We are less than two weeks into the new year but a number of
very odd things have already taken place. Arch-protectionist Donald Trump is
prepared to rub shoulders with the global elite in Davos whilst Steve Bannon,
who promised to “go nuclear” on those opposed to Trump’s populist nationalist
agenda following his White House departure, has been fired by Breitbart News.
Perhaps most surprisingly of all, Nigel Farage has suggested that a second
referendum on the UK’s EU membership might be necessary to resolve the Brexit
question once and for all.
This comes against the backdrop of a renewed campaign against
Brexit. As Farage put it, “My mind is
actually changing on all this. What is for certain is that the Cleggs, the
Blairs, the Adonises will never, ever, ever give up. They will go on whinging
and whining and moaning all the way through this process. So maybe, just maybe,
I’m reaching the point of thinking that we should have a second referendum on
EU membership … I think that if we had a second referendum on EU
membership we would kill it off for a generation.”
This follows the comments by Andrew Adonis, former chair of
the National Infrastructure Commission, who resigned at the end of December,
arguing that “good government has essentially broken down in the face of Brexit” and will now devote more time to the issue of a second referendum. Former
prime minister Tony Blair took a slightly different tack with his Institute for
Global Change highlighting the economic costs that are so far visible.
He also made the valid point that 2017 was too early to rethink the Brexit
strategy but by 2019 it will be too late. “Realistically,
2018 will be the last chance to secure a say on whether the new relationship
proposed with Europe is better than the existing one.” Whatever people
might think of Blair – and he is widely reviled for his role in involving the
UK in unpopular conflicts in the Middle East – he remains a formidable centrist
politician and it is hard to disagree with much of the IGC’s analysis (if only
Blair had applied a similar level of rigour to the weapons of mass destruction
question in 2003 he would have a claim as one of the greatest peacetime prime
ministers).
On the question of a second referendum, my guess is that it
is most unlikely. Despite calls for a second vote to give a verdict on the
terms of the final EU deal, it is unlikely to happen because: (i) neither the
Conservative nor Labour parties support
the idea and (ii) it is too soon to reopen the divisions created by the 2016
referendum. Add to this the fact that Theresa May and her government have
invested so much time and credibility in delivering Brexit, it becomes
inconceivable to think that it will be open to calling a second plebiscite.
Nonetheless, it is astonishing to hear Farage make his
suggestion. In his view “the percentage
that would vote to leave next time would be very much bigger than it was last
time round. And we may just finish the whole thing off.” That is a very
bold statement and like many of Farage’s predictions, probably not true.
Although the economy has held up better than anticipated, consumers are being
squeezed by the Brexit-induced decline in real wages. Moreover, with the
question of NHS funding and staff shortages currently so prominent, Blair
points out that “applications from EU nurses to work in the UK have fallen by
89% since the referendum” and “nearly 1 in 5 NHS doctors from the European
Economic Area have made concrete plans to leave the UK.” I have also pointed to
survey evidence that suggests a rising trend in people believing that voting
for Brexit may have been the wrong decision (here).
Any attempt to re-run the referendum would likely result in a very tight race
and it is far from clear how it would pan out.
But let us suppose that in order to clear the air the
government does accede to this suggestion. What should it do? First and foremost,
it should introduce a minimum participation threshold. A simple in-out
referendum which results in a narrow win for one side is not sufficient. In
order for change to come into effect, it would have to be ratified by at least
40% of all eligible voters in the same way as the Scottish devolution
referendum of 1979. Assuming the electorate is the same size as in June 2016,
the Leavers would have to gain 6.8% more votes (almost 1.9 million). But even
if this were to happen, the Remain voters would still argue that the 40%
threshold represents a minority of the eligible electorate. Thus, an additional
constraint might be that in the event Leave gains less than 50% of all eligible
votes, it must secure a victory margin of at least 10 percentage points. If you
want a really funky solution, perhaps we could weight votes according to age.
Although this undermines the principle of one person-one vote, on the basis
that younger voters have more to lose there is an argument that their votes
should count for more.
I stress that this is all hypothetical. But if the
government were to take up Farage’s suggestion it would be easy enough to put
in place a system which makes it very difficult for the leavers to win. There
would be howls of protest from Brexiteers that the rules of the game have
changed. But if the decision is to be binding (and let us recall that the 2016
referendum was purely advisory) we would have to be damn sure that the case is
watertight. Only then will we Remainers shut up.
If ever any Brit needed reminding of the absolute
indifference with which the rest of Europe views the tedium of Brexit, a glance
at most European newspapers this morning would have provided it. The failure by
the British government to reach a deal on the Irish border issue dominated the
UK news but received scant coverage elsewhere. The travails of Donald Trump were
the biggest item on most non-English language newspaper websites, demonstrating
what happens when lunatics run big asylums rather than the small scale takeover
we are witnessing at home. Indeed, there are plenty of significant issues going
on elsewhere: The fact that Germany has not yet formed a government, almost
three months after the election, is a reminder that other countries have their
own political issues to deal with.
We should thus not be under any illusions that Brexit is
anything other than a peculiarly British problem and as such requires a
domestic solution. But finding a solution depends on being able to identify the
problem. Whilst the Brexit ultras try to blame the perfidious EU for making
life difficult, ultimately the issue boils down to ineffective domestic
government which makes resolution far harder. But whilst I have been critical
of Theresa May's handling of many aspects of Brexit, I do have some sympathy
for the fact that she inherited a mess bequeathed by her predecessor. Brexit
involves trying to reconcile a series of mutually incompatible positions whilst
convincing the electorate that both something and nothing has changed, and at
the same time trying to prevent the fissures at the heart of government from
growing larger. The near impossibility of this task serves to remind us that
advocates of Brexit either deliberately lied about the ease with which it could
be achieved, or perhaps even worse, could not see the difficulties involved.
Much as I may have railed against last year's decision, I
have never called for a second referendum. Partly because I don't think it will
resolve anything, but perhaps because I have secretly believed that the
difficulties in delivering a Brexit that works for the UK are so insurmountably
large that it could yet come back onto the agenda of its own accord. I have
little doubt that the current government is unable to deliver the "red,
white and blue Brexit" promised by Theresa May. For one thing, a task of
this magnitude requires a government with a common purpose but this one
contains too many members with differing positions. Worse still, the government
is unable to command a working parliamentary majority and as it learned to its
cost yesterday, that is an impossible position from which to win a deal on
Ireland.
But Brexit obscures a bigger truth. The referendum last year
was a vote against the status quo. As a consequence we should not be surprised
to find that the old political methods are failing to find a solution. The
conventional politicians who populate the Conservative and Labour parties, and who
we can broadly class as the political centre, represent the status quo against
which the electorate voted. It is no wonder that they cannot imagine a solution
because they cannot conceive of a world in which the old rules no longer apply.
In many respects I am in the same boat although my position is based on the evidence that suggests whatever comes next will not match the deal with the EU that we have now.
Clearly, it is me who is out of tune with the Zeitgeist. But I may be wrong: After all, there is no reason why the post WWII settlement must
continue to hold after more than 70 years. But precisely because half the
electorate shares a similar opinion, Brexit can never work on the terms set out
by its proponents. It will deliver a highly Pareto inefficient outcome because
it cannot make anyone better off without making others worse off. This is not
wholly a monetary issue. If we end up in a world where Britain distances itself
from the values which have characterised its past, and those which large parts
of Europe still hold, then this is for many (myself included) a regression to a
sub-optimal position.
So how can Brexit be made to work under such circumstances?
First off, it probably requires a political leader with near-unanimous support
who can convince the electorate that Britain has a future outside the EU but that
it still shares the EU's underlying goal of ensuring peace and prosperity
across the continent. There certainly isn't anyone in the current generation of
politicians with that sort of broad appeal. The closest any politician in my lifetime
came to having the X-factor was Tony Blair, and look how that turned out.
Thatcher never had it. Nor did Winston Churchill who, lest it be forgotten, was
so revered by a grateful public that they rewarded him with an election defeat
in 1945. In that light it is hard to imagine that Jeremy Corbyn is a viable
political alternative, even though he offers a radically different economic
policy.
In the absence of the requisite leadership, is there any
other way that Brexit can be made to work? I suspect the answer boils down to
cold, hard economics. If the UK economy can generate prosperity in which the
electorate can all share, they may be prepared to accept life outside the EU -
albeit grudgingly. But as most of the economics profession (and all reputable
economists) have pointed out, leaving the EU on the terms specified by the
government simply cannot generate that prosperity because it entails giving up
many of the economic advantages we currently enjoy, such as membership of the
single market.
Having established that we don't have the political
leadership and that the economic conditions for a successful resolution are unlikely to exist, I am not the only one struggling to understand how Brexit will work. It
certainly will not be the success which the Brexit-at-any-price brigade believes.
But then I have been saying this for nearly five years and nothing that has happened so far has been enough to persuade me I am wrong.
