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Alan Blythe“Confusion heard his voice, and wild uproar stood ruled, stood vast infinitude confined; till at his second bidding darkness fled, light shone, and order from disorder sprung.” John Milton, Paradise Lost

Whilst Brexit is certainly by no means comparable to the earth’s creation as described by John Milton, there is an increasing sense of desperation, on both sides of the Brexit debate, that suggests that there is not going to be a salvation from the confusion that currently reigns. It is hard to see either Theresa May or Michel Barnier playing the “God role”, causing “wild uproar” to be “stood ruled” and leading us to path from where order can spring.

So, where exactly does the current Brexit negotiation stand?

From the EU standpoint, virtually all of the meaningful proposals made by the UK have been rejected, although there is a palpable feeling of some softening from Michel Barnier, the EU’s negotiator-in-chief, as though he finally senses what has been obvious to many for a long time– time is running out.

The UK’s position is straight out of an episode of “Yes Prime Minister”. A lame duck Prime Minister, with the vaguest of Brexit plans, clinging to power, aided and abetted by the DUP (with their own agenda), whose assistance she required following a disastrous election campaign, that whittled away her comfortable majority in the House Commons, that had been thrust upon her by the resignation of her predecessor David Cameron, who had just lost the Brexit vote, that he had promised to the country in the last election, as a cunning plan to silence the Euro-sceptic wing of his party!

As cunning plans go, that’s definitely not “as cunning as a fox who’s just been appointed Professor of Cunning at Oxford University” (to borrow and misuse a quote from Edmund Blackadder, Blackadder Series 4)

We currently have a “half in, half out” proposal whereby the UK remains part of the customs union in respect of trade I goods, but leaves altogether with regards to services, with a special carve out to that for the City of London who will still have free access to the common market. This was the deal brokered by the Prime Minister at Chequers and, so far has the support of her Cabinet alone, although it took 2 high profile resignations (David Davis and Boris Johnston, the latter whose motives and plans remain unrevealed) from the Cabinet to get to that point.

Much cold water has been poured upon that proposal by the EU who, until very recently, seemed determined to punish the UK for daring to leave the club and to make an example of her, to anyone else who might be considering the same.

In the meantime, Parliament has succeeded in securing the right to vote on the acceptance or rejection of any deal finally agreed between Theresa May and Michel Barnier, which some are seeing as the final opportunity to bring down the whole Brexit process.

Clamours for a second referendum are growing all of the time, although there is some evidence to suggest that the leave side of argument has if anything hardened over the course of the past 2 years.

The “Irish Question” remains unanswered, although it is hard to understand why this, and many other issues that are simply a question of 2 unilateral decisions, remain so. If the UK wants an open border then it simply needs to state that as far as it is concerned there will be no hard border at the UK. What the EU then does is up to them.

The effort to gain consensus between 2 diametrically opposed sides is what gives rise to the confusion. There are simply many irreconcilable differences and the sooner that is recognised, the sooner both sides can focus on the ones that can be reconciled.

March 29th 2019 is a mere heartbeat away and with each week that passes without agreement on the things that can be agreed the more likely we are to see a “hard” Brexit.

In our weekly group wide discussions on global macro-economic and political issues we all concurred that markets are not currently pricing in a hard Brexit. The confidence in the UK economy, expressed by the Governor of the Bank of England in announcing a quarter point rise in interest rates, with a modest, but upbeat, assessment as to growth prospects, also suggests that the Brexit factor is not as big an issue as some might believe.

In my view this shows a blind faith in the ability of the parties to reach agreement and unless we see a continuing change of stance from Michel Barnier, mirrored by Theresa May, I am finding it increasingly difficult to see (paraphrasing) a “light shining, and order springing from disorder.”

Download: Weekly Comment – August 17 2018 – AB


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