Tuesday, August 1, 2017

UK’s Empty Brexit Threats

Since the election, tough talking has been replaced with softer language.


By Annabelle Dickson
Politico EU
August 1, 2017

A threat only works if the person on the receiving end believes you have the ability and the desire to carry it out.

Chancellor Philip Hammond appears to have concluded that the Brussels audience for his own threat — delivered back in January to Germany’s Welt am Sonntag newspaper — now believes that the United Kingdom has neither.

In the heady days of a comfortable (if not generous) House of Commons Tory majority and an opposition in disarray, Hammond said that if the EU gave the U.K. a bad Brexit deal, “we could be forced to change our economic model and we will have to change our model to regain competitiveness.” It evoked images of a Singapore-style low regulation, low-tax economy on Europe’s doorstep.

What a difference a few months and a disastrous election campaign have made.

The tough talking has been replaced with a far more emollient tone. “I often hear it said that the U.K. is considering participating in unfair competition in regulation and tax,” he told Le Monde, innocently. “That is neither our plan nor our vision for the future.”

“I would expect us to remain a country with a social, economic and cultural model that is recognizably European,” he added.

The shift was not due to condemnation from Brussels (European Parliament Brexit coordinator Guy Verhofstadt called it a “counterproductive negotiating tactic”) but the altered political reality at home.

The dream of some Tory Brexiteers of a second Thatcherite big bang to sweep away Brussels-style red tape was quashed by the 40 percent who voted for Labour’s Jeremy Corbyn on June 8.

And the Grenfell Tower disaster, in which more than 80 people died in a social housing tower block fire (the final death toll may not be known for months), has changed the political mood further. Any appetite for the tearing up of red tape dissipated in the wake of the disaster, which appears to have been caused by a catastrophic regulatory failure.

The opposition has also landed some punches on Hammond’s Singapore vision. Labour’s position on the EU single market and customs union may be even more confused than that of the government, but Corbyn’s oft repeated claim that the Tory Brexit deal threatens to create a “bargain basement economy” gained traction in the election campaign and spooked his opponents.

With public frustration for austerity rising, even Tories are no longer in lock-step behind continuing with government spending cuts.

Remember the calls from around the Cabinet table for public sector workers to receive a pay rise just weeks ago?

Hammond is the man who has to balance the books. When those demands started to be made, Hammond knew a Singapore Britain was off the table.


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