This Withdrawal Agreement is less a carefully crafted diplomatic compromise and more the result of incompetence of a high order,” thundered Mervyn King last week, attacking Theresa May’s Brexit blueprint.
“It beggars belief a government could be hell-bent on a deal that hands over £39bn,” the former Bank of England governor observed, “while giving the EU both the right to impose laws on the UK indefinitely and a veto on ending this state of fiefdom”.
Since retiring from the Bank in 2013, Lord King has spoken out against some pretty powerful vested interests. His 2016 book, for instance, The End of Alchemy, was an honest insiders’ account of the 2007-08 financial crisis. The City and Wall Street mega-banks were and remain “the Achilles’ heel of capitalism … driven by hubris and arrogance that inflicts suffering on the innocent,” wrote King. Reforming them “won’t be easy”, with “most existing financial institutions, and the political interests they support, resisting strongly”.
The ongoing use of quantitative easing, again beloved by the political-financial nexus, boosting shares and other asset prices, “constitutes an error as much of theory as of practice, and is the cause of weak growth,” King argued. The single currency, meanwhile, is “a tragedy … the most divisive development in post-war Europe”.
Lord King, then, has made a series of post-retirement statements that have irked the overwhelmingly Europhile financial and business media establishment. His latest missive on May’s EU Withdrawal Agreement was “disgraceful” according to several prominent commentators, “not worthy of a former governor”. Why is it fine for endless anti-Brexit former Foreign Office mandarins to sound off repeatedly, but not an ex-Bank of England governor?
In calling for MPs to reject May’s Withdrawal Agreement, “a deal that’s the worst of all worlds”, King is, as usual, bang on the money. He’s also right to argue that preparations for a Brexit based on World Trade Organisation (WTO) rules “should have started in 2016, immediately after the referendum”.
It’s true that “Britain needed a fallback position – it is foolish to negotiate without one – and [WTO rules] was the form it should have taken”. It’s also true, as King adds, that the Government’s assumption “an imaginary long-term deal could be negotiated” has been “naive at best, and in the event has proven disastrous – incompetence on a monumental scale”.
From her January 2017 Lancaster House speech, right up until she unveiled her supine Chequers proposals this July, May insisted “no deal was better than a bad deal”. Back then, she appeared to believe in a genuine Brexit, with the UK outside the EU’s single market and customs union. That’s what was discussed during the referendum campaign, after all. That’s what was promised by both the Conservative and Labour parties in their June 2017 election manifestos. Chequers, of course, was a very different package, one accepting EU rules on goods, a modified customs union and ongoing Brussels diktat.
This totally blindsided not just the then Brexit secretary, but the wider cabinet and the country – everyone, in fact, outside May’s Downing Street inner sanctum. Since then, Chequers has morphed into the even more ghastly Withdrawal Agreement, with Brussels imposing a totally unnecessary “backstop” that splits Great Britain and Northern Ireland, while leaving the UK “subject to”, according to the Attorney General, “protracted and repeating rounds of negotiations” that could “endure indefinitely”.
There would be “no way out” for the UK, according to the Government’s own legal advice, “without the EU’s agreement”. And, while May’s disastrous deal applies, the UK will keep sending additional billions to Brussels each year, paid by our consumers, under the common external tariff – on top of the £39bn divorce bill.
Finally, escaping the EU’s clutches will no doubt then cost the UK our fishing grounds, even more money, continued acceptance of freedom of movement and whatever other conditions our “EU partners” want to impose. And to promote this nonsense, Downing Street has, in King’s words, “turned Project Fear into Project Impossible” – insisting that rejecting May’s deal, and trading with the EU under WTO rules instead, isn’t an option.
Six months ago, May thought “no deal was better than a bad deal”. Now it’s apparently “disastrous”.
An insidious, deeply anti-democratic and profoundly dishonest campaign against a clean Brexit – leaving under WTO rules, then striking a Canada-style free-trade agreement – is now in full swing. Serving privy counsellors who are MPs, so able to vote in this Tuesday’s parliamentary showdown, have been called into Downing Street to be fed utter rot about “no-deal” dangers.
With Parliament almost certain to reject Mrs May’s proposals, while manoeuvring to block the “no-deal” default, other options are looming. A second referendum would be disastrously divisive. The so-called “Norway-plus” plan – accepting Mrs May’s deal and hoping the EU will let us soften the terms later – strikes me as duplicitous and ill-judged. It isn’t Brexit, maintains freedom of movement and relies on the EU adopting a flexible attitude down the track. My preferred option remains the “clean Brexit” I’ve advocated since mid-2016.
If Parliament is determined to thwart that we should instead adopt Lord (David) Owen’s scheme of leaving the EU as planned next March, but staying in the European Economic Area (EEA). EEA membership isn’t ideal but would smooth the transition and, crucially, it would be temporary. That’s because the UK can leave the EEA, unilaterally, at any time – as long as we give 12 months’ notice.
“It could be used on a strictly time-limited basis”, says Owen, providing “a flexible full exit timetable, under UK control”. EEA membership, then, in stark contrast to May’s disastrous backstop, leaves the UK’s destiny in our own hands.
“Britain is not facing an economic crisis,” says King, “but a deep political crisis – which Parliament has brought on the country”. Indeed it has. The problem isn’t, and has never been, Brexit. The problem is that out-of-touch, self-serving MPs are determined to thwart the will of the people.
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