BREXIT: Cambridge academics react to Theresa May’s speech on 17 January 2017
Dr Victoria Bateman — Economic Historian
Hard Brexit. Clean Brexit. Full Brexit. Naked Brexit. Whatever you want to call it, we now know what Brexit really means. Or do we? Theresa May’s long awaited speech isn’t quite as clear cut as it seems. There are, in fact, four very different ways to interpret the Prime Minister’s carefully crafted words, underpinned by what could be seen as the four motivating factors behind what would now appear to be Britain’s hard Brexit stance: the economy, politics, society and the art of negotiation.
Firstly, it could be a matter of “it’s the economy, stupid”. Whilst economists are well known for predicting economic calamity as a result of the referendum decision, and the latest research suggests that, if anything, they were too optimistic — that factoring in the adverse effects of reduced immigration doubles the economic losses — there are those who argue that a clean break could bring economic benefits in the longer run. According to Shanker Singham, Chairman of the Special Trade Commission at the Legtaum Institute, these benefits arise from the potential for Britain to become more global: to, for example, eradicate the agricultural protectionism associated with the Common Agricultural Policy, and to make independent trade deals with the wider world. According to Singham, this can only be achieved by a “full Brexit”. Whilst I have myself identified a number of issues with this type of “globalising Brexiteer” story, it may be that it has nevertheless persuaded the Prime Minister.
Of course, even if such hoped for economic benefits really are on offer, there is still a rather big fly in the ointment: the leap of faith that is required to read the Brexit vote as a vote for more — rather than less — globalisation. As I’ve argued elsewhere, Brexit supporters span the whole spectrum of economic views from the left-leaning to the free-market right. Global Britain might satisfy some not all, leading us down a yellow brick road of disappointment. And, even if the majority really are in support of a more global Britain, Theresa May’s strategy seems to involve pressing the de-globalisation button alongside the button for globalisation. To the rest of the world, Britain is not leading the way with free trade, as it did centuries ago, it’s doing precisely the opposite.
Having been a Remainer herself, the Prime Minister is likely to be well aware of the possible economic fallout of Brexit (even if she won’t admit it). In that case, her speech is more a matter of “it’s politics, stupid” than it is of “the economy, stupid”. To date, Europe has made it clear that Britain can’t have its cake and eat it, leaving
May with a choice: remain in the single market for the benefit of the economy, thereby accepting freedom of movement, or aim instead for a little England, with control over migration, whatever the economic cost. May’s speech will be widely interpreted as prioritising the issue of immigration whilst minimising the economic trade-off involved — or suggesting that we will be peddling hard globally to do whatever we can to compensate for losses associated with reduced European trade. Even if that peddling does get us somewhere, we cannot assume that more trade will mean a stronger economy. The reality is that it takes a stronger economy to create more trade, not vice-versa.
Aside from the economic and the political interpretations, there is, however, a third interpretation of May’s speech: that society is being brought in from the cold. Over the last hundred years, a battle has been raging between the state and the market. On the left and the right, politicians and economists have imagined the economic pie as being divided into two pieces: the slice that represents government and the slice that represents market activity. The idea of a direct trade-off between the two naturally follows — more of one must mean less of the other. However, many of the concerns expressed by voters, whether in the U.K. Brexit vote or the U.S.A. election, don’t fit neatly into this two-slice division of the economic pie. That’s because there is a third slice of the pie that economists and politicians have been neglecting and, here, it is a matter of “it’s society, stupid”.
Only by bringing society into our picture can we truly understand the Brexit (and Trump) vote: why, for example, so many Conservatives (or Republicans) who would normally be pro-market and anti-state are in favour of the state “regaining” control over immigration, and why some on the Left are in favour of remaining in what is a free-trade zone, despite not exactly being enamored with free markets. Such apparent inconsistencies require us to think about peoples fears and hopes for society, beyond either the frontiers of the market or the state.
Perhaps the Prime Minister understands that concerns about society are one of the key drivers of dissatisfaction amongst voters: that what we have experienced is not simply a backlash against markets and a desire for the state to do more, but, rightly or wrongly, worries about social breakdown. If that is the case, then her speech falls short. What we desperately need is a wider public debate that engages with two big questions: firstly, to what extent has society really deteriorated, and, secondly, to what extent have globalisation and the free market model — including free movement — really been bad for society.
However, this third interpretation might be giving the Prime Minister too much credit, which brings me to my fourth and some might say most likely interpretation of May’s hard Brexit tactics — that they are nothing more than a negotiation strategy. That this is a game of asking Europe for more than the government is truly happy to accept. If that’s really the case, we need to take what May says with a pinch of salt. Perhaps we can’t infer much at all.
Economics first, politics first, society first, or the art of negotiation. There are four distinct ways to interpret May’s hard Brexit stance. Between all four, you could be left wondering whether we really are any the wiser about Britain’s future. However, whatever happens, May’s image of a stronger, richer and more global Britain cannot yet be taken for granted.
Kenneth Armstrong — Professor of European Law
The Prime Minister’s much-anticipated speech on her Government’s objectives for the UK’s withdrawal from the European Union confirms what was increasing likely to be the political direction of travel. The UK will not be seeking a relationship with the EU like that giving rise to the European Economic Area agreement between the EU and three EFTA states.
Indeed, it will not seek any type of ‘association agreement’; helpful, given that such agreements require the unanimous consent of all Member States’ governments as well as ratification in all EU states. Instead what the Prime Minister wants is something ‘bespoke’ and British and which is in tune with her central theme of building a truly ‘global Britain’.
What is noteworthy about the speech is that it purports to map an exciting new future for the UK that encompasses not just its future trading relationship with the EU, but also the Commonwealth, the Gulf states and — inspired by the recent words of President-elect Trump — the United States. And a stronger Britain is not to be at the expense of the EU, with the UK wanting the EU to be a success, just not with the UK as a member. All of which is remarkably resonant of UK policy in the 1950s when the UK decided not to join the fledgling EEC because it sought the bigger prize of global trade rather than a compromise of regional economic integration. In respects it is distinctly Churchillian: happy to let true Europeans forge an economic, and maybe even political, union just as long as the UK looks on rather than participates.
Important details remain to be settled including what type of customs arrangements would reduce customs barriers while still permitting the UK to enter into its own free trade deals with non-EU countries. The type, scope and duration of any transitional arrangements seems likely to form a key strand of future negotiations.
The Prime Minister made clear that the final deal will be presented to both Houses of Parliament and will be voted upon. This engagement with Parliament is important in seeking to restore the authority of Parliament as the body to whom government accounts. This is especially significant given calls by some for a second referendum to endorse the final deal. By rejecting another referendum, and by giving Parliament a vote at the end of the process, Theresa May is trying to bring domestic political institutions back to the centre of decision-making and, in so doing, to try and put the populist genie back in the referendum bottle.
What is also striking about the speech is Theresa May’s clear intention of steadying the ship with the iron grip of Unionism. Indeed, her speech started with the pledge to put ‘the preservation of our precious Union at the heart of everything we do’. So no special deal for Scotland and no differentiated Brexit. All that is on the menu is the Full British Brexit, complete with HP sauce and a solid 1950s Formica table.
Catherine Barnard — Professor of European Union Law
Perhaps the best news for workers in Theresa May’s Brexit speech is that she committed herself to ensuring that ‘workers rights are fully protected and maintained’. She indicated this before in the speech she gave at the Conservative party conference in October. So the Working Time and Agency Work Regulations are safe — for now.
But, as always, the devil is in the detail (or lack of it).
She said:
Indeed, under my leadership, not only will the government protect the rights of workers set out in European legislation, we will build on them. Because under this government, we will make sure legal protection for workers keeps pace with the changing labour market — and that the voices of workers are heard by the boards of publicly-listed companies for the first time.
So the UK government will build on the rights in European legislation. Does that mean she will update UK rights derived from EU law in line with changes introduced by the EU? Will ECJ case law interpreting EU law continue to be applied, even if only as persuasive authority?
The reference to legal protection for workers keeping pace with ‘the changing labour market’ is more perplexing. On the one hand, the reference to worker protection on boards suggests a progressive direction (although this proposal has already run into difficulties), as does the subsequent reference to ‘Enhancing rights for workers’. But what if the economy goes into recession following Brexit? Do such changes in the labour market mean in fact deregulation of workers’ rights?
And then there is the threat. If the negotiations lead to a ‘punitive deal’ that ‘punishes Britain’, Theresa May said ‘no deal for Britain is better than a bad deal for Britain’, freeing the UK ‘to set the competitive tax rates and embrace the policies that would attract the world’s best companies and biggest investors to Britain’.
Her Chancellor was more explicit. In his interview with Die Welt, he said that ‘We are now objectively a European-style economy … with a social model that is recognizably the European social model that is recognizably in the mainstream of European norms, not U.S. norms’. He concluded: ‘I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different.’ Workers’ rights may be less secure than first appears.
