Today's massive tax cuts in the new UK budget also mark a turning point in the economics of #Brexit which will decide how the success or failure of Brexit will be judged in the future.
First, at the heart of Brexit was always an economic inconsistency. Some Leavers supported it to protect the UK from globalisation, attacking the EU for being a vehicle of liberal policies.
Many of those ended up as first time Tory voters for Boris Johnson, i.e. the ‘red wall’.
They wanted Brexit for a culturally conservative, but economic left-wing policies.
Other Brexiteers wanted to leave the EU to free the UK from European constraints and enact hyperliberal economic policies, the ‘Singapore on the Themes’ model.
Brexit thus could be economically successful, if the UK became much more competitive and liberal than the EU.
When @BorisJohnson took power, the got rid of all remaining opposition to a hard Brexit in the Conserva-tive Party and his government, but retained both sides of this economic inconsistency of Brexit. This allowed him to build his majority winning coalition.
Truss, upon winning the Tory leadership context, has now gone all-in on the hyperliberal model of Brexit. Politically, she has no mandate from @BorisJohnson Brexit coalition of voters from 2019 nor from the Conservative Parliamentary Party for this broad change.
Which brings us finally to EU-UK relations. In the short term, this risky UK economic approach is bound to introduce further frictions also with the EU – as the UK will try to increase its competitiveness precisely in ways the EU feared when insisting on a ‘level playing field’.
With Jacob Rees Mogg at BEIS, the policies announced by Kwasi Kwateng (e.g. getting rid of EU banker bo-nus caps) the EU might soon judge the UK is breaching its level playing field commitments from the TCA, adding to the list of clash points bet London and Brussels.
In the longer term, this risky economic experiment championed will now also define the economic legacy of Brexit. If the bet pays off, the UK will have developed a competing economic model to EU integration. This is why the LPF discussions could become so confrontational.
If the bet fails, however, at least hard Brexit in the form championed by the Conservative Party will fail with it. The scale of this economic bet could therefore hardly be higher. /ends
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The almost complete absence of any EU discussion in the German #btw2021 election campaign is bordering on the absurd.
This will be a key election for the EU, but also for determining German policies. But you really need a magnifying glass to find any discussion on EU policies.
The 'Wahl-O-Mat', a vote adviser tool, has only a single question on the EU - "Should Germany leave the EU". This is absolutely irrelevant for German policy and resembles on one extreme party. No question on fiscal policy etc. that could provide nuance betw the major parties.
Today the height of absurdity was reached by an accusation that a chancellor Olaf Scholz 'could lead to the break-up of the EU', both trivalizing real threats to the Union and misrepresenting where the discussion on social policy in the EU is or could lead to.
Pre-Weekend thought on #Brexit, Northern Ireland Protocol and what it means for the EU-UK relations.
To me, part of why the UK is escalating again is due to very different lessons learned from the Internal Market Bill and its effect on the trade negotiations last year.
From a Brexiteer perspective, the Internal Market Bill is often regarded as a successful negotiation ploy. It seemingly showed the EU what a risk no deal would also be to the EU, and how serious the UK was about no deal. It thus helped getting more concessions out of the EU. /2
Following this, escalating now on NI is seen as giving the UK negotiation leverage. It forces EU attention on the difficult situation in NI, gives the UK gov the support from ERG+DUP and is expected to help generate pressure on the EU to cave on demands for change of NI protocol.
High time to think about how a possible 'reset' of EU-UK relations can be politically achieved. The EU should be open for this, but I fear the political commitment to make post-#Brexit relations work needs to come from both sides, including the UK government.
5 factors were crucial, incl the dynamic nature of the TCA, still close economic links and the co-responsibility for NI.
Others, like @Mij_Europe and @CER_Grant, were far more sceptical, stressing the pol dynamics at play in London (and to a lesser extent the EU) would continue to burden the relationship. So far, they have been proven right, with a confrontational rather than a cooperative dynamic.
UK public discourse seems to be even growing in furore over the Art. 16 debacle. But even if you acknowledge the EU Commission made a mistake, it is time for much needed perspective:
The EU Commission got under quick pressure from Ireland and corrected the mistake within a few hours. Further internal pressure will now lead to safeguards around the NI protocol.
While the UK gov is today threatening to trigger art. 16, last year threatened to violate the NI protocol with the Internal Market Bill and got the House of Commons to vote twice for that explicit violation of the UK's legal commitments.
Rumours are flying wild on how close we are to a #Brexit deal. My sense is that a deal is still possible, but the necessary compromises have yet to be made and time is running out soon.
To me it is therefore high time to think also about the political ramifications of no deal.
In this analysis, I look at three political scenarios: 1. Friendly no deal - in which EU and UK seemlessly continue negotiations and try to limit no deal fallout via unilateral actions and mini deals. Ruled out by the EU, though the temptation will be there in some member states.
2. A 'grown-up no deal' - in which the no deal consequences come, but after some confrontations both sides get back to negotiation table quickly. Preferred by EU, likely will be supported by US, but does not square with UK politics which will need to blame EU for no deal fallout.
Always interesting for EU nerds to look at the bilaterals around an #EUCO and what they say about the power dynamics and conflicts between member states.
Out of curiosity, I put together who @eucopresident met around the #EUCO on the MFF/Recovery Fund negotiations in July /1
@eucopresident A few interesting findings:
- Most meetings were with Macron, Merkel and @vonderleyen
- Michel met Merkel and Macron always together, highlighting the Franco-German push on the MFF
- More active EU policy of Sanchez and Conte got them into the inner circle
/2
@eucopresident@vonderleyen - The most involved smaller MS were the 'trouble makers'
> Rutte/NL as informal leader of the frugal four
> Orban/HU as the leader with most resistance against the rule of law provisions.
- Only EU MS with no participation at the 'balcony diplomacy' were Romania + Cyprus
/3