he has become so trapped in his own Brexit rhetoric, rhetoric he never believed to begin with, but which was simply a vehicle for his leadership bid, that he is forced into pushing through a catastrophic crash out Brexit. That will be so dramatic that, not only will it cause his government to fall, but it would make continuation with Brexit impossible. It would mean that Britain would have to go cap in hand to the EU for some kind of rescue, a deal for readmittance, with the EU doing one of its famous bureaucratic manoeuvres to facilitate it, this time not just stopping the clock but turning it back.
The advantage of that would be that Britain would be in such a weakened position that it would no longer be able to play the destabilising role it has always played in Europe. It would mean giving up all of the opt-outs it has enjoyed, becoming part of Shengen, adopting the Euro and so on. That's probably unlikely, precisely because Johnson must know that this is the likely consequence of a crash out. Its why, he is likely, instead to capitulate and agree to either some kind of extension of the Transition Period, or else some kind of arrangement that amounts to staying in the Single Market and Customs Union. He will no doubt look to his wing man Starmer to come to his rescue to give him the votes to push it through.
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