May’s ex-deal is nailed to the perch

Theresa May © Getty images
The hard work is still to come for May

All sides in the debate have declared the PM’s Brexit deal dead. What comes next? Stuart Watkins reports.

It was a “funeral masquerading as a baptism”, says Matthew d’Ancona in The Guardian. In Brussels this week, Theresa May’s Brexit deal – a 585-page agreement and a 26-page political annex that defines the UK’s relationship with its EU trading partners over a two-year transition period – was “welcomed into the world by the UK’s soon-to-be-ex-partners and the ‘priesthood’ of the European Commission”. But the agreement is a dodo. “This is an ex-deal. The only reason it is sitting on its perch is because it has been nailed there.”

Barring a dramatic realignment of parliamentary opinion, the deal simply cannot survive the “meaningful vote” in the House of Commons, expected on 11 December, says d’Ancona. In the meantime the whips will be busy, but it’s hard to see how they can possibly deliver a victory for May.

What happens after her defeat? No-one knows, but as Jeremy Hunt, the foreign secretary, has admitted, the wholesale collapse of the government cannot be ruled out. “The worst news May has ever had to confront is that the past two-and-a-half years were the easy bit.”

PM may rise above the tantrums

I wouldn’t be so sure, says Martin Sandbu in the Financial Times. All sides are hostile to the deal because they misunderstand what it is – not a final, finished operational trade agreement of either the Norway or the Canada type. Such a deal is hardly possible until Britain decides what kind of deal it wants. Rather, it is a withdrawal agreement, designed to make the transition period as smooth a process as possible until a final trade deal is agreed. It should be judged on whether it achieves this. It does. It perpetuates most of the rights enjoyed by EU citizens in the UK and UK nationals in other EU countries.

It settles outstanding financial commitments fairly. It amicably settles the touchy issue of dispute resolution over its own content. And it ties up a myriad of other loose ends and secures a welcome degree of continuity. In every previous period of Brexit turmoil, May has emerged looking stronger than anyone previously thought once reality had had time to sink in. “This time will be no different.”

The costs of the agreement

Meanwhile, the warnings about the expected costs of the deal were starting to roll in as MoneyWeek went to press. Two independent reports estimated that May’s deal will reduce living standards by between £700 and £2,000 per person per year compared with remaining in the EU. In advance of the publication of the government and Treasury’s own assessments, the chancellor, Philip Hammond, warned May’s deal would make people worse off in economic terms.

There is no version of leaving the EU that increases prosperity, he told the BBC. But bear in mind that the Treasury’s long-term forecasts have in the past been at the more pessimistic end of the spectrum, says Capital Economics. The consultancy expects strong GDP growth of 2% or so in 2019 if the deal is ratified, or a hit to GDP of between 1% and 3% in a no-deal scenario.

The costs of remaining should also be factored in, says Matt Kilcoyne for The Spectator’s Coffee House blog. EU bigwigs have made it clear that a Britain that changed its mind and decided to remain stands to lose its £5.6bn rebate and its opt-outs, most controversially including its exemption from joining the single currency. And the costs of doing business in the EU, under the new burden of the GDPR data regulations, will continue to grow.

The PM should not just spell out the costs of the Brexits she doesn’t like, but the costs of going cap in hand back to the EU too. Whatever the costs of Brexit, it’s clear “the status quo is no longer an option”.