The Ides of March

The reporting of the leaked government forecasts on the regional impact of various Brexit scenarios this week was a good example of the media's "bias against understanding", with little attempt to explain what the numbers actually represented, let alone what they would mean in practice. Some people interpreted them as evidence of economic depression (i.e. an absolute fall in output), which at 15 years long would be nothing if not remarkable, rather than a reduction in the rate of GDP growth over the period. That all Brexit outcomes are going to make us relatively worse off has never been in serious dispute (i.e. beyond the free-trade fringe), and some leavers were resigned to this from well before the referendum, valuing greater "control" over immigration and domestic law above national wealth. Few commentators noted that the forecast limit does not imply a recovery from sub-par growth after 15 years, that horizon simply being as far out as the analysts felt confident modelling. Given that national wealth is cumulative, it would take many years to make up the lost ground, and that's assuming we could achieve above-par growth for a sustained period (we haven't managed it yet during the recovery that started in 2013), so what is actually being forecast is a generation-long recession.

The noise around the forecasts has helped distract attention from the crisis in government over the Brexit end-state, so much so that I'm wondering if the leak was actually engineered by Number 10 rather than "meddling" civil servants. The division in the cabinet over the desired future is not one that can be bridged. A compromise between those who want maximum alignment with the EU and those who want the minimum would satisfy neither. It would be a lose-lose. As there is no win-win either, the only possible outcome is zero-sum: one side has to win and the other lose, hence the fevered talk of expulsions and leadership challenges. In microcosm, this reflects the larger negotiation between the UK and the EU, except there is little doubt that whatever happens the EU27 will not lose. The best the UK can do is minimise its losses (that was the real message of the multiple GDP growth scenarios), but that necessarily means rejecting any compromise with the Brexit ultras and seeking maximum alignment. This dilemma has led to the current irritable state of affairs in which the EU is pointing out that the UK government has yet to hand in its homework, while ministers in London pretend to be affronted by what they characterise as Brussels' high-handedness.

While cake has been the most prominent food metaphor to date, the tactical objective of the UK government remains cherry-picking: the idea that a series of bespoke sectoral deals can be negotiated that will preserve key European markets and supply-chains while allowing full autonomy in respect of trade agreements with other countries. The problem is that cherry-picking is politically unacceptable to the EU27 because of the obvious precedent it would set, not just for existing members but for those like Switzerland and Turkey who are resigned to non-membership but would like improved benefits. Despite its notorious weakness for fudge, the EU remains a construct built on institutions, hence all that is on offer to the UK is a limited set of menu options, essentially Norway or Canada. If this wasn't challenging enough, the true believers of Brexit (and the opportunists, for that matter) are disinclined to accept any deal that doesn't look like a clear loss for the EU. They want to be able to say that money has been repatriated for the NHS and that the EU has admitted it cannot live without our market for German cars and Italian prosecco. They also want remainers neutralised. They want, to put it bluntly, a dead body.

For the ultras, any continuing authority by the EU over trade or commercial regulation is a red line. Though they are insisting that this authority should end in March 2019, it would be reasonable to compromise on the transition period, despite the hype about being a "vassal state" (a time-delimited vassal state is obviously a nonsense), but that only amounts to a delay until December 2020. Any form of associate status of either the Customs Union or the Single Market would entail continuing EU authority in practice, hence the insistence that only a bilateral trade deal (i.e. one in which the UK has equivalent authority to the EU27) is acceptable. Though the maximum alignment faction, led by Philip Hammond, look closer to the EU27's position, in reality there remains a big gulf between them and Michel Barnier & co because of the insistence that the UK cannot be a member of "the" or "a" customs union. Brexit in name only might look attractive to the #FBPE crowd, but it isn't on offer from the EU27 except in the form of explicit membership of both the Customs Union and the Single Market, which isn't something that Hammond & co can sell domestically.

To no one's surprise, the Irish border has come back into focus as the most intractable problem facing the negotiating teams. Unless the UK stays within both the Customs Union and Single Market, a harder border is inevitable. The questions that arise are where and how hard. The Tories and the DUP are both opposed to a border in the Irish Sea, even though this would be the most practical solution and enjoys popular support (or perhaps indifference), even among unionist voters. For the DUP it is an existential issue that would represent the first step towards their full absorption into a united Ireland. Suggestions that a land border between Northern Ireland and the Republic could be magicked away by technology remain literally incredible. While the Tory ultras insist that there is no need for a hard border, they are essentially playing a game of chicken because they simply don't care what the outcome is. If a hard (or even hardish) border reappears, they will simply blame the EU. If it could be engineered, which I doubt, I suspect that Rees-Mogg and his ilk would accept an Irish Sea border as the price for a "clean break" for Great Britain.

All the structural forces are pushing towards a continuation of the status quo, both during the transition and after, while the political imperative of Brexit remains the need for a visible rupture, even if the material consequences are negative. Everything the government is currently doing is aimed at putting off the inevitable crisis that this entails and hoping that something will turn up. But nothing will turn up. The EU27 aren't going to do anything that calls either the legitimacy or purpose of the union into doubt, which means that a "generous" trade deal for the UK simply isn't going to happen. The Brexit ultras aren't going to go away. Labour will, quite reasonably, present itself as the only party capable of facing down the ultras and the DUP to secure a pragmatic Brexit. Whether they could actually achieve this will remain a counterfactual unless the government falls. The preservation of her administration until 2021 is Theresa May's prime objective, but there is every sign now that she will be lucky to last beyond the end of March. The ultras (and the opportunists) know that the transition agreement will set the tone for the final deal, so the chance to secure the Brexit they want will soon pass: "There is a tide in the affairs of men" etc.