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Analysis

We must be honest about transition: 2 years is not enough

by Hugo Dixon | 15.12.2017

Theresa May is hiding the truth about the next stage of her Brexit deal. A two-year transition merely postpones the cliff edge to 2021. We’ll need at least five.

Now that the EU has agreed that we can move on from the divorce deal, transition will be the main focus of the talks. You might have thought that this will flush out the prime minister’s dishonesty. But don’t count on it.

May has every incentive to pretend that two years will be long enough, as Tory Brextremists would be livid at the possibility that we might still be paying into the EU’s budget and accepting free movement year after year after year. She cares more about keeping her party together than doing what’s in the national interest.

But won’t the EU demand a longer period? That seems unlikely. The other EU leaders know that two years isn’t long enough. But they also know we need them more than they need us. Come 2020, when it’s clear to everybody that we are charging over a precipice, they know we will be begging for a solution. They have us over a barrel.

So there’s every possibility that the coming transition talks will avoid the elephant in the room: that two years doesn’t do the trick.

Why isn’t two years long enough?

Hang on, you may ask, are you sure it won’t be long enough? There are four reasons why May’s timetable is hopelessly unrealistic.

First, we won’t even start formal talks about a trade deal with the EU until after Brexit in March 2019. All we’ll do before that is, at best, agree the “framework” of a future trade deal. As the European Council made clear in its guidelines for the next phase of talks, it envisages setting this out in a “political declaration”.

Second, this framework will be a short document that isn’t legally binding. The ultimate free trade deal will probably run to over a thousand pages of densely packed legalese, every word of which could really matter for different parts of our economy. David Davis, the Brexit secretary, has made the ridiculous claim that we can sign the deal “one minute after we leave, or one second after we leave”. The EU’s most ambitious trade deal is with Canada. This took seven years to negotiate.

Third, even after we sign an agreement, it will need to be ratified. Davis has at least started admitting that this may not be a cinch. He told MPs this week that all the other 27 member states may need to ratify it. That’s a cumbersome process involving national and regional parliaments. It nearly sank the Canada deal after the Walloons had objections.

Fourth, we may still need time to implement whatever deal we’ve done. That could add further months or years to the process.

When you put it all together, it’s clear we’ll need much more than two years to avoid falling over a cliff. The Irish deputy prime minister said yesterday we’ll need four or five years. Even that may be ambitious.

What’s the problem with pretending otherwise?

Perhaps Theresa May is ignorant. But she probably knows all this and is just keeping mum to avoid open warfare in her party. Perhaps she thinks it won’t be her problem as she won’t be prime minister when the shit hits the fan. Or maybe she thinks the government will just ask for a longer transition when it becomes clear we’re facing a precipice.

Such thinking is no way to run a country.

First, she’s hiding the truth from voters. They deserve to know that the prime minister is planning to sign us up for five years of transition. Five years of free movement. Five years of following EU rules without a say. Five years of paying into the EU’s budget. In the latter years we wouldn’t even keep our rebate. Each extra year would cost us around £12 billion pounds – so another three years would double our divorce bill to £75-80 billion.

Second, businesses won’t invest if they think we are charging over a cliff in 2021. They will shift more and more activities offshore. We’ll be stuck with a low-investment, low-productivity, low-wage economy. It’s what Jeremy Warner, in today’s Telegraph, calls “slow death by a thousand cuts”.

Third, maybe we’ll still go over the precipice in 2021. Perhaps whoever is Tory prime minister will then decide it’s more important to extricate ourselves completely from the EU than save the economy. Or maybe the government will plead for an extension of the transition but the EU will say no. Or perhaps it will be impossible to get all the EU’s parliaments to approve an extension in time.

As Davis admitted in the House of Commons yesterday: “If we try to go beyond two years, a number of European national Parliaments have said to their Governments that that would require a mixed procedure, which would involve the Walloon Parliament and 36 other Parliaments around Europe.”

Break conspiracy of silence

We can’t rely on May to fess up that two years is not enough. Sadly, we can’t rely on the EU countries, with the exception of the Irish, to do so either. But there are four groups that have a strong interest in getting the truth out.

  • Most MPs, including sensible Tories, don’t want to tank the economy. The Commons’ Exiting the EU Committee earlier this month called for the government to publish a white paper on the transition. It should push hard for this, as it could flush out the truth.
  • Workers will suffer terribly. The TUC has been arguing that we need to stay in the single market. It should now campaign for honesty over the transition.
  • Business has been pushing a transition because it was worried about a cliff edge in 2019. The Confederation of British Industry and other bodies now need to sound the alarm over a 2021 cliff.
  • Philip Hammond was responsible for getting May to agree a transition. The chancellor now needs to say that kicking the can for two years won’t do the job. Diving over a precipice in 2021 isn’t even in the Tories’ interest. Trashing the economy one year before the next election would amount to rolling out the red carpet to Downing Street for Jeremy Corbyn. Even the Daily Mail should be able to understand that.

If we’re going to have a transition, let’s be honest about it. If the people are happy with five or more years, fine. If they want to dive over a cliff in 2021, fine. And if they don’t want either, let’s cancel Brexit entirely.

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Edited by Luke Lythgoe

3 Responses to “We must be honest about transition: 2 years is not enough”

  • The European Commission president, Jean-Claude Juncker, said that the “real negotiations” on the second phase would not begin until March next year. That is the date when the negotiation guidelines say that the framework for trade talks will be issued. source guardian

    Talks about “future relationship” between UK and EU will begin “straight away”, says Prime Minister Theresa May http://bbc.in/2yzrDoK

  • My worry about a long transitional period is that Brexit will become like the RB211 project. So much time, effort and expense will have been sunk into it that people will be reluctant to cancel it.