What sort of Britain do you want to live in?

We probably can’t even agree on the features of the Britain we actually do live in. According to President Donald Trump, we don’t even live in Britain at all: “you don’t hear the word Britain anymore. It’s very interesting. It’s like, nope.”

What the Brexit referendum achieved is a forced rethink about our national policies. But it didn’t do much to determine what those policies might actually be.

Some Remainers are discovering they have more in common with some Brexiters, and vice versa, when it comes to what policies we should actually pursue. What’s changed thanks to Brexit is that we can pursue them according to British preferences instead of distant EU decisions.

The hardest free traders sided with those who want to shut off the economy from the world in the Brexit vote. Pro-immigration and anti-immigration featured on both sides too. The distinctions of left and right were completely befuddled. The failure to realise this is what lost Theresa May the subsequent election. She thought Brexit was a mandate for a set of policies that only a small section of the Brexit camp actually believes in.

Not enough British voters could be grouped into one set of policies under Brexit to gain a majority in an election. We want too many different things on the topics that used to be decided at the EU level. And our preferences don’t follow party lines.

 

The government is as lost as the electorate

In the aftermath of the election, this confusion over what policies to actually pursue is still causing a rift among ministers. They all thought they knew what Brexit meant.

Tax, trade and migration are the key policy issues.

On immigration, the Tories have it three ways in The Telegraph:

Brandon Lewis, the Immigration Minister, said the Government is “very clear” that “free movement of labour ends when we leave the European Union in the spring of 2019”. 

But the statement appears to contradict Michael Gove, the Environment Secretary, who said the Cabinet was “united” around a transitional Brexit deal which will grant businesses continued access to migrant labour. 

It comes as Amber Rudd, the Home Secretary, moved to reassure businesses that there will be no Brexit “cliff edge” and that the UK will “continue to welcome” European workers.

The government has put the issue on ice by commissioning a study on immigration.

The fascinating part is that the EU’s freedom of movement and labour rules are in fact quite restrictive. For stays longer than three months, foreigners must prove they won’t be a burden on local social services. A residence permit can be required by authorities to confirm this. And EU citizens can be expelled for reasons of public policy, safety or health!

Rules like that would make a Brexiter cheer without realising they already exist inside the EU…

Do we need more and different rules than these?

On trade, the debate about the customs union has been pushed back, for the most part. But leaving one of the most protectionist trade blocs in the world is a good idea to promote trade. Apparently 75% of the European Medicine Agency’s staff want to stay in London after Brexit and Deutsche Bank just committed to a 25-year presence in London too. Such news keeps rolling in. So far, trade has jumped since Brexit.

Uncertainty over Brexit doesn’t inherently mean the result of Brexit will be bad. It means we have the potential to boost the economy too. But that’s not a definite outcome either. It hangs in the balance.

Critics make the same mistake as the government in thinking a vote for Brexit is a vote for restrictive trade policy. That’s only part of the Brexit camp.

On tax, there is the argument that Britain will try to emulate small islands like Hong Kong and Singapore with very free-market and low-tax policies. (At least they had these formerly and compared to their neighbours.) Chancellor Philip Hammond has put forward both sides of this argument wherever convenient.

The Financial Times reports he told Le Monde newspaper “The level of taxes that we take compared with GDP sits at around the European average level and I think we will remain at this level,” and “I would expect us to remain a country with a social, economic and cultural model that is recognisably European.”

So we’ll leave the EU, but not change…

Until the government figures out that Brexit means too many different things to too many different people, it will continue to struggle to find popular support. The issue could very well mean a complete reshaping of both parties. The first mover has the advantage in coming elections.

The mess was predictable

Just days after the referendum I explained why all this confusion over British policy, let alone Brexit policy, would occur:

Why Remain won the Brexit referendum

Don’t believe the lines. Remain has won the referendum. At least it will win in the end. And on everything that actually matters.

Thanks to the vote in favour of Brexit, in a few years’ time Britain (might) be able to determine its own policies on issues like migration and trade. But the referendum doesn’t determine what policies it’ll actually decide on. It merely suggests a renegotiation with the EU to take back the power of deciding.

That means the referendum has decided nothing of substance. Not just because it isn’t legally binding. Not just because the outcome of any negotiations with the EU in an unknown amount of time under unknown circumstances by an unknown prime minister of an undetermined party and unknown ideological stance are completely unknown. You can read about these issues elsewhere.

The referendum is misleadingly important because being inside or outside the EU doesn’t matter. A country can be in the EU but not adopt all its policies, as Britain does. Or a country can be outside the EU, but adopt many of its policies as Switzerland and Norway do. Membership obviously influences policy, but it doesn’t determine it.

What matters is the policy which governs your life in the end. And the referendum has no direct impact on this. The referendum was not an election which gave a new government a mandate to implement a list of policies. It doesn’t mean migration and trade with the EU will be changed in a certain way. It was only an outcry about who should determine British policy – British politicians or EU politicians.

What if, in two years’ time, we see our prime minister negotiate Britain leaving the EU but maintaining free trade and free migration with Europe? Who has won the referendum then?

Indeed, the coming migration system proposed by ministers might make migration easier for some people inside the EU. And the coming agreement over trade might increase trade with the EU by making the British economy more competitive. The pound has already done that with trade with the EU rising.

It seems that nothing is as it seems in the Brexit debate. Lifting the curtain to expose the confusion is the first step to influencing politicians towards cohesive policies.

Quit whining and start campaigning

Those who realise that Brexit was about localising decision-making power rather than making any particular decisions have been busy. Unfortunately, those are the types of Brexiters who fear trade and immigration. That’s why the government’s policies are favouring their preferences.

The rest of Britain, Remain voters and free market believers, need to unite to push back for free trade, high levels of migration and a free market economy.

Brexit isn’t about leaving the EU. It’s about saving Britain from this.

Until next time,

Nick Hubble
Capital & Conflict