How We Shifted from a Soft to Hard Brexit

Before the 24th of June, discussing the options for Britain's post-Brexit relationship with the EU was like tossing around semi-interesting thought experiments – like "Imagine if your hands were where your feet are," or, "Imagine what might happen if everyone in China jumped up and down at the same time." Back then, the weighing of respective tariff regimes was like an intensely dull episode of Black Mirror.

Perhaps we were especially uninterested because we were told there were a load of easy off-the-pegs for exiting a 40-year relationship. There was something called the "Norway option", which would mean being a part of something called the EEA, which was like the EU, except you had no say at all over it and still paid-in.

This was described as a "good option" by many on the Leave side. You got to keep your ability to be dictated to by Brussels, but you didn't have to salute that ghastly 12-star flag every night before you went to bed.

Then there was the "Swiss Model", which apparently involved not being part of the EU, but like the Norway model this seemed to involve taking in as much or more migration. However, this one seemed to be slightly more lax on things like setting your own buttermilk quotas and dumping toxic waste in lakes.

There was the Canada Model, the CETA trade agreement between Canada and the EU which meant free trade, but no free movement. This was the one Boris seized upon in his legendary "gloomadon poppers" speech of March, 2016. The small question of the seven years the Canada deal took to negotiate didn't come up. Nor the seven ensuing years of phasing-in. And the fact that the services sector – the bulk of Britain's economy – isn't really covered by CETA was barely mentioned. No, never mind the detail: Boris was set on CETA. In terms of the Take Back Control narrative, it seemed pretty settled – we could all look forward to a life of fur-trapper hats and wet indie from here on in.

But overall, the question of the day of Brexit-plus-one didn't seem terribly interesting. The fight was more immediate than that, far more adrenal. The real question was in the present tense: are you unhappy and could the EU be to blame for that?

Apparently so, as it turned out.

So we left the EU, perhaps under the misguided belief that the politicians knew which of the prefab options we would try to secure once we left. Of course, as Gove and Johnson's hazy press conference post-Brexit indicated, these little thought-balloons weren't fully-formed. The shape of Brexits ever since has moved sharply away from all three of those models, as each one has had its boats blown out of the water by a crucial flaw.

It was September by the time the world's most cunning tautology resolved itself into some basic shape. Theresa May used her conference speech to announce that Brexit meant there would be no surrender on removing freedom of movement. Given that the EU had already made this non-negotiable for access, markets interpreted the speech as her government holding out for a hard Brexit. Almost overnight the pound lost 18 percent against the dollar.

Since then, the Number 10 drumbeat has been for the hard Brexit that seemed unimaginable at the start of the year. What's a few WTO tariff levels, really? A 2.3 percent tariff on agricultural goods? Pffft. We could do that spinning on our heads. 10 percent on cars? Well, it's still made up for by the drop in the pound. Blitz spirit. Dig for Victory. All that.

May's new tone is designed to make it seem like hard Brexit is no biggie. It's more a piece of game theory than an actual policy statement. If she can sell it to the public, then her window for EU negotiation expands. The Europeans need to believe that she can and will walk away from the table if they don't plate up some super-awesome access. At the same time, the British public need to be softened-up to mitigate the internal political risk to the PM of hard Brexit happening by accident.

The key problem with a hard Brexit – however sexy it may seem – is it will involve barriers to trade; not just tariffs, but fiddly complexities that will make Britain immobile. Take, for example, the upcoming conspiracy to spanner our financial services sector by refusing it equivalence with European banking firms (the so-called Passporting rule). This is easily done: historically the French are great at making up reasons for things that barely exist – it was ten years after BSE before they let our beef back on the shelves. They hold the cards, and soon enough they will be telling us that British money is too heavy for French bank-tellers, not vegan enough, hasn't filled out Form 254A regarding phytosanitary monetary conditions.

Which is partly why, in recent weeks, some are losing their nerve, deviating from the strategy. Philip Hammond – who surely knows grey when he sees it – began to agitate for a "grey Brexit", the "customs union" model, AKA Turkish Brexit. In knocking him back, Theresa May somehow found a brand new way to say nothing at all, dubbing hers the "red, white and blue Brexit" – "the best deal for Britain", whatever that means. May has no incentive to reveal her hand until the EU reveals theirs. She will talk all gas all the time for the next two years, and she is innately boring enough to accept that as her fate.

The irony is that while it was hardly ever on the lips of Davis, Fox, Johnson, Gove or Stuart, whether or not a hard Brexit now happens may be a question of sheer dice-rolling. Even if both Europe and Britain want to do a deal, there are so many obstacles, all to be done against the clock – approval by the European Parliament, getting a qualified majority of 27 nations to agree on anything, the spectre of a UK Parliament vote, Merkel getting sacked halfway-in – that we may very well accidentally slither into the no man's land of hard Brexit without ever actually meaning to.

@gavhaynes

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