When Theresa May became Prime Minister she really did inherit a poisoned chalice, but it’s hard to feel sorry for her as her own lack-lustre EU Remain campaign contribution (designed to leave the door open for a run at Number 10 if Cameron failed) was very much part of the poisonous cocktail.
Had she been a Brexit hardliner and already enacted Article 50, as if it were some sort of trophy England had won, her premiership would be in trouble already. So, she is attempting to kick Article 50 into the long grass hoping not to have to enact it until January. Gordon Brown had a similar beginning to his time as PM: A bounce in the polls, a new PM representing a change distracting the people from the nation’s problems, and then he decided not to call the snap general election Douglas Alexander was advising, ending his honeymoon period and defining his time in office. We won’t truly know the measure of May until we start to see how the Brexit negotiations are going, but she is in a no-win situation.
All the signs point to May looking to secure a deal that can be defined as a Brexit, but maintains the closest possible links to the EU and as free as possible access to the European single market. Let’s be clear about this: There is no way the UK can have border controls and total access to the single market. Other non-EU countries have access to the single market (Norway, Iceland, Switzerland, even North Korea) but access is not uniform and not as advantageous to trade as membership is and the more access you have, the more sovereignty (over EU regulations and borders) you have to give away.
With this comes more money you have to pay in trade levies, up until the point where you may as well pay a membership fee. So, May’s only option is to try to negotiate a fudge that will please everyone, when actually it will only disappoint everyone and even anger the anti-EU hardliners in her party and Ukip. She might, however, be able to persuade England she did the best under the circumstances and that will give her a chance of maintaining party unity, but the honeymoon will very definitely be over.
She probably won’t be able to convince Scotland that she did the best deal though. Not only did we vote to stay, Scotland does far better than most out of EU membership overall through our exports and the sheer volume of EU grants. We pull down 17.4 per cent of all grants to the UK with 8.4 per cent of the UK population. Any restriction on access to the single market for Scottish exporters and a failure to replace the EU grants will mean a bad outcome for Scotland and Nicola Sturgeon, and her Scottish Government team knows it. That is why she has been stressing the need for access to the single market and moving the argument to one that all businesses and most Scots can agree on. She can then focus the inevitable disappointment with the post Brexit trade deal in a way that will lead people to considering independence, something many are not yet willing to do as they believe that access to the single market can be maintained.
Much of the unionist press have stated that her offer to work with those in Westminster who want to maintain access to the single market is her backing off the independence cause. That is a flawed analysis, as she is clearly just preparing the battlefield to her liking, as shown by the announcement that draft legislation to allow for a second independence referendum will be published within 10 months.
May is now starting to face pressure from multiple fronts. The restless natives in Scotland will be on her radar, but the EU is putting diplomatic and public pressure on the UK to move forward on Article 50 as soon as possible. Donald Tusk has pointed out that the ball is the UK’s court, but it’s now time to pass it back, and to sweeten the pill he has been suggesting that “the EU wants to agree the closest possible relations with the UK”. That means the EU wants open borders, massive trade levies and free access to the UK market, however, the best possible deal when defined by David Davis and his like means closed borders and no fees of any sort. Like I say, everyone is going to be disappointed, and to keep that fact under wraps for as long as possible May won’t detail what she thinks will happen, justifying it as not showing her hand too soon. The trouble is, her hand is empty.
The importance of the emerging single market dynamic to the debate cannot be overstated. It helps define the huge difference between leaving a political union and leaving a trading union. If you leave a political union you lose clout in what remains of the political union (understandable and acceptable to most) but get more say over your own affairs. If you leave a trading union you lose trade and your economy suffers. This is the difference between leaving the EU (a trading union) and leaving the UK (a political union).
In both cases, if you manage to maintain access to the existing single market your economy will not suffer. As Nicola Sturgeon has figured out, if the UK leaves the EU but maintains a free trade deal, then Scotland can leave the UK, maintain its membership of the EU and by virtue of that maintain its free trade deal with the UK, thus proving independence would not hurt trade with the rest of the UK.
This is where the fudged deal becomes even more important. May needs some form of immigration control or she is in trouble and she can’t get that without some sort of trade penalty, most likely the loss of financial passporting. That could mean 50,000 well-paid jobs leaving the city of London, and if Scotland were an independent member of the EU then many, if not most, of those jobs could come here, forming part of the enlarging independence dividend. Independence supporters have to campaign as if a referendum has been called and help get support for Yes to 55 per cent before the new referendum bill is published next year. Then things will get interesting.