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Britain's options after Brexit

Britain's options after Brexit

Never mind the why and wherefore, the vote is in. A romantic vision has trumped pragmatism, and we all now need to make the best of it. Unhappily, so deep in commedia dell'arte was the campaign that nobody has the least idea of what such practicality entails. The journey from romance to pragmatic positions may be a long one.

Things about which we can be relatively sure.

Things about which we can be relatively sure.

There do seem to be a number of constants:

First, there are the headline economic issues of tariffs and quotas; the regulatory matters concerning embodied pollution, child labour and such; and and the specifically technical matters around customs procedures. This last in non-trivial in a world of integrated supply chains. All of this has to be worked out on a partner-by-partner, industry-by-industry basis.

Second, there need to be dispute resolution procedures. The investor-state dispute settlement (ISDS) mechanisms have been critical to past GATT rounds, to the WTO constitution and is now one of the most controversial elements of the TTIP and TTP trade deals. If a state abrogates a deal, changes regulations that had previously been agreed between the parties, then firms can take legal action against governments.

These constants delineate a long journey from here to wherever “there” may be, a journey through an uncertain landscape. That uncertainty needs to be set against four very important variables.

It is against this background that Britain has to make its way. What lessons are there to be learned as to what we should do in the next few years?

Finally – and this may well be a bridge that is much too far in current circumstances – we need to think critically about who and what comprises this British “we”. Is the UK as a whole the right level of scale at which we should be having these thoughts? It is clear, after all, that large, complex societies are becoming hard to govern at a single level. It may be appropriate to think of a more layered, subsidiary style of governance, one under which regions are able to specialise and to some extent go their own way. One could think of it as a national Commonwealth.

This would be a Commonwealth of loosely coupled layers. At the “top” level, of course, every nation state enters into a plethora of transnational agreements, from science to economics, environment to security, migration to trade, regulatory standards to the protection of IP. They do this to gain advantages, but in doing so they also agree to lose sovereignty. You cannot be a completely sovereign modern nation.

A layer down, history has asserted the primacy of national government over the composite regions. Even nations recently forged from principalities, or consciously decentralized to avoid political centralization, nonetheless possess architectures of power that assume that national government is supreme over regional politics.

The nation state is, though, a largely arbitrary geographical construct that has been dumped onto the present by accidents of history. It is not homogeneous or somehow possessed of a mystical unity. Sub-national regions – for example, states within federations, major cities, even economic clusters – have their individual strengths and needs. If they are permitted to do so, they change their local governance to reflect this.

Regional autonomy and small states seem better suited to complex times. Plainly, it is easier to manage a focused, smaller unit than it is a large and complex one, particularly if there are higher level structures that are running things at their own level of competence. Thus the national level should run defence, for example, whilst local centres of excellence ignore that and focus on their particular advantages. Aberdeen, for example, might focus on offshore engineering and the training, schools, facilities and regulation needed to make that industry world class. London has needs that rural England does not. The West Country is particularly suitable for retirement, tourism and similar economic activities that call for transport, hospitals and other facilities that are quite distinct from other regions.

It has always been taken as read that the degree to which these regions couple into more-than-national agreements has to be through a homogeneous national interface. It is time that this assumption was challenged. London may need agreements with its European peers which Devon simply does not, and activities that are based in these two could answer to separate agreements. If Scotland that wanted close ties with "social" Europe, then there is no reason why it should not enter into these.

This is an attractive model for the future: a Commonwealth of specialised entities, working together as 'Britain' for some outcomes, alone for their particular advantage in others. The flexibility would be reinforced by national structures that managed conflicts and acted to arbitrate amongst the interests.



The figure places two important set of variables against one another. Vertically, it asks whether the EU retains its coherence over the next ten years; or whether instead it is forced into a major re-alignment. Horizontally, it asks whether Britain is able to formulate a clear and achievable set of expectations (of the EU and beyond it) or whether it retains a romantic and incoherent slant to what it seeks.

The dotted line traces the evolution of events from its original accession to Brexit. Four cases are marked:

Sweet Regrets: a state in which neither Europe nor Britain really has what it wants, but nonetheless the compromised is good enough, particularly given the increasingly terrifying external world. Britain keeps its focus, Europe becomes somewhat more worldly, and is more inclined to compromise with its federalist ideals. In parallel, it also acquires the institutional structures needed to manage and police its currency. This is the least bad outcome, in all likelihood.

Northern Europe: the original European union fractures under the pressures which were described earlier, and Britain is able to play a role in the formation of a Northern economic peer group. The now much harder Euro is confined to Germany and its immediate neighbours. A quite separate structure, of which Britain plays no part, deals with the future of the Southern European states. It is not a body that inspires much confidence.

Hang Separately: “If you don’t hang together, then you will hang separately.” The European project retains some symbolic properties, but its importance and weight is eroded by external events, by its internal political divisions and by a marked preference for the symbolic over the pragmatic.

Atlantic Castaway: Europe prospers, Britain fails to find a meaningful role either as a non-aligned next door neighbour nor as a global citizen. Project Fear was right after all.

These scenarios are, of course, extremely general. However, the key variables do seem to come down to this: that Britain knows what it wants, or it does not; and that Europe is or is not able to find a coherent balance around its public finances, the Euro and its role as something more than a customs union.