When the Brexit vote came up on 23 June, 2016, we went to bed that night thinking this wasn’t a big deal. Who in their right mind would vote to leave the European Union, the largest, richest and most frictionless single economy in the world?
We awoke to the answer on 24 June 2016: A majority – 51.9 percent – of the voters in the United Kingdom, or more than 17 million voters.
In the runup to the election, United Kingdom Independent Party leader Nigel Farage (who has a German wife and several French mistresses), Boris Johnson – later (briefly) foreign secretary – and others on the Far Right had convinced the British people the EU was the bête noire, responsible for all their troubles.
Leaving the EU would mean an extra 350 million pounds each week for the National Health Service; the UK would get a Brexit dividend and would soon be able to cut taxes with the windfall from brilliant new trade treaties around the globe.
In the intervening two years, what was billed as “the easiest negotiations in human history” have gone nowhere as Prime Minister Theresa May’s government discovered what those Remoaners suspected – divorces are bitter to the end.
As we mover ever closer to 29 March 2019, the likelihood of a “hard” Brexit increases every day, with the UK leaving the EU with no trade, transportation or freedom of movement agreements whatsoever. Which will have ramifications for expats across Europe and beyond.
This is a particularly fraught moment as May has presented a draft agreement negotiated with the EU to the approval of absolutely no one.
That agreement proposes keeping Northern Ireland, and the rest of the United Kingdom, in a European customs union until a plan that does not require customs check on the N. Ireland/Republic border is ready — which should only take another decade or so at this rate.
In short, the UK would remain bound by EU rules even though it’s not in the EU, which infuriates far-righters such as Jacob Rees-Mogg.
What’s next? Will May’s government fall, with Moggsy filing a vote of no confidence? Will there be a second Brexit referendum?
To quote the New York Times, “No one really knows.”
In a 14 November post, the Times explains the deal still has to be completed at an EU summit later this month, then make it through the UK and EU parliaments with less than 132 days till B-Day. Right.
So we’ve started a running update of Brexit developments:
• On the day May presented the draft agreement to parliament, the guy who oversaw Brexit quit. Brexit Minister Dominic Rennie Raab – the son of a Czech-born Jewish refugee who escaped the Nazis, and who is married to a Brazilian Google executive – said he could no longer support the deal, which Raab said has “two fatal flaws.” Which he negotiated. Monty Python couldn’t have written a more absurd script.
• On 31 October – Halloween, appropriately – the Guardian reported that Manhattan-based rating agency Standard & Poor’s warns that a no-deal Brexit would plunge the U.K. into recession, send unemployment skyrocketing, home prices lower and office leasing rates off the cliff. Oh, and for good measure, Britain’s credit rating would be downgraded.
• The New York Times has a post about a new phenomenon – Brexit Preppers. They’re the Brits who are hoarding food, medicine, toilet paper and other supplies, preparing for the disruption of supplies likely after a no-deal Brexit.
From the post:
“People are talking about World War II and rationing,” said Ms. Mann, a former midwife. “People have also been talking about the blackouts in the 1970s, and how power was rationed. This has the potential of being a combination of the two,” she said.
• Scottish First Minister Nicola Sturgeon said in a 15 October speech at the Royal Society of Arts in London that Scotland voted overwhelmingly to remain in the EU. In the event of what she calls “a blindfold Brexit,” “Scotland must have the option to choose a different course, as an independent member of the EU.” Make of that what you will.
You can see her full speech here. It’s worth a close read as it might be a harbinger of things to come in the UK as Northern Ireland and Scotland voted to stay, while Wales voted to leave.
• San Francisco-based Wells Fargo became the latest global financial giant to announce it was shifting its European operations to mainland Europe from London. Wells Fargo announced 15 October that it will open a subsidiary in Paris post-Brexit, according to The Financial Times.
• Former Conservative Prime Minister John Major said in a 15 October speech to the Foreign Office that Brexit is “a colossal misjudgment that will diminish” the UK while also threatening its future existence.
• On 20 September, European Union leaders including French President Emmanuel Macron told Prime Minister Theresa May her Chequers Plan is unworkable, increasing dramatically the chances of a no-deal Brexit. Or as CNN phrased it in their headline, “Brexit was sold by ‘liars’ and Britain’s exit plan is unworkable, UK told.” The remarks came during a Brexit Summit in Salzburg, Austria.
• Bank of England Gov. Mark Carney stated a no-deal Brexit could lead to a housing crash in Britain and other financial issues comparable to that of the 2008 financial collapse. The BOE carries out “stress tests” to check whether the banking system can withstand extreme financial shocks.
The most recent from November 2017 predicted a 33-percent fall in house prices could occur in a worst-case scenario, according to the BBC. Carney’s worst-case scenario was that house prices could fall as much as 35 percent over three years, a source told the BBC.
• On Sunday, 9 September, The Times of London published details of a leaked report from the National Police Co-ordination Centre. The report warns that in the event of a no-deal Brexit, the military might have to be deployed to back up police to quell civil unrest after food and other necessities start disappearing from British shelves. The NPCC report warns that traffic jams at ports could lead to “unprecedented and overwhelming” disruption to the road network.
• Speaking of goods disappearing, the Financial Times is reported Sunday that British businesses would have to stock 40 billion pounds worth of imports to preserve inventories in case of a no-deal Brexit. That increase in business would lead to a spike in the economy, followed by an equal and opposite reaction – a dip as business activity post-Brexit decreased, according to the Centre for Economic and Business Research.
The FT quoted Douglas McWilliams, CEBR founder, as saying, “This makes a post-Brexit mini-recession almost inevitable.”
• You knew this was coming … a warning Brexit would deny Ed Sheeran’s global fan base access to his new music. Wait, this is serious. The New Music Express, or NME as it’s now called, reports the British Phonographic Industry trade group is warning a no-deal Brexit could be catastrophic for Britain’s music industry, which is huge.
Who knew that UK-based artists account for one out of eight albums sold globally in 2017!
• On 6 September, several British media outlets including Sky News revealed the existence of Operation Yellowhammer, the May government’s planning for a worst-case, no-deal Brexit scenario. That plan includes messaging to reassure financial markets to keep them from collapsing.
The plan also calls for instituting budget austerity, with taxpayers funding emergency measures such as stockpiling pharmaceuticals and other essentials.
Operation Yellowhammer is the work of the Civil Contingencies Secretariat, designed to plan for emergencies and disasters.
• On 23 August, Brexit Secretary Dominic Raab sent out 24 technical notes he called “practical and proportionate advice” in case the UK leaves the EU without a deal. Raab’s release of the documents was meant to demonstrate to the British public that adults are in charge, with plans to ameliorate the worst effects of a no-deal Brexit.
Why, “the vast majority” of consumers won’t even notice any impact, Raab said, apparently referring to Brits who don’t fly, eat food, work for a living or make credit card purchases.
“People and businesses should not be alarmed by no-deal planning and preparation, nor read into it any pessimism. Instead, they should be reassured that we are taking a responsible approach, ensuring the UK’s exit can be as smooth as possible in all scenarios.”
• Unfortunately for Raab, the very same day, May’s Chancellor of the Exchequer Phillip Hammond stated in a letter to Tory MP Nicky Morgan, chairwoman of the Common’s Treasury Committee, that a no-deal Brexit will mean a 7.7 percent decrease in the UK’s GDP over the next 15 years.
To put that in perspective, the real GDP contracted by 4.2 percent between late 2007 and mid-2009 during the U.S.’s worst economic downturn since the Great Depression.
From Hammond’s letter:
Under a no deal/WTO scenario chemicals, food and drink, clothing, manufacturing, cars, and retail were estimated to be the sectors most affected negatively in the long-run, with the largest negative impacts felt in the North East and Northern Ireland.
Bottom line: Government borrowing is projected to increase by 80 billion pounds per year by 2033 to cover the budget shortfall in order to simply maintain the status quo.
Just in case you’re not depressed yet, here are a few more details from Raab’s soothing words to the British public concerning a no-deal Brexit as reported by the BBC:
• UK citizens living in the EU could lose access to payments and pensions from UK banks unless the EU passes its own new regulations.
• The cost of credit card payments between the UK and EU will “likely increase” and won’t be covered by a ban on surcharges. Credit card users could be hit with a new “Brexit tax” – about 166 million pounds.
• Businesses trading with the EU should start planning for new customs checks, and – by the way – might want to invest in new compliance software.
• The UK’s organic food producers could face new hurdles to exporting to the EU.
• Pharmaceutical companies have been told to stockpile an extra six weeks’ worth of medicine to ensure a “seamless” supply.
Kind of lost in all this good news is that a no-deal Brexit has rekindled talk of Scottish independence.
Scottish National Party leader Nicol Sturgeon tweeted:
That a ‘no deal’ Brexit would be an unmitigated disaster – and the fact that UK govt is even talking about it – is evidence of their abject failure. That they once had the nerve to tell us that independence threatened our place in Europe adds insult to injury. Scotland deserves better.
The essential question is, will the Tories come to their senses before the UK goes over the cliff? Most British and international business leaders have opposed Brexit from the start. And banks and financial giants have already begun the exodus to Amsterdam, Paris, Frankfurt and Luxembourg City.
If there is a movement for a revote, it will have to be led by a Tory … and there are few Tories outside David Cameron, Dominic Grieve, John Major and Morgan who are willing to say out loud that Brexit could be the biggest strategic mistake the UK has made since the Battle of Yorktown.
The best posts we’ve read on Brixit:
• “Brexit — #Brexcrement horrors and howlers” by Rob Mudge condenses all the hilarity of Brexit into a five-minute read of hypocrisy, flipflops and outright lies.
• Brexit: Britain’s atavist revolution. Sam Natapoff on Salon.
• Think we can rewind to the heady days before Trump and Brexit? Think again. Gary Younge in The Guardian.