Theresa May and the politics of Brexit

The Conservative party conference last week was Prime Minister Theresa May’s first real opportunity, after taking office in the summer, to address both her party and the country more generally on her government’s plans. Unsurprisingly, her comments in her two set piece speeches were closely listened to and analysed.

Mrs May made a concerted effort to portray her government as having a full social agenda. She devoted the longer and more important of her two speeches – the traditional Leader’s Closing Speech – almost entirely to domestic affairs.  There was a considerable amount of populism in what she outlined, much emphasis on the interests and concerns of the ordinary person, and a very obvious pitch for the support and votes of centrist and soft-left voters for whom Jeremy Corbyn’s Labour party has increasingly little appeal.  The break with David Cameron’s government style and direction was clear and complete – as it was meant to be.

And she was duly rewarded with all the right headlines the next day. But she knows, and the electorate knows, that despite this speech and despite her attempt to create a distinct and new domestic programme for the government, one subject and one alone will dominate the next few years.  However much of her ambitious-sounding social agenda she is able to complete (or even find time and political energy for), her premiership will be known and judged by the result of the negotiations to leave the European Union.

And thus it was that her other speech, the one at the start of the conference, was inevitably all about Brexit. In a sense, and because everyone knows it is the elephant in the room, this was both necessary and wise:  since she was bound to be pressed on the matter, it was sensible to lead with it to get it out of the way.  Especially as she seems to have decided on a fairly high-risk approach to the negotiations with the EU.

By setting a firm date by when Article 50 (the formal declaration of the UK’s intention to leave) will be invoked, and by not setting any pre-conditions, May has sought to achieve two things.  First, she appears keen to confirm that the UK will definitively leave, that there will be no last-ditch attempt to avoid or annul the result of the referendum.  And second, she appears to have accepted that the UK may well have to conduct two separate negotiations – one to leave and end the current market arrangements, and then a second one from the position of a non-member state to establish new trading arrangements.

This is a significant change in position. Up until now, the government appears to have expected, and almost certainly hoped, to conduct the two discussions in parallel, so that the UK could move seamlessly from membership to the new trading status.  That way would have minimised the disruption for exporters and reduced the risk of an interim period where the UK has neither trading rights as a member state nor an agreed set of trading rules as a non-member state.  And because the trading framework for the UK after its departure will be negotiated from the position of a non-member state, it greatly increases the risk that it will be fairly minimal – the so-called Hard Brexit.

Why did the prime minster choose this approach? Why, given the warnings of adverse economic consequences, has she seemed to embrace a short timetable for the negotiations and a hard and complete rupture?  There are three possibilities:

First, this could be what she fears will happen anyway. The EU has shown no willingness to change its opening position, which are that there will be no negotiations before Article 50 is invoked, and no sign of any flexibility at all on its main stance, which is that the “four freedoms” (the free movement of goods, services, capital and people) are indivisible and non-negotiable.  And the UK has very few cards in its hand with which to seek a change of heart.  In this sense, she is managing expectations downwards by preparing both her party and the population at large for a bruising outcome.

Second, it could be what she actually wants to happen. Mrs May was always a very reluctant Remainer in the referendum, and she is better known as a hard-line Home Secretary for whom the control of immigration became something of a cause célèbre.  It could be that secretly, she is herself in favour of ending the free movement of labour as soon as possible, knowing full well that this would almost certainly be incompatible with any form of continued membership, even reduced membership, of the single market.

And third, it could be the calculated decision of a politician looking at the 2020 election and beyond. Regardless of her personal beliefs on immigration, on the economy, on the desirability of trade agreements with the EU, one thing is clear:  Mrs May senses the opportunity to establish a long premiership, and is determined to win the next election.  And to do that, she has to keep control of her party, satisfy those who prioritise the control of immigration, and meet the stated wishes of the majority of the electorate.

Many will no doubt be surprised at this third possibility, though it should not be too unexpected that this most political of politicians might have a political objective. Indeed, with the British public itself arguably having chosen to prioritise political issues (sovereignty and the control of the country’s borders) over economic ones, it is entirely rational for the prime minister to do so as well – she can after all claim that she is merely doing what the people have said they want.

What genuinely is a surprise though is that the same people who themselves prioritise politics over the economy – the Brexiteers – still nevertheless repeat their mantra that “the EU will have to offer us a trade deal, it’s in their economic interest”. It does not seem to have occurred to them that the EU might also prioritise political objectives (which are many, but to name just three, they are to maintain their principles on the four freedoms, to keep the Union together and avoid losing any other states, and to not give too much away to Britain and be seen by their voters as a soft touch) over economic ones, and will demand a hard Brexit even if it comes at some cost to the EU economy.

Mrs May is unlikely to have made this mistake, and looks to have embraced a probable hard exit with her eyes open. It is a high risk strategy – she is well aware that not even all her own MPs, let alone the House of Commons more generally, will agree with the prioritisation of immigration control over economic access or will support a drive towards such a complete rupturing of relationships.  Philip Hammond has already observed forcefully that “the British public voted to leave the EU, not to make themselves unnecessarily poorer”.

But Mrs May is also is well aware, as a senior member of David Cameron’s government, how difficult it was to negotiate with the EU even from the position of a member state. She knows that in the coming negotiations, the UK has turned the other 27 member states from partners who had to at least pretend to listen to the UK and try to find a mutually acceptable outcome, into opponents who will legitimately have no reason to wish the UK well and may actually want the UK to fail.  She is clearly expecting a very bumpy ride, of which the sharp fall in sterling last week is probably only the first instalment.  And we can expect her to cut her losses if the negotiations turn sour, neither prolonging futile discussions with opponents who will not bend, nor investing too much of her political capital in them.

Her political party and her countrymen would do well to prepare themselves for a hard exit and difficult economic times.