Remain voters must wish someone had considered the Irish border question before they voted on 23 June 2016.
It probably would not have changed the outcome. The referendum, as the pollsters remind us, was a cultural phenomenon linked more closely to people’s attitudes to immigration and sovereignty than to economic success – a situation that persists today. Still, it would be satisfying to rewind and show that the reason many now believe Britain must stay connected to the EU for five years or so relates to complex customs rules and how they cannot be reconciled with open borders.
Parliament only took notice when MPs on the Brexit select committee damned the government’s dithering. The committee’s message was that keeping the Irish border open and at the same time installing border controls with the EU couldn’t work.
Ever since their report last December, the border contradiction has travelled through Whitehall like a virus, forcing civil servants to drop what they are doing in a desperate bid to find a cure. As one senior civil servant put it, officials are too busy finding a way to put the right export stamp on a sheep’s backside to think about anything else.
So far, no cure has been found and the situation is looking desperate. Foreign companies have virtually switched off the stream of investment into the UK. By the end of last year, OECD figures show foreign direct investment down by half on the average seen from 2012 to 2015 and by 90% on the bumper inflow of funds seen in 2016.
Even the most confident Brexiters have noticed the economy flagging under the weight of the uncertainty
That Britain has fallen off the investment agenda of most major businesses is a sad and irrefutable fact. It’s true some domestic businesses have found extra cash for investment: after all, Britain is a nation of almost 65 million people with 32 million of them in employment. It’s a big market.
But the economic data remains weak and most of the spending is simply to keep abreast of digital developments. In other words, IT investments are being made just to stay in the game. Productivity has risen a little, but mainly as a result of a fall in hours worked to achieve the same outputs, rather than an increase in output from the same number of hours worked.
The result has been a dramatic fall in GDP growth in the first three months of 2018. The economy could only manage a growth rate of 0.1% in the first three months of the year, and, worse than that, the measure of GDP per head saw a 0.1% decline.
Even the most confident Brexiters have noticed the economy flagging under the weight of the customs union uncertainty.
It’s such a quandary that last week Tory MPs were openly considering adding another three years to the transition deal just to give the brightest minds in the civil service enough time to sort it out. That would take the UK’s membership of the customs union to 2023.
They recognise that any attempt to stay inside an economic zone with the EU – whether that be the “Norway option”, under the banner of the European Economic Area, or the “Swiss option”, which involves negotiating upwards of 100 separate trade agreements – comes with a demand for free movement of labour. That, as we know, is an unacceptable outcome for Leave voters.
These Tory MPs support Theresa May’s attempts to cobble together a technological solution and recognise that, from a standing start, it may take until 2023 to finish the job.
However, that amounts to five more years of uncertainty and five more years of being a rule-taker from Brussels without the ability to strike fresh trade deals.
Some Leave agitators like the MEP Daniel Hannan can live with staying inside the EEA, but not the customs union. Like Boris Johnson, Hannan believes that “giving Brussels 100% control of our trade policy with 0% input would plainly leave us poorer and weaker than now”. The EEA allows members some influence on how the market operates.
But Johnson and Hannan are not anti-immigration. They would allow free movement of labour as the price of economic security, though they both seek the have-cake-and-eat-it option of signing separate trade deals. This places them at odds with Tories facing Ukip-sympathising constituents, who put immigration at the top of their list of concerns. Most importantly, it puts them at odds with Jacob Rees-Mogg.
With the government’s supporters split several ways, it is difficult to see how an agreement can be struck that takes us past 2020. One faction or the other would need to retreat from their central demands.
For this reason, most large businesses have prepared for an immediate exit from the EU next year and the single market and customs union in 2020. It’s a sensible plan.