Monday 8 January
“We’ve given an awful lot away already…and now it’s time for the European Union to give a bit back on services and financial services,” said Nigel Farage moments after his meeting with the EU’s chief negotiator Michel Barnier in Brussels this morning, adding: “I’m not sure, looking at his body language today, he wants to give too much on that, so it’s going to be a little bit difficult.”
Indeed, it is.
As Leave.EU has argued for some time, a goods-based trade deal, based on the recently implemented one between the European Union and Canada would represent the sort of “bad deal” the Prime Minister threatened to dismiss almost a year ago at Lancaster House.
Here’s why. Britain’s goods deficit with the EU was £90bn in 2015 and looks set to break the £100bn barrier in 2017 (ONS). The services surplus, on the other hand, was £21bn (ONS) and is also increasing. Therefore, a deal strong on goods and weak on services is entirely in the EU’s favour especially since only around 5% of UK businesses sell into the EU (HMRC), and goods exports to the EU only account for 6% of GDP (ONS).
An entirely goods based deal would not undermine the UK economy of course. But equally, the WTO alternative would not be a disaster – the mass media, of course, would have you believe otherwise. The logic at play is simple, an unfair deal is a bad deal, and should be thrown out, along with all of Theresa May’s foolish concessions.
The no deal bluff
After the constant backsliding, it is time for the Government to play hardball. Today’s otherwise unremarkable Cabinet reshuffle suggests Downing Street plans to chart a different course in 2018 to the backwards one in 2017. Theresa May intends to create a new ‘no deal’ ministerial post in Dexeu. According to the Telegraph, the role will be subordinate to David Davis, but the minister will attend Cabinet meetings.
However, following on from Farage’s observation of Barnier, it should come as no surprise to learn the EU is not taking the bluff seriously. Before the New Year, a senior official is quoted as saying that it is not a case of “no being better than a bad deal, but rather that any deal is better than no deal. Her pliant reputation will not be shaken off easily, if it all. She may have been known as a bloody difficult woman among Tories, but not anymore, least of all in Brussels.
Farage, the anti (establishment) hero
Which is why Farage’s arrival on the scene carries even greater significance. He took Barnier to task over his appraisal of why the 17.4m voted the way they did. It turns out, the Frenchman had bought into Vote Leave’s completely unrepresentative vision of Eurosceptic Britain, populated by multicultural metropolitans dismayed by cash handouts to Brussels and the parlous state of their public services, but otherwise unbothered by mass immigration and subjugation to the EU Empire. How wrong he was.
Lord Ashcroft’s 12,000 strong poll conducted on the day of the referendum found that just under half of Leave voters said the single most important reason behind their decision was to take back control of British law, followed closely (33%) by those who wanted the tightening or loosening of borders to be decided from Westminster. The post-Brexit windfall of around £15bn showed up nowhere.
This presents a serious problem. It is one thing being locked in a negotiation where both sides want different things, it is quite another for one side to not even know what those things are.
Shortly after the final EU summit of the year, when Mrs May finally caved in, paving the way for phase II’s trade negotiations, Mr Barnier said Britain would have a choice between staying in the Single Market and the open border obligations that entails, and a copy of the Canada deal from off the shelf, containing virtually zero provisions for exporters of services.
As Farage, a former City man himself rightly alluded to, this would pose a headache for British financial services, if not a catastrophe. It is worth noting that financial institutions are working on the principle that Britain will leave the Single Market. None have left or are planning to leave. This brings us back to the issue of a fair deal and a bad deal and the need for a more muscular and honest approach – two staples of the Farage modus operandi – if we are to get a deal we can all get behind.
Theresa May needs Farage, to save her own judgement, to bring the fight to the EU’s door and most simply of all, remind everyone why they’re at the negotiating table in the first place.