Initial personal thoughts on Frost's speech this evening. It is a very clear & lucid explanation of his & the Government's views. Much of it is simply stating facts & trying to explain the logic behind Government positions. But it does serve to highlight some big gaps with EU 1/
Fundamentally, it demonstrates that the Government understands that there will be friction but its view of the consequences, especially over the long term is different. They simply don't agree with the economic analysis & prize flexibility & control 2/
This should be a clear challenge to those in EU (& UK) who think the Govt will eventually bow to their view of economic rationality. Frost also has a point about limitations of economic modelling on Brexit. We certainly shouldn't dismiss it but we shouldn't pretend its perfect 3/
It is true to say that baked into these models is an assumption that putting in place barriers has the same symmetrical effect on trade flows & productivity as removing them does. It may do. But we don't know for sure as this has never really been done before. 4/
The reference to "the ability to set regulations for new sectors, the new ideas, and new conditions" is an important one & demonstrates that they don't see gains coming from necessarily diverging in existing areas but in emerging sectors which are not regulated at the moment 5/
People have picked up on the reference to "EU supervision" on level playing field but we should be careful to read this as some form of softening. 6/
EU supervision will be needed where there is EU law. By ruling out one, you rule out the other. This in turn rules out any form of alignment. But it also makes non-regression from existing EU law hard to agree. EU would insist on a role for ECJ to determine what that law means 7/
So I think the gap on LPF is as big as ever. As I've noted in the thread below, I think Frost et al have a point that there is no practical need for the EU's LPF to go beyond existing deals. But the EU is equally within its rights to demand it does 8/
I have never been a big fan of the argument which Frost to an extent uses - what if the UK tried to tie the EU's hands in this way? I don't think it helps convince the EU side as they don't see this as a negotiation of equals & so consider this a patently absurd idea 9/
That being said, that may be the exact point Frost is trying to highlight and change. But I suspect he will struggle to succeed. 10/
I expect EU side will disagree with much in this speech but it is a clear explanation of UK Government position & underlying thinking behind it. It just demonstrates a fundamentally different world view. Which only serves to reinforce the large gaps on policy 11/ ENDS
