Welcome to the annual autumn crunch

Parliament

Fundamental decisions are looming

The “autumn crunch” has been an annual fixture of UK politics ever since June 2016. It started in the first post-referendum autumn. The rush to define which of 165 possible definitions of “leave the European Union” the government would choose ended abruptly, though. Newly-minted Prime Minister Theresa May informed the Conservative Party faithful, journalists, the country, and her ministers and Chancellor of the Exchequer all at the same time that the UK would leave the Single Market.

In the following years, May’s position unravelled as she sought to keep Single Market benefits without Single Market obligations. A crunch came in 2018. May faced a confidence vote for prioritising the UK’s own integrity, its internal market and the Good Friday / Belfast Agreement over ideological purity. She survived, but only until summer 2019. The next year it was the turn of Boris Johnson. He rushed to make any kind of Withdrawal Agreement with the EU before October and January deadlines. The crunch culminated in a general election that returned him with a majority to do as he pleased.

Only he could not quite bend the EU to his will, so another crunch ensued in autumn 2020. This time it was over the future relationship. The deadline was self-imposed. It culminated in the Trade & Cooperation Agreement (TCA), which met the UK’s sovereignty goals at the price of vastly increased non-tariff barriers (NTBs) in the trade of goods and services with its largest export market.

And that brings us to the 2021 crunch.

Plus ça change, plus c’est la même chose

You hoped that this year was going to be different, didn’t you? The government still has its crushing majority, the TCA is signed, as the pandemic recedes things should be settling down. What could possibly go wrong? Several things: the government has yet to reconcile itself to the trade-offs it made when it signed the Withdrawal Agreement and TCA. We have walked out of the castle, rejected the need for a drawbridge for trade flow back and forth and now find a forbidding castle wall of red tape behind us. We are going to face several more crunches before Santa Claus ho-ho-ho’s his way across our land.

GB to EU trade

Problems are mounting for exporters from Great Britain. There is now pressure from the Chairman of Marks & Spencer to “unite with the EU” to crush border red tape. Viable solutions are there precious few though. These NTBs are simply third country reality. Without a sanitary and phytosanitary (SPS) agreement – which the government turned down to preserve its regulatory autonomy – M&S and the other GB exporters are exporting on the same terms as producers from Japan, South Korea, and other “independent coastal states” exactly as the UK described itself.

The only difference is that GB has a vast book of agri-food business with the EU that grew up because it was in the Single Market, which waived all these NTBs. There is no reason why this business should continue. But it is becoming clearer that Hard Brexiteers genuinely did expect some kind of special treatment when the UK left the Single Market. That it would not be following the rules, but also would not tick the bog-standard third country box that the bureaucratic and legalistic EU has ticked for it.

Expect the government’s attempts to weasel out of facing up to this and to blame the EU for “imposing” new barriers instead to dominate headlines in some red-tops. As before, the castle wall was always there. We were just inside. That we are outside without having made adequate provision to deal with it is a choice of our own making.

EU to GB trade

See that mountain of bureaucracy over there? Now it’s coming the other way too. Think we already have shortages? Incoming border controls are due to start on 1st October. Retailers of course are keen for them to be delayed. Again. In fact, probably indefinitely.

There was an outbreak of common sense recently when the government postponed the deadline for manufacturers to gain a UK Conformity Assessment (UKCA) label to place goods on the GB market. Will it do the same on incoming border controls? We’ll see.

Northern Ireland

Surely you didn’t think that this one had gone away? The chickens laid by “sign anything, get it over the line, say it’s great, tell everyone you can “change it later“”, have been trying to come home to roost all year. The unilaterally extended grace period for chilled meats ends in October. Archie Norman has been warning of empty shelves. Export Health Certificates (EHCs) for Products of Animal Origin (POAO) will also be necessary from the end of October. The extra costs will ruin some supply chains.

What to do about this? Regulatory autonomy for GB and no border between the North and the Republic always meant a regulatory border between GB and NI. Extending grace periods just postpones the inevitable day of reckoning with this freely made conscious choice. Face up to the consequences, or dilute the ideological purity? Let’s see whether they can postpone that again.

To what end?

And linked to all that is the question of whether the government will ever even use its much-trumpeted regulatory autonomy. Until now, it has skated by, letting the ERG think that a bonfire of red tape is just around the corner. It is always just around the corner. A journey towards a mirage never ends. The day is coming when the PM will have to reconcile how he promised the EU and Labour MPs that the bonfire would never happen, all the while aware that a dwindling number of Hard Brexiteers see it as the entire point.

He never really convinced the EU. That’s why the TCA is full of provisions for “rebalancing mechanisms” if the regulatory bonfire goes too far. Let the blaze get out of control and there might not be a TCA after the 2025 review point. WTO terms and tariffs here we come. He also never convinced business, which understands that there is little mileage in attempting to detach ourselves from increasingly global standards, whether they emanate from, or pass through, the Brussels bureaucracy.

But he convinced Lord Frost. When asked to explain the benefits of the Hard Brexit route taken, Frost tends to focus on subsidies and protectionism as things that Single Market membership prevented. Another hard sell to the backbenches, you would think. But thinking that seems to come from the boss.

Parallel universe

It is worth noting here, for a second, the crunch that would be happening if we were still in the EU. The German elections are rightly dominating the international pages. Much like in the era of the ill-fated European constitution, when Tony Blair was frantically trying to walk back comments from EU politicians calling it “the capstone of a federal state”, were the UK still in the EU we would now be hearing the government saying that all the chancellor candidates’ calls for European defence capability and common foreign policy by majority voting had somehow been mistranslated.

Get ready

The fundamental philosophical questions can wait maybe a little longer, but the deregulators are getting antsy. Daniel Hannan describes the current policy as “abandoning the advantages of membership and then ignoring the opportunities of withdrawal”.

The more nitty-gritty questions about Great Britain’s borders with Northern Ireland and the EU are top of the agenda once again.

Parliament returns on Monday. Get ready.

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Martin is a management consultant, former think tank researcher and lobbyist (appearing on national TV) for small business organisations and successful campaigns featured in Public Affairs Magazine. He has provided research and articles on trade issues for the Conservative Group for Europe.

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