Time to give up on the ‘no deal’ mantra
The government continues to say ‘no deal is better than a bad deal’. This is despite it not being economically credible and the other negotiating side not believing it.
Theresa May continues to say “no deal is better than a bad deal”. This is, the government believes, a good negotiating tactic. At PMQs today, the prime minister said the government would not rule out a ‘no deal’ Brexit. She said that to do so would mean accepting “a deal at any price to the British taxpayer, whatever the damage that would do to the British economy”. However, what the government still won’t do is substantiate the claim by providing evidence. This was the damning conclusion of a House of Commons committee back in April. And the government continues to refuse to publish impact assessments it has done on Brexit.
Instead, the evidence that there is suggests that a ‘no deal’ Brexit is a bad deal. Not only would the UK be left with no trade deals at all (none with the EU and none with other countries the EU has agreements with), it would mean uncertainty for millions of people and businesses as well as the return of a hard border in Ireland. A ‘no deal’ outcome would also do long-term damage to the UK economy. Yesterday, the OECD published an economic report on the UK warning a “disorderly exit from the European Union would hurt trading relationships, reducing long-term growth.” And it added that “negotiating the closest possible EU-UK economic relationship would limit the cost of exit.” Indeed, the OECD said that reversing Brexit would lead to a significant positive impact on the UK economy.
So, for many reasons, ‘no deal’ is the worst possible deal. It’s not credible as an economic argument and it also doesn’t seem credible as a negotiating tactic either. This is because the other negotiating side don’t believe it. As German MEP Jens Geier writes in the Guardian “with neither a withdrawal agreement nor transitional period, there would not be so much as a feather to soften the British economy’s hard landing.”
And May’s own ministers don’t believe it either. The Independent reports another split within the cabinet opened up yesterday. Whilst the Brexit secretary David Davis told the House of Commons that maintaining the ‘no deal’ option was important for “negotiating reasons and sensible security”, the Home secretary Amber Rudd told a committee of MPs that ‘no deal’ would be “unthinkable”.
In his column in the New Statesman, Stephen Bush writes that the maintenance of the ‘no deal’ option for negotiations is also a dangerous tactic. He said that aside from it not being credible, it reduces the time negotiators have to actually reach a deal. As he writes, the government’s position basically amounts to saying: “Don’t give us a deal which hurts our economy or we’ll knacker our economy.” That certainly sounds like what the government is saying when it says “no deal is better than a bad deal”.