9 June 2017
But continued antipathy towards immigration means free movement and membership of the single market remain off the table.
Robin Niblett

Dr Robin Niblett CMG

Director, Chatham House


The House of Commons Chamber. Photo: Getty Images.
The House of Commons Chamber. Photo: Getty Images.


Prelude to a remarkable result

Theresa May was chosen by the Conservative Party last autumn to be the safe pair of hands that would navigate Britain through the difficult waters of Brexit. She had called yesterday’s snap election to seek a popular mandate to conduct the negotiation and to buy time to implement it thereafter. She had laid out the broad outlines of the UK’s negotiating position in her Lancaster House speech on 17 January and in her letter on 29 March to European Council President Donald Tusk. 

Having made Brexit the rationale for the election, she nevertheless made no effort during the campaign to explain how she would manage the negotiation or what a successful deal would look like. Instead, she tried to keep her powder dry for the start of the post-election negotiations and simply emphasize her own competence, believing that the true message of the referendum vote was the need to heal a divided Britain.

This might have seemed like a winning formula, as the early polls indicated. Unfortunately for her, she presided over a disastrous misstep in drafting the Conservative manifesto – alienating older supporters and angering colleagues and party members with an unpopular proposal to overhaul social care costs, branded a ‘dementia tax’. She also failed to connect personally with many voters during the campaign. The terrorist attacks did not strengthen the Conservative vote, as the Labour Party turned attention to her role in overseeing police cuts. 

In the end, the Conservative Party has lost its outright majority, and has had to rely on gains in Scotland to secure a working majority in a hung parliament. The prime minister’s political standing has been badly damaged. She has lost a key ally in Ben Gummer, who helped draft the manifesto and would have played a critical role in the Brexit negotiations. She will form a government with the support of the Democratic Unionist Party (DUP) of Northern Ireland. But she now has to turn her focus immediately back to the Brexit negotiations while presiding over an angry and restive party and with serious doubts as to whether she will lead the party into the next election, whenever it takes place.

In contrast, Jeremy Corbyn gave voice to public fears of another five years of Conservative budget-cutting and austerity, and in Bernie Sanders-style, channelled the passion of the young for a more hopeful future. Where Theresa May surprised ‘on the downside’, he surprised ‘on the upside’. He also offered a goody bag of highly popular electoral bribes – such as nationalizing the railways and abolishing university tuition fees – without worrying too much about how to deliver them. Whereas May can point to the fact that she secured a larger share of the vote (close to 43%) than Margaret Thatcher and Tony Blair in their best elections, this is scant consolation when Corbyn has been able to increase the Labour vote to 41% and repel the expected increase in the Conservative parliamentary majority.

Where this leaves the UK and Brexit

A key dynamic of the election is that the collapsing UKIP vote did not go solidly to the Conservatives; rather, in seats like Hartlepool and Newcastle, a large number went back to Labour. They did so not because voters had second thoughts about Brexit, but because Jeremy Corbyn appeared consistent and committed in his long-standing Euroscepticism (he was a half-hearted Remainer during the campaign) and credible in his statements that he would not go back on the referendum result. Passing this test, he was able to turn the political agenda to other issues, such as austerity and inequality.

The result is that Britain’s two major parties once again dominate politics, collectively representing some 85% of the vote on a near 70% turnout. And both are formally committed to following through with Brexit. 

The question, then, is not whether Brexit will now happen, but what sort of a deal this election result might produce. The negotiations will clearly be more difficult for Theresa May to manage domestically. Her party still contains fierce Brexiteers, who will challenge every concession. But the proportion of Conservative MPs who voted to Remain and who want a pragmatic Brexit is higher than expected. 

For his part, Corbyn will have to tread carefully too. This morning, he stated his desire for a pragmatic outcome, saying Labour will be looking for a ‘jobs first Brexit – which means a good trade deal’. On the other hand, a larger number of Labour MPs now represent constituencies which voted by large majorities to leave, and whose voters could abandon Labour again if it changed course on Brexit.  

The net effect of these conflicting pressures is likely to be the search for a pragmatic deal with the EU that can pass the threshold of a significant majority across the whole Parliament and not just in the Conservative Party. To be acceptable domestically, this deal must minimize the economic risks inherent in Brexit and not put Parliament in a position where it is forced to test Theresa May’s proposition that ‘no deal is better than a bad deal’. If it came to such an outcome, there is now a chance that Parliament would hand the deal back to the electorate in a second referendum.

There are some other considerations. This snap general election does not in any way challenge the referendum vote, which was intensely debated over a far longer period. Antipathy among a majority of Britons to uncontrolled immigration has not receded. This means that there is still no chance Prime Minister May will go back on her refusal to accept free movement of labour from the EU. The Labour leadership also accept this position. As a result, British membership of the single market remains off the table. 

The final deal that the British side will seek, therefore, will aim to combine the agreement to withdraw from the EU with some complex form of enhanced free trade agreement. Deciding how to supervise this agreement will be no easier than before. The Conservative Party in particular will not accept the primacy of the European Court of Justice (ECJ) over UK domestic legislation. 

Agreeing on the size of the UK's 'exit bill' will also remain contentious. But the government may have more space to offer a preferential deal on EU migrants coming into the UK to support key sectors, such as the NHS, agriculture and the financial sector. And having the DUP guaranteeing the government's operating majority means the UK will be under added pressure to reach a compromise on border arrangements and regulatory convergence which avoids a 'hard border' with the Irish Republic - although the DUP may well oppose a special arrangement in Northern Ireland if it is seen to undermine its place in the Union.

Possible EU27 responses

This raises the question of how the EU27 will now approach the negotiations. The Article 50 clock continues to count down to 29 March 2019, and there is deep frustration in Brussels and EU capitals that so much time has been lost for what is now so little reason. They will worry about the ability of a weak UK government to manage domestic compromises on key issues and feel their position in negotiations, in which they already have the upper hand, has only been strengthened.

In the meantime, the EU has moved on. Emmanuel Macron's election in France along with the prospects of Brexit have given new energy and optimism to the prospects for deepening EU and eurozone integration across a range of policy areas. With this renewed confidence, the EU27 could choose to play hardball with the UK on the budget or the future rights of EU citizens wanting to work in the UK. 

Hopefully they won't. Not even a weakened Theresa May could accept EU extra-territorial jurisdiction over EU citizens living in the country. And there is nothing to be gained now from pushing a wounded UK and weakened Theresa May into the corner. The EU27 are as keen to move on beyond Brexit as are the Brits. A failed Brexit negotiation is no more in the EU27’s interest than it is in the UK’s. And tying up the withdrawal agreement by the end of March 2019, as scheduled, will allow the European Parliament elections in May 2019 to go ahead without the severe complication of the UK as a member.

The most difficult political question for the EU27 is how to ensure that the UK pays some form of cost for leaving, such that its position outside the EU is less advantageous than being a member was. Theresa May says she has already accepted to pay the cost. By choosing not to be a member of the Single Market, the UK will lose influence over the rules by which British exports of goods and services gain access to their major market. This will increase the regulatory burdens for UK-based businesses and have negative knock-on effects for foreign investment.

The recent British tensions with the European Commission, evident in the May-Juncker dinner on 26 April, imply that the EU27 did not believe this was a sufficient cost. Constant EU carping that the Brits are insufficiently prepared for the negotiation masks a deeper fear that, outside the jurisdiction of the ECJ, the UK might yet find a way to make a success of Brexit at the EU's expense. 

But, just one month after that dinner, the EU is in a far stronger position economically and politically. Perhaps it can afford to let the UK pay the price of Brexit over time rather than up front, without risking damage to its own future cohesion.

If so, Theresa May could yet carve a path for Britain from a botched election to a Brexit outcome that reflects as well as possible the contradictory aspirations of the British electorate.

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