Yesterday the British Prime Minister made a speech about Brexit which I thought set out the Britain’s position on their relationship with Europe going forward. I could not see the continuation of membership of the single market once I had formed the conclusion that immigration was the biggest single issue in the referendum. As for the customs union I knew far less about that but again it seem inconceivable to be a member of that and want to try and form new relationships with countries around the world. In short Britain will be free to try and make the best of the decision that the country made – whether that was a wise long term decision is irrelevant – the decision has been made so we need to move on.
The first consequence of the speech yesterday was that the SNP’s bluff has been called. Up until now the SNP has been making a lot of the running on what form Brexit should take. Their argument was that as Scotland voted to remain in the EU then Scotland should be able to forge their own relationship with the EU without any clear idea as to how that would work with the rest of Britain. However, they conveniently ignored the other referendum result from 2014 where Scotland comfortably voted to stay part of the United Kingdom: Therefore Scotland is bound by the decisions made by the United Kingdom, in this case to leave the European Union.
The obvious retort to this is that Scotland should be allowed to have another referendum to see if they now want to stay as part of the United Kingdom now that it is leaving the European Union against the wishes of the majority of voters in Scotland? But there is a problem here too – there is no evidence that the SNP would win this. In fact over 400k voters who would vote for Scottish independence voted to leave. So the electoral maths just don’t add up in the SNP’s favour and they know this but they still have to try and come up with some methodology whereby they might change opinion. So I suspect they will try and paint every little thing bad that comes out of England – it won’t be pretty but it might just work especially when there is little chance that the UK Parliament in London is unlikely to even consider granting another referendum on Scottish independence anytime before the next British general election in 2020 thus forcing a reluctant Scotland out of the European Union.
The next consequence of the clean break with Europe is that for any company that exports to Europe nothing will change. This sounds somewhat counter intuitive but it is unlikely that any British manufacturer will produce one product for British standards and one for Europe it just isn’t economically viable. If there are tariffs and checks placed on your exports it is far easier to show that your products comply with all the EU regulations, as they do now anyway, rather than go through the problems associated with having one standard for Britain and one for the EU. I was first really aware of just how powerful the EU was for imposing its standards on non EU products when I listened to the Bottom Line podcast about data protection. Here the EU standards are being adopted as de facto standards by companies all around the world including the American tech giants like Google. What this means is that even though we will no longer be part of the EU we will continue to comply with all their standards whether we like it or not.
This then has significant consequences for future trade deals Britain might want to strike with other countries, such as the USA. If we are still trying to meet EU standards how will we be able to deal with such things agricultural produce imported from the USA – much of which probably doesn’t meet EU standards on such things as GM crops and meat standards. So if you are a pie manufacturer, for example, who exports to the EU then you are probably less likely to use produce from the USA because of these concerns. Such problems could scupper many trade deals no matter how bombastic the President of the United States might be.
One final thought on retaliation. Some of the papers in Britain today seem to be suggesting that we can punish the EU if we don’t get what we want. Having listened to the PM’s speech I think that this is over egging things. I have written a number of times on the dangers of nationalistic posturing and bombast during the forthcoming negotiations and this clearly falls under that heading. Both the EU and Britain have a vital interest in dealing with each other fairly – there would be no winners from such a conflict. Britain isn’t Norway, Switzerland, Lichtenstein et al it is far far bigger than that so the EU is going to have to deal with Britain in a more sympathetic way. Equally, the EU is not some weak failed state but rather the home to the largest and richest market in the world and so should also be dealt in a sympathetic way. If this is the way things are conducted then something can be sorted out – although I really do think it won’t be in the two years and may take some time after that. Before finishing it is really worth remembering my caution from a few blog posts ago – if anyone claims to know what is going to happen they don’t so treat the above with extreme caution.