It has been clear all along that Brexit has little to do
with economics and everything to do with a view which a certain group within
the Conservative Party has of the UK and its place in the world. It is also not
news that the form of Brexit which this group intends to pursue is not one
which large parts of the electorate voted for – even those who voted in favour
of leaving the EU. But it is increasingly evident that this is becoming an
obstacle to the smooth running of government as the fissures within the
Conservative Party threaten to split it apart.
Last week, Boris Johnson again broke ranks with his cabinet
colleagues via a series of pre-briefed news articles by calling for additional
NHS spending, with newspaper reports suggesting he was pushing for an
extra £100m per week (£5bn per year) after Brexit. Recall that Johnson was one
of the prime supporters of the claim that the UK would be able to save £350m
per week after leaving the EU, a large proportion of which could be channelled
towards health spending. Whatever you think of Johnson as a politician, his
call for additional NHS spending is well made. According to the OBR’s
projections, total health spending is set to decline from 7.2% of GDP in FY
2017-18 to 6.8% by 2019-20. Simply to hold spending constant as a share of GDP
implies increasing funding by £166m per week by 2020. But as is often the case
with Johnson, there is usually more than meets the eye and the rest of his
cabinet colleagues clearly did not think much of his attempts to hijack the
political debate.
Meanwhile, Chancellor Philip Hammond is the focus of ire
from the Leavers following his speech at the World Economic Forum in which he
called for a soft Brexit that would result in only “very modest” changes to the
UK’s relationship with the EU. The prime minister has been called upon to sack
her Chancellor as concerns mount amongst pro-Leave MPs that the UK is “diluting
Brexit” and that it may become an EU “vassal state” during the transition
period. This comes at a time when leaked reports prepared for the government suggest
that in the absence of a trade deal with the EU, output would be 8% below the
pre-referendum baseline over a 15 year horizon. A free trade agreement with the
EU – the current favoured option – would result in a 5% decline in output
whilst the soft Brexit option (i.e. continued single market membership) would
result in a 2% decline in GDP. All of which comes after Brexit Secretary David
Davis refused to release impact assessments covering 58 sectors of the economy
when requested to by parliament, claiming they did not exist.
All this is, to be sure, a deeply unsatisfactory state of
affairs and it highlights the weakness of Theresa May’s position. Despite Boris
Johnson’s constant flouting of collective cabinet responsibility, such is the
strength of his grassroots support that the prime minister is unable to remove
him without jeopardising her own position. If she were to bow to the minority group
of hardline MPs calling for Hammond’s departure, the other half of the party
would similarly revolt. There is thus mounting concern that there may be a
challenge to May’s leadership – a procedure which requires the support of just
48 MPs – although since most Conservatives believe this would hasten their exit
from government, this is not anybody’s favoured scenario.
But the Conservatives only have themselves to blame. It was
their party that called the referendum, and their government which decided the terms
on which they would seek to leave despite being warned of the dangers. Theresa
May has compounded the problem by not offering any leadership on the Brexit
issue. She has not articulated what she wants from the EU, other than the
closest possible relationship, and in the words of FT commentator Philip Stephens, “Mrs May, it is obvious, has no
organising vision of the shape of Britain’s post-Brexit relationship with its
own continent ... As things stand, history will remember her as an accidental
prime minister who foolishly squandered a parliamentary majority in an election
she had no need to call — the worst prime minister of modern times with the
exception, of course, of her immediate predecessor, David Cameron.”
Former LibDem leader Nick Clegg, also writing in the FT,
noted that as it currently stands the proposed transition period which will run
beyond the end of the Article 50 period in March 2019, will leave the UK
powerless; a member of the EU in all respects but one – the ability to have any
say in writing EU legislation. This is very much the position Norway finds
itself in now. Why this comes as any surprise to anybody beats me. I pointed
out in 2015 that such a Norwegian outcome “would
appear to be even less optimal than that which the UK faces today.”
There is increasingly little faith in the government’s
ability to square this circle. It clearly appears that Theresa May gambled on
the UK’s ability to quickly achieve a deal with the EU without thinking through
the implications of what this might entail. In that sense, she is very much in
tune with those elements of her party who have spent much of their political
career either ignoring or misreading European issues. And now she is their
prisoner.
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