Transcript Brexit: What to Watch Georgina Wright Senior Researcher, Institute for Government Anna Isaac Trade and Economics Correspondent, POLITICO Europe Professor Richard G Whitman Associate Fellow, Europe Programme, Chatham House Professor Vernon Bogdanor Professor of Government, King’s College, London Chair: Professor Anand Menon Director, UK in a Changing Europe Event date: 11 December 2020 The views expressed in this document are the sole responsibility of the speaker(s) and participants, and do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event, every effort has been made to provide a fair representation of their views and opinions. The published text of speeches and presentations may differ from delivery. © The Royal Institute of International Affairs, 2021. 10 St James’s Square, London SW1Y 4LE T +44 (0)20 7957 5700 F +44 (0)20 7957 5710 www.chathamhouse.org Patron: Her Majesty The Queen Chair: Jim O’Neill Director: Dr Robin Niblett Charity Registration Number: 208223 2 Brexit: What to Watch Professor Anand Menon Hi everyone, and welcome to this Chatham House event on Brexit: What to Watch. We could call it Brexit: Is it really still going? I suppose, but we’ve got a lot to talk through. We’ve got a fantastic panel to do that. Georgina Wright from the Institute for Government. Anna Isaac from Politico. Richard Whitman, who’s an Associate Fellow at Chatham House and also of the University of Kent and Vernon Bogdanor, who’s a Research Professor at King’s College London. Talking of which, I’m Anand Menon, also from King’s College London, and the way we’re going to proceed is, we’re going to sort of have a discussion as a panel. I’ll try and talk to each of the panellists a little bit to start with, after which we’ll welcome your questions. I should say that this is being recorded. You are being – it’s on the record. You’re encouraged to tweet if you want to do that sort of thing, using the #CHEvents. And when it comes to questions from the audience, if you can submit them through the ‘Q&A’ function on Zoom, we’re then hoping, rather heroically, that we can get people on mic to actually ask their question when I call on them. If, for any reason, you don’t want to speak or can’t speak, add that to your question and I’ll try and integrate your question into our conversations, so that it gets asked. But do please start sending your questions in early, because if I can filter some into our conversations, I will, so we can cover as many of them as possible. I think that’s everything. I’ve almost certainly forgotten something, but we’ll see what happens if we go from here. So, Georgie, I’m going to start with you, with the easy question, what’s going to happen? Georgina Wright Thank you so much, Anand, and thank you, Chatham House, for the invitation to be with you this lunchtime. Well, what’s going to happen? No-one really knows, to be honest. 21 days to go until the end of the transition period, where we know that deal or no deal on the 1st of January, the UK/EU will be trading on radically different terms. So, where are we? Well, we’re still at it and 98% of the text, according to reports, has been negotiated and agreed to. We know that the Prime Minister went to Brussels on Wednesday. He met with the Commission President who helped hold face-to-face talks. They decided that their negotiators should have a final go, and they set Sunday as a potential deadline. We don’t know whether these talks are going to lead to a breakthrough or a breakdown. Again, we apparently, Sunday is the day where we will find out. But as with much of Brexit, that could shift as well. We know that the EU leaders also met in Brussels on Thursday and today for their course of the European Council, where, according to reports, they spoke eight minutes about Brexit. So, lots of other things that they needed to discuss. And we know at the same time that the Prime Minister obviously came out last night and said there was a very, very strong possibility that the UK and the EU would fail to reach a trade agreement by the end of the year. So, the mood music is a bit pessimistic. But on a more positive note, we know that there was a breakthrough in the Joint Committee, which is the UK/EU forum responsible for overseeing the application of the Withdrawal Agreement, which was of course passed in January. And there have been lots of decisions there made that will impact Northern Ireland and particularly trade between Great Britain and Northern Ireland, which I’m sure Anna has views on that, and we can come back to later. So, there has been some kind of positive news on the Brexit front this week. Will we have a deal? Look, if we are to have a deal, it will be the result of compromise, where both sides are going to have to move and 3 Brexit: What to Watch give in. The key question really is, is it a deal that both sides see as a price worth paying? At the moment you’re hearing that actually, they don’t think that what’s on the table is okay, and that we know that in any case, there will be disruption. So, I think for the Prime Minister in particular, and Anand, this is something you’ve said before, in a deal scenario, the Prime Minister has to own that disruption. In a no deal scenario he could potentially he could potentially blame the EU. So, it’s not just about the deal on the table, it’s also about whether you can sell it politically, and what it will do to your own domestic audiences. So, there’s a lot in play. Everything really now lies on what happens over the next couple of days, and we shall see. Professor Anand Menon And it’s worth that regular reminder, isn’t it, that, you know, other people have domestic audiences too, and so it’s not – I think, in this country, we tend to think that we’ve got political constraints and everyone else is being stubborn. Whereas, in actual fact, we’ve all got them. So, Anna, I mean, it’s interesting, isn’t it? Because there’s been a lot of talk about this being a thin deal that’s being negotiated, though it sounds quite a long thin deal. Is there a massive difference economically speaking or for businesses between deal or no deal at this point? Anna Isaac It’s very difficult to answer that question, and I think, as we get crunchier and crunchier with the economic forecasts of addressing that very question, we’re seeing how very difficult it is for people to puzzle it out. Now, that’s not because of the tariffs, ‘cause you can model tariffs into an economic forecast quite easily. It’s because of the non-tariff barriers. So those barriers that we’re going to have deal or no. What’s the actual impact of slowing goods at a border because they have to fill out a form? As much as whether or not they have to pay a fee. Paying a fee or tax as the tariff is might determine whether or not the goods get to the border in the first place, but they don’t tell you how reluctant businesses will be to try and deal with the extra headaches involved. It’s also that we don’t necessarily know what a lot of the non-tariff barriers might look like ‘cause of services yet. We know some things are probably off the table, like mutual recognition of professional qualifications, which is fancy talk for if you qualify as an Architect in the UK, will you be recognised as an Architect in Germany or elsewhere? Ditto with being an Accountant etc., in other areas. So, we know that mobility is going to have a big impact. But we don’t know how great that will be. We’ve also lost our counterfactual because of COVID. So, we don’t know what mobility would have looked like in a normal world, where we’re all dealing with lockdowns. We don’t know what the UK economy would have looked like in a non-pandemic world. Which comes back to this point about selling a deal versus no deal. That political implication of not having that clear counterfactual, that clear what would the world have looked like had it been for a different course of Brexit, is going to make it easier in some ways to sell whatever deal we have and harder in others. So future prosperity on the one hand, versus the current state of play. We won’t really, really know what the hit of a no deal would be very immediately.