The pace of an election campaign tests the attention span of even the most committed observer. In a less frenzied climate, political debate might have dwelt, for example, on the declaration by Elon Musk, founder of carmaker Tesla, that Brexit has deterred him from locating a new factory in the UK.
Mr Musk has chosen instead a site outside Berlin to develop the next generation of electric vehicles. The decision to leave the EU made the UK “too risky”. That is not the story that Boris Johnson tells British voters. By ironic coincidence, Mr Johnson spoke at an electric car plant in the West Midlands on Wednesday, hoping the location would chime with his leading campaign theme – that “getting Brexit done” will unlock economic opportunity.
The Tesla decision does not in itself crush that ambition, but it exposes a serious flaw in the plan. One of Germany’s advantages in securing automotive investment is its membership of the EU single market and customs union. The prime minister’s Brexit plan erects barriers between UK manufacturers and that vast marketplace. This is not simply a matter of tariffs. Complex “rules of origin” requirements dictate how much of the supply chain behind a modern manufactured good can pass outside the area covered by a comprehensive free trade agreement. Future British compliance with those rules is in doubt.
The uncertainty is not simply a function of delay in ratifying a withdrawal agreement. The years of ambiguity around Britain’s relationship with the EU have put a brake on business investment, but a hard Brexit on Tory terms will not resolve the problem. A vital difference between the deal negotiated in Brussels by Mr Johnson and Theresa May’s is the current Tory leader’s preferred path of regulatory divergence from the EU.
That is the very purpose of Brexit in the eyes of hardline Conservative Eurosceptics, but it also makes the next phase of negotiation much harder. Divergence provokes fears in Brussels that the single market will be undercut by a low-cost, low-standard competitor across the Channel. That makes the European commission warier of granting access to continental consumers. In short, Mr Johnson’s plan locks many UK businesses out of trade with the EU.
Unpicking that lock would take a lot longer than the time available under proposed transitional arrangements. The deadline is December 2020. It is normal for negotiations over a comprehensive free-trade deal between developed economies to take many years. The EU-Canada deal that Mr Johnson claims to take as his model took seven years and was almost scuppered when the Walloon regional parliament in Belgium rejected its terms. Tory ministers claim their deal would be fast-tracked because the EU and UK are such close neighbours, but in reality that makes things more complicated. It is the combination of geographic proximity and drastic deregulation that creates all of the difficulty.
Meanwhile, to woo supporters of Nigel Farage’s Brexit party, Mr Johnson has pledged that the transitional phase will not be extended. If that promise were ever honoured, it is highly probable that Britain would find itself trading with the EU on WTO terms by January 2021 – the hardest and most damaging mode of departure.
That prospect persuaded David Gauke, a former Tory cabinet minister, to endorse the Liberal Democrats in seats other than his own (where he is running as an independent). Mr Gauke once represented the Conservative mainstream and his alienation from Mr Johnson’s platform is a measure of how far from economic rationality the prime minister has strayed in pursuit of Eurosceptic mania.
The Tory leader’s speech on Wednesday retold the familiar deceit that Conservative government will release Britain from the Brexit rut in which it has been stuck. But Mr Johnson has negotiated nothing more than a narrowing of options, a deferral of painful choices and a short delay before a nasty, familiar cliff edge comes back into view. By compulsively declaring that he will get Brexit done, the prime minister is desperately and dangerously diverting attention from the harm that Brexit will do.
