Ian McConnell: Bad economic omens in Michael Gove ‘philosophy’ on European Union and Priti Patel immigration outlook

This latest round of talks, held by video-conferencing amid the coronavirus pandemic, does not seem to have gone at all swimmingly. The omens did not look good even before the talks started, of course, with great dollops of posturing from the UK side.

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Michel Barnier, the EU’s chief negotiator, said as the talks came to an end on Friday: “Despite its claims, the United Kingdom did not engage in a real discussion on the question of the level playing field – those economic and commercial ‘fair play’ rules that we agreed to, with Boris Johnson, in the political declaration. On this topic, this was a round of divergence, with no progress.”

Divergence seems like a gentle euphemism in this context.

Mr Barnier noted the discussions had enabled the EU “to clarify a number of issues in areas such as trade in goods, transport or the UK’s participation in future programmes of the [European] Union” and “at last…to initiate the beginnings of a dialogue on fisheries, even if our positions remain very far apart”.

However, he added: “With the exception of some modest overtures, we failed to make any progress on any of the other more difficult topics.”

It was interesting to read Mr Barnier’s thoughts about a “Canada-style” trade deal with the EU, something that Mr Johnson has touted as a possibility.

Mr Barnier said: “The United Kingdom frequently refers to precedents. It tells us it would be content with a ‘Canada-style’ deal. But at the same time – and this is the real paradox of this negotiation – in many areas, it is demanding a lot more than Canada! It is even looking to maintain the benefits of being a member state, without the obligations.”

He added: “We are negotiating a trade agreement with a third country here – one that chose to become a third country. This is not an opportunity for the United Kingdom to ‘pick and choose’ the most attractive elements of the single market. This makes me believe that there is still a real lack of understanding in the United Kingdom about the objective, and sometimes mechanical, consequences of the British choice to leave the single market and the customs union.”

It remains difficult to understand what the UK hopes to achieve through Brexit from any kind of sensible economic or trade perspective.

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In any case, what is clear is that there remain huge differences between the UK and EU on their future relationship. This is not about thrashing out details.

So it was, against the backdrop of the latest seemingly largely fruitless set of talks, not surprising to see the pound slip to a five-week low late last week on elevated fears of a no-deal departure from the single market.

Mr Gove, Minister for the Cabinet Office, told the BBC’s Andrew Marr show at the weekend: “There’s a big difference, a philosophical difference, between the position that we take and the position that the European Commission take. The European Commission want us to follow the rules even though we’ve left the club and the European Commission want to have the same access to our fish as they had when we were in the EU even though we’re out.”

It is difficult to escape the notion that the issue of fish is being highlighted so much by the Conservatives because it is a potentially emotive issue for some, and can be portrayed easily as some kind of geographical battle with the EU bloc. Something to rouse the British nationalists.

Mr Barnier’s viewpoint seems fair enough. It remains difficult to shake the impression from a UK perspective that the Conservative Government continues to want to have its cake and eat it in terms of the future relationship with the EU. For many years now, the Tory Brexiters have postured and played to the gallery. The December 2019 election result indicated that many voters have lapped up this stance.

However, there is no escaping the fact of the matter: there is now little more than seven months until the end of the transition period which is protecting the economy and living standards in the UK from the actual effects of Brexit.

Forecasts drawn up by Theresa May’s government show huge damage to the UK economy from a no-deal exit. The damage is of course very significant even if the Conservatives can get the comprehensive free-trade deal they say they want with the EU.

The May government forecasts show a major hit to the UK economy from leaving the single market under any scenario. This is no surprise, given the permanent loss of the huge economic benefits of free movement of people to and from other EU countries.

Of course, for many Brexiters, this whole sorry saga has always looked to be about clamping down on immigration.

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The Conservatives’ immigration bill, aimed at introducing a points-based system, passed its second reading in the Commons this week.

Home Secretary Ms Patel appeared to add to the whole Alice in Wonderland vibe around Brexit with the proclamation on Twitter this week: “We’re ending free movement to open Britain up to the world.”

This contradiction is surely impossible to fathom, and also infuriating. Opening the UK up by ending free movement to and from EU countries? What?

The damage to the UK economy from the coronavirus crisis looks to be huge, although there remain a wide range of possibilities in terms of the speed and strength of recovery. Many other countries have also been hit hard.

However, while the economic damage from leaving the single market could be masked to some extent by the huge effects of the coronavirus crisis, that does not mean the severe drag on UK output and living standards arising over years and decades from the Tory drive to separate from the EU is any less of a real thing.

And that brings us back to a key question: why would the Conservatives inflict yet further damage on the UK by refusing to extend the transition period?

We continue to hear that Brexit has been done. Yes, the Leavers did get their technical Brexit on January 31 but it is important for everyone to realise that nothing much will change until the end of the transition period on December 31.

The Government knows this fine well.

It was worrying, and demoralising, to read a media report over the weekend that UK Government Ministers were moving civil servants back from dealing with Covid-19 to no-deal Brexit planning.

Negotiating stances are one thing but this report did nothing to dispel the notion that many Conservative Brexiters would be quite content to walk away without a deal.

It is difficult to remember anything from Mr Gove to dispel this notion either.

Last summer, he warned the Government “must operate on the assumption” the UK would leave the EU without a deal.

Indeed, in the context of the Minister for the Cabinet Office’s weekend comments, the Conservative Government’s attitude to our EU neighbours laid out by Mr Gove continues to look far more ideological than philosophical.

It is in stark contrast to the Government’s seeming pandering to the US on trade. There have just been two weeks of trade talks held between the UK and US by video-conferencing but the thing that is most apparent from these is big, broad-brush statements about potential rather than anything of substance.

And the UK’s post-Brexit tariff arrangements outlined yesterday by International Trade Secretary Liz Truss, which received mixed reviews, amount to a hill of beans relative to continuation of frictionless trade with the EU.

The Conservatives seem at times when it comes to trade to be making a great deal of noise about everything apart from what is really important – maintaining the closest possible of relationships with the EU. The sensible thing to do would be to ensure continued single-market membership, but of course that was ruled out by the Tories years ago even before the Brexit negotiations got under way in earnest.

Curiously, the UK’s chief negotiator in the talks with the EU, former Scotch Whisky Association chief executive David Frost, claimed the European bloc was being ideological. This seems strange, given it is the UK side which has been banging on about not being perceived enough by the EU as a “sovereign state”. The UK was, of course, a fully sovereign state as part of the EU, so the continuing reflection by the Brexiters on this point remains difficult to understand.

Mr Frost declared: “The major obstacle to this is the EU’s insistence on including a set of novel and unbalanced proposals on the so-called ‘level playing field’ which would bind this country to EU law or standards, or determine our domestic legal regimes, in a way that is unprecedented in free trade agreements and not envisaged in the political declaration. As soon as the EU recognises that we will not conclude an agreement on that basis, we will be able to make progress.

“Although we have had useful discussions on fisheries on the basis of our draft legal text, the EU continues to insist on fisheries arrangements and access to UK fishing waters in a way that is incompatible with our future status as an independent coastal state.”

Emotive language in negotiations may be common-place but when was the UK not an “independent coastal state”? The geography has not changed.

Mr Frost added: “It is hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement. We very much need a change in EU approach for the next round beginning on 1 June.”

The grim impact of the Tory Brexit folly on the UK economy will be a simple arithmetical reality given the determination to leave the single market, whether or not it is ideological or philosophical. The greater the dislocation, the greater the amount subtracted from the UK’s economic output.

Given the coronavirus effect, the last thing the UK economy needs is a further hit fuelled by philosophy, or ideology, or whatever you want to call it, towards our EU neighbours.