Britain hurtles toward a No-Deal Brexit

Mark O'Neill October 02, 2019 17:02

With just 29 days to go until the deadline, Britain is hurtling toward a No-Deal Brexit – the worst scenario for the business community.

“A No-Deal Brexit is not the end of chaos for business, it is just the beginning,” wrote Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), the country’s most important business institution, in the Financial Times on Sept. 2.

“No deal can sound like a glorious leap to freedom, a clean break. That is dangerously false. It is a swamp, not a cliff-edge. For thousands of companies, it would mean extending crippling uncertainty against a new backdrop of ill will,” she said.

But now that is the most likely outcome. Prime Minister Boris Johnson plans this week to make a “final offer” to the European Union (EU). A version of it leaked to a British newspaper does not meet the demands of the EU, which will reject it. If it does, the government will work for a No Deal.

Johnson has said that he will not comply with the “Benn” Act of Parliament, passed on Sept. 9 and named after its sponsor, MP Hilary Benn. This requires him to seek a three-month extension from Brussels if there is no deal by Oct. 31. “Nobody will work on delay,” said an official at Johnson’s office.

No-one who voted 52-48 for Brexit in the referendum on June 23, 2016 could have imagined the chaos and political conflict that have resulted. In the more than three years since the vote, the Conservative government has been unable to reach agreement with the EU on how to leave, despite thousands of hours of talks. The vast majority of the public is suffering from “Brexhaustion”; they simply want the nightmare to end.

They are angry and shocked that their elected representatives have been able neither to reach an agreement nor leave the EU.

Businesses, domestic and foreign, are equally angry. “The UK’s long-held reputation as a stable, common-sense place to do business is being openly questioned,” said Fairbairn. “As the drama unfolds, slowly but surely more investors are changing the channel.”

Nissan makes 440,000 cars a year at its factory in Sunderland, northeast England; it is the largest auto plant in the United Kingdom, employing 7,000 people.

In November 2016, the Conservative government promised that its operations would be protected from the impact of Brexit. On that basis, it is building the Qashqai sport utility vehicle (SUV) there; it accounts for more than two-thirds of the plant’s output. Now, if there is a No Deal, Nissan will review its decision and may close the plant entirely.

In May, Honda announced the closure of its auto plant at Swindon and said it would cut 3,500 jobs by 2021. Steven Armstrong, head of Ford Europe, has warned that a No-Deal Brexit would be a catastrophe for its business.

“We would have to look at our manufacturing footprint in the UK as a result of the decision to leave the EU,” he said. It has already closed its plant at Bridgend, which resulted in 1,700 job losses.

Businesses, domestic and foreign, are holding back on new investment while they wait to see the terms of Britain’s departure. Even with less than a month to go, no-one can predict the outcome.

While Rome is burning, the politicians are obsessed with their internal divisions and trying to arrange a victory at a general election expected in the next three to four months.

The MPs of the two major political parties – Conservative and Labour – remain bitterly divided over Brexit. Waiting in the wings are two parties eager to exploit these divisions. One is the Brexit Party, set up in November 2018 to campaign for a No Deal. In the European elections in May this year, it won 30.5 percent of the popular vote in the UK, ranking first.

On the other side is the Liberal Democratic Party, which campaigns to remain in the EU. In the European election in May, it won 19.6 percent of the popular vote, finishing second.

Johnson fears the Brexit Party will attract tens of thousands of his votes – so he is going for a No Deal. If Britain is out of Europe, the Brexit Party loses its main raison d'être. For their part, the Liberal Democrats expect to gain many votes from Conservative and Labour supporters who want to remain.

How could the world’s oldest democracy and top-quality civil service have come to this?

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.