Hard or soft Brexit? Britain’s dilemma after a chaotic election

When the British Prime Minister Theresa May called a snap election on 18 April, she did so to securea strong mandate, with a big majority in parliament. A strong mandate would, arguably, strengthen her hands in the Brexit negotiations with the European Union. Yet, as a politician, she also made explicit political calculations. She wanted to take advantage, as urged by some in her party, of the presumed weakness and unelectability of the main opposition leader, Jeremy Corbyn, whose party, Labour, was 22 points behind the Conservative party in the opinion polls at the time. Indeed, several pollsters and commentators were predicting a heavy defeat for the Labour party and a landslide for the Conservatives, with a possible majority ranging from 100 to 150 seats!

But, as Corbyn himself said after the election, “Democracy is a wondrous thing. It can throw up unexpected results”. And it did in this election! The Labour leader was universally dismissed as a complete no-hoper, who would drive his party into oblivion. But what actually happened? Well, Corbyn didn’t win the election, but caused enough upset to prevent Prime Minister May from winning it. The massive majority predicted for the Conservative party did not happen. Instead, the Tories lost their 17-seat majority!

How a radical leftie, a political underdog, seemingly feeble and inconsequential, could rise like a phoenix from the ashes and cause such a political upset is still a subject of intense discussion among the political elite and intelligentsia in the UK. Yet, a simple explanation is that many people observed Corbyn during the campaign, in the TV debates etc, and liked what they saw. Young people turned out in large numbers for Labour, attracted by its manifesto promise to abolish university tuition fees! Indeed, many applauded Labour’s socialist manifesto, with commitments to tax and spend more and to re-nationalise privatised utilities. With seven years of austerity measures biting hard, and discontents about globalisation and capitalism growing, as elsewhere around the world, there were strong anti-austerity and anti-capitalism streaks that drew a large number of people to Labour’s fiercely socialist agenda.

But let’s not overegg this: Labour did not win. The Conservative party still secured 13.8m votes, 42% of the vote and 317 seats in the 650-strong House of Commons. However, given the predictions of a wipe-out for Labour, its 12.8m votes, 40% share and 262 seats are spectacular results. The whole election was, indeed, spectacular for other reasons, some positive, others not. For instance, on the positive side, it produced the largest number of ethnic minority MPs to date, 7 of Nigerian descent. Of the seven, four – Chuka Umunna, Chi Onwurah, Fiona Onasanya and Kate Osamor– are from the Labour party, while the remaining three– Bim Afolami, an Old Etonian, Helen Grant and Kemi Badenoch– are from the Conservative party. The large number of MPs with Nigerian heritageis truly heart-warming, and I congratulate all of them!

Yet, the election result is less heartening for other reasons, not least the political chaos it has created. Because Labour did not win, and the Tory party doesn’t have a working majority, the UK now has apotentially unstable government. The Conservative party has the largest number of MPs, 317, but falls 8 short of the 326 needed to form a government. To stay in office, it is relying on the 10 seats won by the Democratic Unionist Party (DUP), one of the sectarian parties in Northern Ireland. Leaving aside the potential implications of this alliance for the sectarian politics of Northern Ireland, DUP’s 10 MPs can hardly guarantee a stable government, especially in the febrile and difficult climate of Brexit negotiations.

The Brexit talks formally start today, Monday 19 June, but one-eighth of the two-year negotiating period has already gone. The reality is that, whether or not there is a deal, the UK must leave the EU on 29 March 2019. Yet, even if the negotiations are accelerated or, albeit highly unlikely, even extended, what kind of future trade relations would the UK have with the EU? Unfortunately, given that no party won the election, there is no mandate for either of the two opposing approaches: “hard” or “soft” Brexit. Hard Brexit means that the UK leaves the EU without membership of the single market and the customs union, and, even, without any free trade deal, on the basis that, as the prime minister constantly said, “no deal is better than a bad deal”. By contrast, a soft Brexit means that the UK would leave the EU but stay in either the single market or the customs union, or both.

However, neither of these options can secure a majority in parliament. A“hard”Brexit deal, involving the UK leaving the single market and the customs union, is not popular with business and a large number of the British media. There is also strong opposition to such a deal within the Conservative party itself, and even the DUP. Yet, those who want a “soft”Brexit know that in order to stay in the single market or customs union, the UK must accept freedom of movement and the jurisdiction of the European Court of Justice, in addition to contributing to the EU budget. Many would argue that this was not the original intent of the Brexit vote, which was, as most Brexiteers understood it, to allow the UK to “take control” of its own “borders, laws and money”. A soft Brexit would also defeat the UK’s “Global Britain” objective of negotiating trade deals with other countries around the world. Even if there is a majority for a soft Brexit in parliament, MPs would have to worry about how the British public would view what they might see as a betrayal of the Brexit mandate, particularly in relation to immigration. Both the Tories and the Labour party reject direct membership of the single market and the customs union, as well as freedom of movement, in their manifestos. So, it’s difficult to see how parliament would vote for a soft Brexit.

But if parliament doesn’t vote for either a soft or a hard Brexit, what then happens? Well, the UK would leave the EU without a trade deal, and trade under WTO rules. Of course, this has huge implications. First, UK goods, which currently enter EU markets duty-free, would attract an average tariff of around 3.4%, and up to 10% for some goods. Similarly, EU exports to the UK would attract UK tariffs. However, far more problematic are non-tariff barriers, including regulations, which are currently harmonised, or subject to mutual recognition, between the UK and the EU. Without a post-Brexit deal, commercial activities between the UK and the EU would be cumbersome indeed!

A “no deal” situation would also mean that the UK, once it leaves the EU, would no longer benefit from EU’s treaties with other countries, covering trade, regulatory cooperation, transport, customs etc. According to a recent Financial Times research, there are 759 of such treaties, spanning several decades and involving 168 countries. The process of renegotiating such treaties would tax the capacity and resources of any country. The UK has, however, begun a programme of intense training for its negotiators. Earlier this year, my colleague at the London School of Economics, Stephen Woolcock, led a well-received “LSE Advanced Trade Negotiation Programme” for UK negotiators. But the resource-intensity of negotiating new deals and revising existing ones remains daunting.

Certainly, the UK needs a national consensus on its Brexit strategy. But the Brexit referendum and general election have created deep schisms. Perhaps another election or another referendum would settle the issue. But perhaps not! Surely, divorce of any type is difficult and painful, but the economy, jobs, and prosperity are at stake here. Which is why economic rationality should prevail. Yet, time is ticking. Hard or soft Brexit, something must be done before the exit date in March 2019 to avoid a “cliff-edge”!

Olu Fasan