Opinion: Brexit presents challenges and golden opportunities

Mark Littlewood
British Union flags fly in front of The Houses of Parliament in London, Jan. 22, 2019. British Prime Minister Theresa May launched a mission to resuscitate her rejected European Union Brexit divorce deal, setting out plans to get it approved by Parliament.

The United Kingdom has now been in the grip of a constitutional and political impasse for several years. A few months before the American electorate voted for Donald Trump to become the 45th president, the British people went to the polls to cast their verdict on whether we should stay in the European Union or leave it. By a margin of 52% to 48%, with the highest number of total ballots cast in British history, we plumped for the latter option. As the United States gears up for its next presidential election, the instruction issued by the British people in June 2016 still has not been carried out.

What has gone wrong? What will happen next? What are the implications for the relationship between our two great nations?

The excruciating delay in Britain actually departing the European Union has been down to paralysis in the political system. The U.K. government has been committed to trying to leave the EU with a deal in place which will mitigate any immediate shocks to the economy, as well as to establish the broad outline of our future relationship with Europe.

No one has been able to construct a package which is acceptable to the remaining 27 EU members and also to the British Houses of Parliament. Our previous prime minister, Theresa May, sought to pass a Withdrawal Bill through Parliament on three occasions — failing every time and in one instance suffering the largest margin of defeat for any government proposal in the history of British democracy.

May’s failure to navigate a departure from the EU led to her own departure from 10 Downing St. The flamboyant and charismatic Boris Johnson — seen by some as an Anglicized version of Trump — took over as prime minister in late July. Unlike his predecessor, Johnson had supported the Leave side in the referendum. With the initial departure deadline of March 29 having already been missed and a new target date of Oct. 31 being established, he has declared he would rather “die in a ditch” then bear witness to the U.K. still being a member of the EU beyond Halloween. He has mere days left to avoid a fate he considers worse than death.

A man walks past the flags of anti-Brexit protesters outside the Houses of Parliament in London on Feb. 12, 2019. British Prime Minister Theresa May asked MPs Tuesday to give her more time for talks with the European Union on renegotiating the Brexit deal, just weeks before the scheduled March 29 departure date.

Although there are a range of sticking points in reaching a divorce agreement with the EU, the thorniest is the tricky question of what to do about the border between Northern Ireland and the Irish Republic. The U.K. and Ireland joined the EU together in 1973, so the departure of the former will mean the two countries will now have differing trading and regulatory arrangements for the first time in the modern era.

The conundrum is how to allow this divergence without enforcing a hard border between Northern Ireland and the Republic with a vast array of border checks and security infrastructure. No one wishes to see such a structure emerging for fear it will unravel the considerable successes of the Irish peace process. But without some sort of enforced border, how can either side be sure that a range of non-compliant goods won’t now flow into their diverging markets?

Britain's Prime Minister Boris Johnson is accused of misleading Queen Elizabeth II, whose formal approval was needed to suspend the legislature.

Boris Johnson’s attempt to solve this problem has been met with an unenthusiastic reception from Europe. He believes that technological solutions can be found to check goods well away from the border to the mutual satisfaction of both sides. Furthermore, Northern Ireland might stay in close regulatory alignment with the EU in a range of areas, although this would require the continuing consent of the Northern Irish themselves.

What the prime minister is unwilling to countenance is to allow one part of the U.K. to permanently be treated differently due to the demands of the EU — a foreign, external agency. By way of analogy, this would be like asking the U.S. to agree to a new trade agreement with Mexico which would involve, for example, the state of Texas having a permanently altered constitutional and legal structure compared to the rest of America.

On Oct. 17, the leaders of the EU will meet in Brussels to try to finally agree on a Brexit deal. The early evidence suggests that Johnson’s proposals will not be acceptable to his European counterparts. This will leave the prime minister with the options of seeking a further extension to our departure — which a majority of the House of Commons are insistent on — or seeking to exit without any deal in place, in face of staunch Parliamentary opposition. He would ideally like to dissolve Parliament and seek a fresh mandate. Opinion polls suggest he would have a pretty good chance of winning, but the power to call an election is not entirely in his own hands.

Sooner or later, with or without a new election, it still seems likely that Johnson will prevail. Britain will leave the world’s largest trading bloc and will then be free to establish its own, new trading relationships across the globe, as well as regaining control of its own laws in a wide range of areas, such as immigration policy.

Although this will present challenges, it will also provide some golden opportunities. The United States is the nation we do the most business with, despite no formal trade deal being in place. With both the U.K. and U.S. being committed to constructing such an arrangement, there is the tantalizing prospect of improving this trade flow and boosting economic growth on both sides of the pond. If we can sensibly start to remove the swathe of tariffs and, more importantly, regulatory barriers which inhibit trans-Atlantic trade, both British and American consumers will benefit.

The world has looked on in bemusement as the U.K. has spent three years running around in ever decreasing circles while failing to extract itself from the European Union. The British electorate increasingly despair of the ruling political class and its inability to carry out the instruction given in the 2016 referendum. At last, however, we may now be reaching the endgame. An improved and blossoming transatlantic relationship is one of the greatest prizes on offer once we have finally, somehow, made sure that Brexit has been delivered.

Mark Littlewood is director-general of the London-based Institute of Economic Affairs, an educational charity with a core mission to improve understanding of the fundamental institutions of a free society by analyzing and expounding the role of markets in solving economic and social problems.