Theresa May started 2017 in a confident mood. The coming Brexit negotiations, she said in her January Lancaster House speech, would be a success because “we are a great, global nation with so much to offer Europe and so much to offer the world”.
Almost 12 months later, the prime minister can reflect that the year did not go quite to plan. As she looks forward to the second stage of Brexit negotiations in 2018, she would be wise to reflect on the lessons of the past year.
Just two days after her speech, the first lesson must have become painfully obvious to Mrs May. Only a thin audience gathered to hear her in silence at the World Economic Forum in Davos. Unlike the full halls that greeted her predecessors, the world saw Brexit Britain as a diminished nation without a chance of achieving her proposed “equal partnership” with the EU.
So it has proved. Size matters and throughout the year, the EU27 have dictated the Brexit timetable, the agenda and the decision on whether sufficient progress had been made to move to the next stage.
When Mrs May considers why the EU27 held the whip hand ever since she invoked Article 50 — the mechanism to exit the bloc — she might want to reach for some lessons from Greek mythology. In January she insisted “the government will not be pressured into saying more than I believe it is in our national interest to say”. The first stage of talks will have taught her that this Delphic attitude is inferior to the EU27’s Odyssean approach of publishing their strategy to bind their official negotiator to their publicly stated position. In this contest, the UK, with its emphasis on flexibility, was bound to bend to the EU’s wishes.
While she is still considering Ancient Greece, the prime minister would not be human if her own hubris in calling the election did not spring to mind. It was not just the wasted two months of failed electioneering that damaged herself and her country, it was also her own choice words. “No deal is better than a bad deal,” she boasted in the Lancaster House speech, only to demonstrate by year’s end that Britain was so ill prepared for no deal that the phrase was entirely empty. The UK, it transpired, would sign up to almost any financial request made by the EU27.
The big money, of course, is not the exit bill but the hit to the UK economy. Mrs May began 2017 with an economy seemingly unaffected by the Leave vote, but ends the year with no doubt that Brexit hurts. While other countries have seen growth accelerate, Britain’s has slowed. The irony, no doubt not lost on Boris Johnson, foreign secretary, is that the economic losses already appear to be roughly the £350m a week he suggested the UK would gain from leaving.
When she thinks about economic losses, consistently and accurately predicted by the vast majority of economists, but pooh-poohed by many of her most senior lieutenants, she might also consider the other expert advice she ignored at the start of the year. The only reference to Ireland in the Lancaster House speech was a determination to preserve the common travel area between the UK and Ireland. Plenty of experts had warned of the trading difficulties that would be the direct consequence of her desire to leave the single market and customs union, but in January these did not register. I’m told by senior officials that there is hardly a Brexit meeting in Downing Street today without Mrs May asking about the consequences for Ireland.
These are just five lessons that the prime minister has been forced to learn in 2017. There will be more next year as the UK has to face up to the consequences of its decision to leave the EU.
Some are obvious. Everyone involved in Brexit must expect the unexpected and prepare for a breakdown in relationships as Britain and the EU27 are forced to address uncomfortable trade offs. Some are subtle. The UK economic environment might be more favourable than thought as the squeeze on household incomes from sterling’s decline eases. Even so, the lesson on hubris still stands. The more Britain overplays its hand, the greater is the danger of a catastrophic no deal outcome.
That fear creates the final lesson of the phase one agreement. Never underestimate the desire for a fudge. It is a wonderful mechanism to sweeten bitter disputes on fundamental issues. By next Christmas there is little to stop the UK and EU27 agreeing that Brexit will happen in March 2019, that a standstill transition will be implemented and that this will be used to reconcile incompatible positions over Britain’s twin desires to leave EU trading institutions while maintaining their benefits.