Brexit

Brexit Talks Are Failing. Somebody Needs to Care.

The U.K. hasn't overcome political obstacles to serious negotiation. The EU has little incentive to bail it out.

Cliff's edge.

Photographer: Carl Court/Getty Images

Since talks on the U.K.'s exit from the European Union kicked off in June, there have been five negotiating rounds backed by speeches, press conferences and shuttle diplomacy. And yet the U.K. and Europe are no closer to agreeing about what their future relationship should be, or even settling the divorce bill. Now the question is whether there will be a deal at all by March 2019, when the treaties binding the U.K. to Europe will automatically expire.

QuickTake Brexit

Last week, EU negotiator Michel Barnier delivered a withering assessment of the talks, which he called "deadlocked." There is not even agreement, he noted, on the issues the EU wants resolved before negotiations can start in earnest.

Negotiations always contain a measure of brinkmanship. But even allowing for that, the total lack of progress after nearly six months raises some bigger questions. Is there enough common ground to reach a deal at all, ever? And if not, what will happen?

The answer to the second point is clear: The U.K. will be the loser. No deal would mean tariffs on goods where there are now none; it would likely mean a host of non-tariff trade barriers, a reduction in scientific cooperation, and the jeopardizing of other areas of cooperation from policing to counterterrorism to agreements that allow planes to take off and land. And it would mean reintroducing uncertainty into a Northern Ireland peace agreement that was grounded on the benefits of EU membership.

Some of these dangers could be averted by 11th-hour diplomacy, but the picture is grim. And while there would be pain all around, the EU's share would be divided among 27 trading partners. The U.K. would suffer more.

A study out this week from the Resolution Foundation found that if the U.K. reverted to Most Favored Nation status under World Trade Organization rules, it would mean price rises in consumer goods from dairy to meat to clothing, with the poorest families hit hardest. Other estimates also make clear the economic costs of no deal would be significant, putting the lie to the "no deal is better than a bad deal" mantra repeated by Prime Minister Theresa May and others in her Conservative Party.

"I want someone to describe this mythical bad deal that is worse than that," said Labour's shadow Brexit minister, Keir Starmer, addressing residents in a north London pub last week.

So how to explain the impasse given claims on both sides that they want an agreement? Beyond tactical brinkmanship, the only explanation is that this isn't a negotiation, at least not yet. It's more like a series of lectures and position statements directed at domestic audiences.

The U.K. government can't compromise because that would reveal as fiction the underlying Brexit claim that Britain doesn't need Europe. The EU side can't compromise because its main motivation is to deter other would-be rebels.

Because the EU holds the better cards, it's likely to win the staring contest. But there's every possibility that the U.K. government — in this sense not unlike the Catalan one now facing an ultimatum from Madrid — would prefer to go down in a blaze of Brexit glory than humbly seek to get the best it can for its people.

Brexiters will bristle at the comparison with Catalonia's separatist regional administrators. The U.K. is a nation state that held a legitimate referendum in June 2016, when 52 percent of voters favored leaving the EU. The government's stated goal now is simply to carry out the will of the people. The problem with that argument is that the Brexit campaign was always based on a twin fantasy: that a deal would be fast and painless, and that Britain would quickly emerge better-off.

There are some British voters who would happily accept a torturous negotiation, a costly settlement and unfavorable trade terms for the benefit of controlling their own borders and freedom from rules set in Brussels. To them, the prize is already achieved. But for most Britons, there is a balance to be struck. In a recent poll, 52 percent agreed that leaving without a deal would be a "disaster" for the U.K. economy.

You would think, then, that May would take a more conciliatory stance. But part of the Brexit narrative is that the U.K. is in control. Thick red lines were drawn that make it impossible for the U.K. to participate in the single market or the EU's customs union. Countering that narrative risks exposing the deep division that tears at her party, and discrediting the campaign that so many of her colleagues fought for and whose tenets so many Britons accepted. That would take a more courageous speech than she has yet given.

If the EU were more motivated to reach an agreement, it could help pull the U.K. out of its rhetorical corner. When EU leaders meet later this week, they could drop the insistence on the strict sequencing of talks under which the EU has refused to discuss the future trade relationship until it has certainty on three exit issues: EU citizen rights; Britain's exit bill; and the status of the Northern Irish border with Ireland, an EU member. The EU knows, for example, that a solution on the Irish border issue is closely tied to the future trading arrangement, which it refuses to discuss. The EU also knows that May would have an easier time selling a more generous exit payment if she could sandwich that between bits of good news about future trade benefits. But why should it reinforce the Brexiters' message and undermine its own?

For all the criticism of May after a disastrous Conservative Party showing in a June election and a much-criticized recent party speech, it's not clear who else in her party is prepared to level with voters. That weakness should be May's strength. If she would finally dispel the myths of the Brexit campaign, she could begin real negotiations toward a realistic Brexit. The alternative is to edge closer to the cliff.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Therese Raphael at traphael4@bloomberg.net

    To contact the editor responsible for this story:
    Jonathan Landman at jlandman4@bloomberg.net

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