Retired diplomat Lord David Hannay helped negotiate Britain’s entry to the EU. Matthew Partridge finds out what he thinks about the government’s approach to our exit.
The government has no positive vision for Britain's post-Brexit relationship with the EU
(Image credit: 2018 Getty Images)
The diplomatic twists and turns in the talks about leaving the EU and agreeing a future trade deal may seem bewildering. But one person who has seen it all before is retired diplomat Lord David Hannay. A key part of the team that negotiated Britain's entry into the then EEC, Hannay was the UK ambassador to the EU from 1985 to 1990. He is currently a senior member of the European Union Committee in the House of Lords.
"Getting an agreement over the divorce terms, including the money that we have to pay the EU was definitely an important breakthrough and a good thing", says Hannay. But it's important not to "exaggerate things". After all, the agreement left "a lot of loose ends which have to be tied up in any final transition treaty". At the moment, the rest of the EU countries ("EU27") are discussing among themselves the instructions they will give to their negotiating team, lead by Michel Barnier. Once that is agreed, talks between Britain and the EU can begin in earnest.
One major hope among supporters of Brexit is that the EU countries' differing attitudes will force a fracture, allowing the UK to play them off against each other. However, Hannay thinks that this is very unlikely. Of course, Britain's major trading partners such as Sweden, The Netherlands and Denmark will want to retain closer post-Brexit links than countries such as Spain and Portugal, who don't trade as much with us. Eastern Europe will want to continue freedom of movement. But it is France and Germany (assuming Angela Merkel is able to form a government) that will play the biggest role in determining Europe's line. Some experts see Italy as a possible wild card, but elections in March are likely to be inconclusive. This will result in a lengthy period of coalition building, with the eventual government falling into line with whatever the rest of Europe agrees.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
The British government, however, "doesn't seem to have any agreed strategy, or even idea of what it wants the end state after the transition to look like", says Hannay. The prime minister "was clear in her Florence speech that she wants free movement to end and that she doesn't want the European Court of Justice to have any jurisdiction over the UK". But she hasn't articulated a positive vision for Britain's post-Brexit relationship with the EU, beyond "generalities". In effect, "she's given Brussels a long lists of of don'ts, but hasn't provided any dos".
Canada Plus Plus is just a slogan
Even the desire for a "Canada Plus Plus" (a free trade deal with enhanced access in certain areas) seems to be "just a slogan". In Hannay's view, any economic partnership will have to involve agreements on issues such as justice and home affairs, plus science and innovation, all of which have been "untouched" so far. While it's "impossible to tell" what sort of access can be agreed, he is "pessimistic" about the sort of access that Britain's banks and financial institutions can secure. In his view, "it is very unlikely that we can get anything close to passporting if we continue to draw all these red lines".
The idea of securing a trade deal by the end of 2020, the period at which the government wants the transition period to have finished by, is "pretty ambitious" argues Hannay. This means that "there is a strong case for a longer transition period" though such a move would "be very unpopular within certain parts of the government". In any case, if the end deal ends up being little more than a free trade agreement, "then you could argue that you are only replacing one cliff-edge for business with another".
Of course, if the government suddenly decided to adopt the EEA as a model for future arrangements then this would "clarify things quite a lot", especially since Europe "has had a lot of experience working with Iceland, Norway and Lichtenstein". At the least it "would be a striking alternative to the long list of negatives coming from the government at the moment". Sadly, such a sensible solution looks unlikely "as it would contradict what Theresa May said last year in Florence". The Prime Minister "seems to be conducting policy based on what will keep the Conservatives together, which is not the best way to make decisions".
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Annual house price growth halves to 3.5% – ONS
Nationwide pays £100 to millions of people – have you received the payment?
