Why is there talk of a Brexit U-turn?

0:02Sky News, the full story first.

0:12If you thought the Brexit debate was over, think again. And this is why.

0:26Hi everyone, Neil here. And we're going to get started with a pretty straightforward question. Did you realise that this June it will have been 10 years since this? This means that the UK has voted to leave the European Union. Brexit means Brexit. Tonight we are leaving the European Union.

0:48Of course, the debate continued for a very long time after the vote. One way or another, we were arguing all the way up to 11pm on the 31st of January 2020, when we formally left the EU. Since then, not so much. For whatever reason, we haven't seemed keen to talk about it at all. Then along comes Sir Keir Starmer. I think it's in the British national interest for us to be stronger and closer to Europe, whether that's defence and security or energy and the economy. Any talk of a closer relationship with Brussels is bound to lead to cries of a Brexit betrayal. So what exactly is the PM proposing?

1:28Is he actually ignoring the will of the British people? And are we all ready for yet another argument over our relationship with the EU? Annan Menon is director of the think tank UK in a Changing Europe. Annan, let's start at the beginning. I know that we have left the European Union. I think we are all very aware that Brexit has taken place. So currently, what governs our relationship with the European Union? Fundamentally, the two agreements that were signed under Boris Johnson, one of which is the withdrawal agreement, that is this backward looking document that took care of our divorce payments and the ongoing rights of UK citizens in the EU and EU citizens in the UK, and also made certain arrangements for Northern Ireland.

2:12And then there's the trade agreement, the trade and cooperation agreement that Boris Johnson negotiated and signed very, very quickly way back in December 2020. That remains the basis of our trading relationship with the European Union. So what is Sir Keir Starmer proposing and why? Well, in opposition, what Labour said was they wanted to reset the relationship to, as they put it, tear down barriers to trade. And what they've been doing since they came in is negotiating in a few discrete areas. Agricultural trade is one. Electricity markets is another. To try and remove some of the barriers that were put in place by the trade and cooperation agreement to make trade easier in those specific areas.

2:56So when we drafted that trade and cooperation agreement, or indeed when we negotiated that agreement with the European Union, were we then all fully aware of what the potential negative outcomes of that arrangement might be? I think if you go all the way back to the referendum of 2016, at the time that that referendum was happening, a lot of the big economics organisations put out models or forecasts of what the impact of Brexit would be. And they all put the range at between sort of 2 % to 5 % or 6 % of GDP. What we're starting to learn now, we're getting the data, is that ballpark figure is probably about right.

3:35That is to say that Brexit has had an impact on our trade with the European Union, and that is feeding into our economic growth figures. So what the Labour government said, and what they're saying sort of increasingly boldly over the last few months is, Brexit has damaged our economy. we are going to undertake these negotiations to try and redress some of that harm. So in what way is this plan, this kind of closer alignment that Sir Keir Starmer is talking about, in what way does that act to negate some of the negative effects that have flown from the particular Brexit that we negotiated? If you take the case of agriculture, there are two clear things that would come about.

4:12In the event that the negotiations are successful, we should say very clearly the negotiations are ongoing. There are quite a few sticking points in the talk. So it's not a foregone conclusion that we'll get what we want. But assuming we do, we get two things. Firstly, it will make trade between Great Britain and the European Union easier. That is to say, it will remove the need for checks. What the government is anticipating is that this will have positive impacts in terms of both the availability of European goods on the shelves here and the price of those goods. The other thing which we shouldn't forget is one of the big bugbears of the whole Brexit process was the fact that it caused particular problems for Northern Ireland.

4:53We have at the moment a Windsor framework under which there are checks on goods that travel from Great Britain to Northern Ireland. If we have a deal on agriculture, it will mean fewer checks. So it will make the workings of that Northern Ireland protocol supplemented by the Windsor framework easier and cause less problems for Northern Ireland and trade between GB and NI. All of which sounds perfectly understandable, but does this government actually have a democratic mandate for what it is doing? They mentioned ahead of the election, during the election, we want closer ties with Europe, but there wasn't an awful lot more detail than that, frankly.

5:28No, but thinking back, and my memory is far from perfect, but I do seem to recall that in the Labour Party manifesto, they talked explicitly about agriculture as an area where they were going to negotiate closer ties. What wasn't there in great detail, for understandable reasons, it was a manifesto, was the trade-offs that this would imply. If you want access to the European market without checks, you have to commit to sign up to European Union rules. And this is what the argument currently ranging about the bill that's proposed by the government is all about. The government is saying we will dynamically align with the European Union.

6:05And that means not only we will adopt all EU rules now, but we will commit to changing those rules to follow any developments in the European Union. And of course, the difference between dynamic alignment and being a member state is we will follow those rules without having any say and certainly absolutely without having a vote over those rules as they change. This is, I've seen this mentioned a few times now, all to do with something called the Henry VIII powers. In essence, we're talking about politicians having the ability to change things, but not having to go through Parliament. Well, what the government is talking about is a bill, and we haven't seen this bill yet.

6:42We assume it'll be mentioned in the King's speech, and then we'll see the text. But this is a bill that is meant to allow the government to align with changing European Union rules without the need to come back to Parliament for a formal bit of primary legislation each time. And you're absolutely right. The plan is to use what it calls Henry VIII powers, secondary legislation. and secondary legislation means that MPs will get an up or down yes or no vote, but they don't usually scrutinise these things all that closely. There's no opportunity for MPs to amend under the secondary legislation procedures.

7:17So parliamentary scrutiny is lighter than it would be in the event of primary legislation. Without meaning to relitigate or reopen the entire Brexit debate again. I mean, look, there are those who said we left the European Union because we wanted to be rule makers, not rule takers. This looks very much like we're returning to a rule taking status quo. Yeah, I mean, I suppose the counter argument is this is rule taking in one small area of economic activity. The vast majority of our economic activity, we now get to set our own rules according to what we want, because we're not covered by this kind of dynamic alignment.

7:53But yes, there's a trade off. And there's that trade off that was always at the heart of the Brexit debate. It's a trade-off, if you like, between political autonomy and market access. If you want market access to the European Union, you have to sacrifice an element of political autonomy. And of course, what you sacrifice if you're not a member state is arguably greater than if you are a member state, because if you are a member state, you at least get to sit around the table and cast a vote. If you're not a member state, you are complying with regulations over which you've had precious little say.

8:22But how far does alignment have to go before you are essentially functionally part of the system again? That's the million dollar question to which I don't really know the answer. I mean, this is, again, the essence of Brexit, isn't it? For some people, losing access to the European market was worth it if we got to control our own legislation, we got to control our own immigration policies. There were people who would prefer that level of control to market access. Other people see things very differently. So I think for each person, that trade-off is a slightly different one. And the answer is a slightly different one.

8:52The government is simply saying, in these areas we have earmarked for negotiation, we think it's worth the sacrifice of a certain amount of political autonomy in order to get the economic gains that will be forthcoming from easier trade. Has the government put figures on this? Have organisations like yours been able to put figures on this? I mean, how much of a benefit could we see to the economy if Sir Keir Starmer's plan goes ahead as planned? I mean, in aggregate terms, the benefits of a deal in agriculture are relatively small, well shy of 1 % of GDP. So in that sense, it doesn't really counteract the overall effects of Brexit.

9:26We've seen very reputable studies. There was one published last year by the National Bureau of Economic Research in the United States that put the costs of Brexit as of now at between 6 % and 8 % of GDP. So this isn't a game changer in economic terms, though what the government hopes is at least in this one sector, they will be able to do something that will, if not lower food prices, prevent food prices from going up because of making that trade with the EU less burdensome than it currently is. I do wonder if people recognise that this is not game changing, whether they wonder if it is perhaps a starter for 10, that this is the first step that Sir Keir Starmer wishes to take towards closer alignment with the European Union, that there are other sectors that he would be happy to look at in addition to this that could well be game changing.

10:14I mean, at the moment, the government is also negotiating on access to the EU's electricity market, which again will require alignment. And the UK and the EU are trying to coordinate their emissions trading systems, which again will require us to align with EU rules. So there's already talks in progress to do even more of this. And of course, the government recently, Rachel Reeves, the chancellor in her MACE lecture, talked about the fact that the government would be open to dynamic alignment in other sectors on top of these. The problem there, I think, is it's far from clear if the European Union will be willing to allow us that sort of market access in other sectors, because from the EU's perspective, they are slightly wary about giving the UK access to the single market where we want it without opening a conversation about significant budget payments and potentially even freedom of movement.

11:04From the EU side, you don't get the rights of market access without some of the obligations that come with being part of the single market. Just remind us what the single market and the customs union actually are, because I think a lot of people before the Brexit referendum thought leaving the EU didn't mean leaving the single market and the customs union. The single market is that unique system put in place by the European Union, whereby in principle, it's as easy to sell your goods between member states as it is within individual member states. And that means that the member states either harmonise their rules or agree to accept each other's rules and therefore something that's made in one member state has to be legally sellable in another member state.

11:46To do that, you have to have the same rulebook and the EU has to be satisfied that you have the same rulebook. Hence this whole debate about dynamic alignment and the need to follow EU legislative changes. A customs union is a bit more simple. It complements the single market. A customs union is an area where basically all the participating states have the same external tariff when it comes to trade with other countries. And this basically reduces a load of friction with trade between each other because everyone knows that no one is undercutting the others in terms of their trade with third parties.

12:20And one of the best things about doing the job that I do is that I have no stake in the Brexit fight, that I remained above the fray for reasons of impartiality and all the rest of it. But looking at what the government is doing right now and the prospect of them doing more. This is looking like the direction of travel is inevitably towards conversations about re-entering the single market, re-entering customs union, perhaps even re-entering the European Union itself. Well, I don't know what the government has planned for the medium term. It's certainly the case that for this parliament, they ran for government on a manifesto that explicitly ruled out membership of the customs union and membership of the single market.

12:59The problem I think they're going to find is, on the one hand, they want this reset to go further than it's gone already. The problem is the European Union is now saying you can't pick and mix, you can't just get to choose the bits of the single market you want and expect us to give you access. So at a certain point, this conversation becomes a bit more binary. And the choices between the status quo, where we are now, perhaps the trade and cooperation agreement with a bit of agriculture and a bit of electricity thrown in, or something a lot more ambitious, which might be customs union, might be single market, might even be rejoined.

13:31I imagine those are conversations that are going on within government at the moment, but there's still no sign of any inclination to go back on those red lines that were laid out so clearly in the manifesto. Politically then, where do you think this leaves parties like Reform? Obviously, we know their position on the European Union and of course, the Conservatives who were the ones who took us out in the first place. Well, the Conservatives and Reform UK have both said that if they are elected at the next election, They will unpick some of these negotiations that the government has been doing.

14:00But the interesting question is this. On the one hand, yes, absolutely. Both the Conservatives and Reform UK have come out and said this is a betrayal of Brexit. The interesting question is how central a plank of their campaigning this is going to be. Because whilst there are signs that public opinion has shifted on Brexit, the clearer sign still is that Brexit is simply not a priority for the British public. The things they care about are public services, the state of the economy, the cost of living, immigration. Brexit no longer figures. You know, you'll remember thinking back to the days of 2018 and 2019 where all anyone could think about was Brexit.

14:35We're no longer living in those times. And Brexit has fallen off the list of major issues that the public think are confronting the country now. Why do you think that is? Is it just that there's too much else going on for people to sit back and have a rational, open discussion about the pros and cons of the Brexit process? I think there are broadly three things. One, you're absolutely right. An awful lot has happened, not just since we left, but since we voted to leave. You've had all those things, the pandemic, the war, another war, cost of living. Secondly, I think, you know, the British public were told in 2019 the Brexit would be done.

15:10I mean, that was the whole basis of Boris Johnson's campaign for the 2019 election. And thirdly, I think there's an element of kind of, we don't want to think about this ever again. I mean, the public were quite badly scarred, I think, by the experience of the Brexit years, where the only thing people would talk about was Brexit, where families found themselves divided over Brexit. There's precious little appetite, I think, to revisit those times and revisit that debate. But don't we need at some point our politicians to at least articulate the realities of Brexit? We have had, I would suggest, a flavour of it from Sir Keir Starmer.

15:46Is it not incumbent upon our politicians to actually be honest, be honest with each other and be honest with us about what has gone right and what has gone wrong? I mean, we'd all prefer a world in which the politicians were absolutely honest. What I would say is this. Firstly, I think the debate is moving for a number of reasons. I mean, one is that the Labour Party sees Europe as an opportunity now. They want to use Europe offensively, partly because they're starting to realise that their position of being critical of Donald Trump is a popular one with the British public. And consequently saying we're distancing ourselves a little bit from Donald Trump and his war in the Gulf.

16:22What we're going to do as a consequence is move closer to Europe. They see a political gain in having that. But secondly, we are just starting, I mean, remarkable though it sounds, 10 years after the referendum, to have a detailed debate about what being out actually looks like. It means either not having access to the market or making some difficult decisions about being a rule taker. And if you like, we're just really starting to explore some of the details that were always implicit in the Brexit vote, but we didn't really talk about in much detail at the time, about what being out means and what the trade-offs involved between sovereignty and economic access might really look like.

17:01Just to conclude, I can see what's in it for the United Kingdom. What's in it for the European Union? One of the things we often forget in this country is that we are no longer a priority for the European Union. One of the reasons why this reset that the government has tried to carry out has taken quite a lot of time is that I think the EU simply hasn't given it the priority we would have liked it to give it. The EU has loads of other issues to deal with at the moment, whether it is the war in Ukraine, whether it is what's going on in the Gulf, whether it's illegal immigration, whether it is the budget negotiations they've just begun to have.

17:33so we struggle not just with the fact that the EU is a tough negotiator that puts its interests first and won't do us any favours but also with the fact that negotiations with the United Kingdom are perhaps not their number one priority at the moment. And it's always a pleasure to talk to you thanks for your time. Now that's your lot for today do remember to give us a follow if you're new to This Is Why and make sure to get in touch with any suggestions you might have for future episodes why at sky.uk is the email we're back again tomorrow