Border disorder

It has been a tumultuous week in the world of British politics as the political establishment tears itself apart over the issue of Brexit. With just 29 days to go, Boris Johnson reiterated at today’s keynote speech to the Conservative Party conference that the UK is "coming out of the EU on October 31, come what may." There is only one way that this can be achieved and it requires the UK and EU to agree a deal that will enable the transitional arrangement to come into force which will prevent a no-deal Brexit. For all the ongoing excitable talk in the press, no doubt whipped up by Conservative sources, that the government is prepared to leave without a deal, do not forget that to do so would be a breach of the law. Parliament has already ruled out this option and having lost one legal battle, Johnson would not relish the prospect of MPs once again resorting to the courts to force him to comply.

If ever there was a time for ignoring press chatter and speculation, now is that time. Ahead of Johnson’s speech, there were stories suggesting that the government would unveil its strategy to deal with the Irish border problem, and present it to the EU as a “take it or leave it” option. That was not what we got. The rhetoric was far more conciliatory as the government presented a plan which allows for regulatory alignment between Northern Ireland and the Republic for a limited period of time. But it is what happens once the transition period ends that is far more problematic.

At that point, Northern Ireland will leave the EU customs union and revert to being part of the UK customs union. However, the North will be fully aligned with the EU for the purposes of the agri-food business and “in addition, Northern Ireland would also align with all relevant EU rules relating to the placing on the market of manufactured goods.” This effectively means the creation of two borders: A regulatory border between Britain and Northern Ireland for manufactured goods and agri-food products but a customs border between the North and the Republic.

Moreover, the British government has reiterated its position that “no customs controls necessary to ensure compliance with the UK and EU customs regimes will take place at or near the border.” Instead, they will rely on “continuing close cooperation between UK and Irish authorities” with movements across borders notified using a declaration process, utilising processes such as the trusted trader scheme which the EU has already rejected as unworkable. None of this sounds to me like a solution that the EU can buy into – it is all a bit vague. And from the EU’s perspective it gets worse. The UK has proposed that every four years, the Northern Irish electorate will get a chance to have its say on the regime to ensure that it is still satisfied with the arrangements. But “if consent is withheld, the arrangements will not enter into force or will lapse … after one year, and arrangements will default to existing rules.” This is clearly not the permanent solution to the border problem that the EU is seeking. In its current form, I would be highly surprised if the EU accepts it. Indeed, chief EU negotiator Michel Barnier was reportedly scathing of Johnson's Irish border plan, describing it as "a trap".

The best way to view the proposal is as a starting point for discussion. But it all seems a bit late although that seems to be the only way that anything gets done in these negotiations. Clearly the EU does not want to reject it outright since this would effectively scupper any chance of a deal at the summit in two weeks’ time. The question is then how much are the British prepared to bend to accommodate the EU’s requirements (and vice versa)? And where does it leave the Democratic Unionist Party? After all, they were the ones who objected to a customs border between Northern Ireland and the mainland yet that is exactly what they have now signed up to.

But Johnson is now entering the most critical phrase. His mantra “let’s get Brexit done”, for which read "leave the EU on 31 October", rings increasingly hollow. It is 100% certain that Brexit will not be “done” by the end of this month even if the UK leaves the EU. The October deadline represents a staging post which would at best mark the start of negotiations regarding the nature of the UK’s long-term relationship with the EU. As a third country with much less bargaining power than the EU, the UK will be in a much weaker position than it is now and negotiations will be a lot tougher than anything seen so far. As a consequence, the economic uncertainty that has held back business investment over the past three years is likely to persist – a point made by MPC member Michael Saunders in a speech last week.

Although the Conservative government believes that it will be possible to reunite the country once it has dragged Brexit over the line, I continue to have my doubts. A no-deal Brexit will exacerbate, rather than heal, divisions and the damage to the UK as a business location may already have been done – a view I heard expressed at a business forum I attended yesterday. Brexit long ago stopped being about the economics and simply became the toughest battlefront in what now has to be seen as a culture war. But the economics matters – ultimately it will determine whether Brexit is deemed a success. I am not holding my breath.