Longer transition is necessary but would be miserable

by Hugo Dixon | 13.10.2018

We will certainly need a longer transition period to avoid an abyss in just over two years. But it won’t solve Irish border problem and will cost us dear.

The idea of such an extension is being floated in three papers this morning – the Telegraph, the FT and the Times. It is being put forward partly as a desperate ploy to stop the DUP pulling the plug on the government and partly to avoid a cliff-edge in December 2020 when the transition negotiated by Theresa May is supposed to end – given that nobody thinks we can nail down the details of a trade deal with the EU by then.

The fanciful thinking on the Irish question goes as follows. The EU is insisting on a legally-binding “backstop” to keep the Irish land border open in all circumstances. However, all versions of the backstop so far devised would involve checks in the Irish Sea – crossing the DUP’s “blood red” line. By buying more time, a future trade deal with the EU could be agreed which keeps all our borders with the EU open – and so the backstop would never have to be triggered.

The logic is flawed because the EU is unlikely to agree a trade deal that keeps all our borders open as long as the government insists on eventually pulling out of the single market and customs union. So if and when a trade agreement is reached, the backstop will be needed to keep the Irish land border open. Checks will then have to be imposed in the Irish Sea – otherwise goods could flow unimpeded from Great Britain into the EU via Northern Ireland and the Republic of Ireland.

Given that this is one issue that the DUP cares about more than almost anything else, it is unlikely to be conned by the idea of a longer extension. No wonder that the government is toying with the idea of dumping the DUP, according to The Times – though it is unclear how it would then survive.

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Miserable years as a ‘vassal’ state

Even though a longer transition doesn’t solve the government’s DUP problem, it will still be needed to avoid that abyss in December 2020. The snag is that the one-year extension currently being mooted – to end 2021 – won’t do the trick. It will take even longer than that to finalise a deal. One would have thought that the Conservatives can see the folly of the economy falling off a cliff in December 2021, just five months before the next general election.

The problem is that every extra year of transition is going to involve another year following all the EU’s rules and paying into its budget without a vote. Given that we would lose our budget “rebate”, which Margaret Thatcher negotiated all those years ago, the likely net cost per year would probably be about £13 billion. Assuming we need another three years, that would be £39 billion on top of the £39 billion we have already agreed to pay to settle our past accounts – in other words £80 billion in round numbers.

Nobody – whether patriotic pro-Europeans or hardline Brexiters – will like that. It would amount to losing not taking back control. No wonder Jacob Rees-Mogg has told The Telegraph that extending the transition would be a “very high-risk strategy”.

Quite so. But the prime minister is in such a bind that she has no good strategy. The only sensible course of action is to ask the people whether they wish to stop the madness once the talks are over. If you agree, make sure you come to the People’s Vote March next Saturday – and bring your friends and family too.

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    4 Responses to “Longer transition is necessary but would be miserable”

    • Given that it is becoming ever clearer that more time will be required surely extension of the Article 50 period (for which consent would almost certainly be granted by the 27) is much the better option than extending the transition period. While brexiteers may worry about the fact that this would delay the formal date of leaving the EU surely they will see that this option would strengthen the negotiating power of the UK, which would be immensely weakened by having to seek concessions after the leaving date. Only those extremists who merely want out with no concern whatsoever about any deal with the EU could possibly want the UK position to be so seriously weakened.

    • You are absolutely right. Furthermore, extending the article 50 negotiations is the only way to prevent a catastrophic rupture with 168 non-EU countries with whom we have over 700 agreements (covering every vital aspect of our economic relations with them) solely by virtue of our EU membership. Once we leave the EU those agreements come to an end; a fact which seems to be under-reported.

    • I don’t see either how extending the article 50 period wouldn’t strengthen UK’s negotiation power. And if it does, why should the 27 agree to extending?