Seamus Mallon described the Belfast Agreement as “Sunningdale for slow learners”. In the end, Brexit is likely to be “Norway for slow learners”.
Events this week mean it’s now probable that the UK will limp out of the EU in two months with a cobbled-together, Norwegian-style deal. On the face of it, little will change materially until the final trade deal is hammered out.
Except everything has changed.
The entire edifice of UK decision-making has been turned on its head. In terms of taking back control, the UK parliament has taken over control from the government to execute the will of the people. The government and its allies, the DUP, will be left to do the glorified county council work of humiliated local government, leaving the really big sovereign stuff to a cross-party, quasi-coalition of middle ground parliamentarians. The prime minister’s office will become facilitator rather than originator.
For an all-or-nothing political system, used to top-down, imperious prime ministers and all-powerful cabinets, such a consensus-based approach will be quite the comedown. Such compromises will feel as continental and un-British as cycling royals, cinq-à-sept and tea without milk.
But the iron rule of realpolitik is that compromise trumps absolutism when you have a weak hand, and the UK has a weak commercial hand.
In fraught negotiations, no side gets what it wants, but ultimately each side gets what it needs. The UK needs to honour the referendum, and it will leave not with a drumroll of neo-Elizabethan daring but with a whimper of 21st-century reality. It is a rule taker not a rule maker.
The UK will look like Norway with less oil (although they have snaffled Ole Gunnar Solskjær).
For its part, the EU had to reaffirm the integrity of the club in the face of the threat that Brexit-type referendums might become contagious throughout the union. The unflinching unity of the 27 has been a show of impressive diplomatic force.
The EU can afford to be flexible now if it wants to be. As no-deal recedes, so too does a lot of the rancour. No-deal is still described as the “default option” but the coalition against it is so numerically strong, it looks unlikely.
Although they cracked open the champagne after May’s humiliation on Tuesday, the PM’s defeat constituted the high point for the hard Brexiteers in the European Research Group (ERG) and the DUP. It looks like they will be sidelined.
No crash out also means that the ERG, the DUP and parliamentary opposition to the backstop all become less significant. The leverage they now have is no longer Brexit leverage but confidence-motion leverage. They can bring down May, but then they precipitate a general election, whereby the DUP lose all power. It is they who are now boxed in.
The shifting sands mean an ultimate trade deal looks more like the “EU-lite”, obviating the backstop.
Those who want to get rid of the backstop value sovereignty over commerce. The Tory party might split between those who value British commerce more than British sovereignty. The pragmatic pro-business, let’s-do-a-deal Tory minister could well be prepared to throw the unionist, Derry-is-as-British-as-Finchley Tory backbencher under the bus, if it means that corporate UK gets a more market-friendly deal.
But there is a real possibility that there will be, not just one, but two splits. As parliament takes control, the Brexit-at-all-costs Tories are losing, but so too are the anti-EU extreme left of the Labour party. The vast majority of the Labour party, its social democratic centre, want to remain close to the EU, so too do about half of all Tories.
Maybe the upshot of the whole saga will be the reconfiguration of the British centre as the Social Democratic centre-left of the Labour Party and the One-Nation Tory centre right of the Conservative Party. These two are coalescing now over Brexit, and realise they have more in common with one another than with the extremes of their own parties. Sometimes it takes a massive political shock like this to knock heads together.
Economically, once “no deal” is off the table, the UK economy is likely to get a bounce, and here I digress from the mainstream about Brexit and Ireland. Up to now, the consensus view here has been that Brexit will be terrible for Ireland. I’ve never bought that.
To be sure, the impact on Irish supply chains, using the UK land-bridge, from a no-deal would be hugely costly. But that doesn’t look likely now. If we are honest with ourselves, much of the Brexit economic-catastrophe narrative has been peddled by our own establishment europhiles, who see any criticism of the EU as blasphemy that can only be countered by warnings of eternal damnation.
The real world of commerce is always more nuanced, and far less dramatic.
A “common-sense” Brexit, engineered by the parliamentary middle ground, changes the game. UK assets now are extremely cheap. Incredibly strong companies are trading at extraordinary low prices and extremely high yields. Long-established homebuilders, which have pipelines of government-underwritten contracts, are trading at one-off, Brexit-induced discounts.
Investment by large and small British companies has been put on hold, so now there is plenty of pent-up demand in the UK economy once the fog of the hard Brexit has lifted. This week, UK financial markets certainly think the “hard Brexit” threat is over and have been reacting positively.
The implication of this for Ireland is that, as a location for inward movement of both capital and talented people, we become more – not less – attractive. The UK, the market for our traditional products, stays open. This is not a bad outcome.
Act of aggression
At its core, Brexit is an act of aggression against globalisation; this will not be forgotten quickly by international investors. For Ireland, when your neighbour shows signs of deep political instability, all you have to do is do nothing and you look remarkably sane and thus attractive.
In the next few weeks, we will hear about indicative votes and horse trading as the British political system tries to find something that it can agree on. Resolution while not in sight, is now possible. The alternative is a general election to clear the air, bringing impetus for a new deal. No party will fight an election on no deal.
Economically, for Ireland, the upshot from Brexit is likely to be broadly positive so long as we follow our policy of what I like to call “cosmopolitan nationalism”. Cosmopolitan nationalism implies being a fully paid up member of the global economy, embracing free movement of capital, technology and talent, while at the same time keeping idiosyncratic national policies, such as our tax policies, that set us apart from the rest.
For a trading country, this is the sweet spot. Ironically, the now more likely soft Brexit might have made Irish cosmopolitan nationalism more, not less, secure.