As negotiations between the UK and the EU go down to the wire, this second of two articles by economist Brian O’Boyle argues that workers should be supported whatever the outcome – and that a border poll should be high on our agenda.
Part 1 can be read here: Bojo’s Bargain Basement Brexit.
The tug of war between the British Government and the European Commission is entering its endgame. With less than three weeks before a No Deal Brexit, fundamental differences still exist around fisheries, the ‘level playing field’ and the resolution of trade disputes.
The reason for the endless negotiations is the intractability of the remaining issues. For example, the ‘even playing field’ really involves a battle between Britain, France and Germany for future influence within Europe and a conflict within the British establishment on how best for Britain to regain a leadership role within global capitalism.
On one level the dispute is about access to markets. Boris Johnson wants tariff-free access to 450 million European customers, but he also wants to reduce UK labour standards so that British businesses become more competitive. This underpins his wider strategy to sign free trade agreements after Brexit and is the major sticking point with EU negotiators who fear the UK will steal a march on European capitalism.
This dynamic is front and centre in the mainstream press, with Johnson accusing the EU of undermining UK sovereignty and the European Commission arguing that Britain can’t expect access to the Single Market while it breaks the rules. Some of this is political brinkmanship in the run up to the deadline, but there are genuine tensions on both sides of the negotiating table.
On the UK side, the majority of the ruling class never wanted Brexit to happen and they are piling on the pressure to make a deal. Led by the Confederation of British Industry (CBI), more than 70 professional bodies – representing 190,000 businesses – have signed a statement urging the government to secure an agreement.
Without one, the Office for Budgetary Responsibility expects the British economy to contract by 2% in 2021, with 300,000 people losing their jobs. Research from 13 other studies estimate average losses three times higher – with around £125 billion permanently wiped off British GDP.
If this were to happen it is hard to see how Johnson could survive, but his inner circle remains strongly reliant on the English nationalism that they themselves have cultivated, while his backers on the right of the Tory party remain convinced that Britain can create a 21st century trading empire once it breaks free from European bureaucracy.
Johnson understands that this is little more than a pipedream, but he owes his Prime Ministership to championing Brexit and may feel it is worth seeing it through to the bitter conclusion.
On the other hand, the European Union has presented itself as the reasonable side throughout this negotiation, but tensions are beginning to emerge on this side too. Eight times larger than the UK economy, European negotiators have always insisted they can handle Brexit better than London.
Despite projecting an image of compromise, the EU is mindful of the dangerous precedent that would be set in allowing Britain to visibly gain from their decision to leave and is therefore driving a harder bargain than in previous negotiations.
The Financial Times recently listed a series of examples where the EU granted rights in previous trade negotiations but is denying them to Britain. This has created some tension on the European side, with France particularly insistent that Michele Barnier hold the line on the key strategic questions.
The EU Commission faces an internal struggle between France and Germany, whilst they try to unite to oppose the United Kingdom. German capitalism underwent a major anti-worker restructuring in the wake of reunification and is now the most competitive economy in the European Union. Angela Merkel therefore has less to fear from Johnson’s moves in the same direction than France, who have seen massive protests over the past few years against French bosses and the EU attempting to slash worker’s rights and benefits. She also has more to gain from a deal being done.
For example, the car industry is set to lose £110 billion, with much of this centred in Germany and the UK. Like its British counterpart, German business is pushing hard for a deal and the mood music is now shifting in this direction. With or without a deal, the stakes remain extremely high with a level of disruption now inevitable regardless of the outcome.
The Impact on Ireland
Whilst the Irish establishment are painting the EU as the reasonable negotiators who are looking out for the Irish, the impact on the island of Ireland will be immense, deal or no deal.
The economic impact on the south of Ireland will be felt in three direct ways: increased bureaucracy, time costs from transport delays, and, in a No-Deal scenario, major increases in tariffs and quotas – particularly in agriculture.
If Britain leaves the EU on World Trade Organisation (WTO) terms, there will be an average of 14.8% tariff increase on 2,067 different agricultural products imposed from January 1. The Irish Farmers Association estimate that tariffs of around €1.4 billion could be imposed on a beef and dairy sector which currently sends around €4 billion of its €10 billion output across the water.
This would devastate tens of thousands of small and medium beef farmers who are already squeezed by the major meat processors and the supermarket chains in the Republic. North of the border, farmers are worried that Boris Johnson will revert to a ‘cheap food policy’ long suspected of being the favoured position of the Tory right. This would involve reducing – and eventually scrapping – payments that farmers currently receive from the Common Agricultural Policy (CAP) while bringing in much cheaper meat from Latin America. If either of these things were to happen, the North would rapidly be priced out of its key export market.
Even with a trade deal, moreover, very important issues remain to be resolved. For example, new ‘Country of Origin Rules’ have the potential to disrupt the 800 million litres of milk that move from the North into the South for processing every year, or the 80,000 tonnes of pig meat that move in the other direction.
A ‘no deal Brexit’ would also bring significant costs for consumers, with the Economic and Social Research Institute (ESRI) arguing that imports will become between 3-5% more expensive, adding between €900 – €1350 to the annual cost of a family’s food bill.
Beyond this, industries selling into the UK will have problems, as will the various transportation companies which will look to pass any extra costs onto consumers.
These economic consequences will be potentially devastating for individual sectors, but it is worth remembering that a state that spent €42 billion on bank recapitalisation after the Great Recession and a further €40 billion on Covid-19 has more than enough resources to support farmers and fishermen, workers, and consumers.
Below is a non-exhaustive list of what needs to be done immediately:
- Support small and medium sized farmers and fishermen through direct cash payments tied to increased environmental initiatives such as rewilding, forestry, organic farming and sustainable fishing.
- Support low and medium income families by making sure food bills don’t increase. Tariffs will bring in money for the EU which should be re-directed to lower and middle income families.
- Support workers in industries affected by Covid 19 by extending the Pandemic Unemployment Payment Scheme and the Temporary Wage Subsidy Scheme and by offering re-training programmes for anyone in an industry made unsustainable through Brexit.
- Support small and micro-businesses exporting to the UK with grants to allow them to redirect to other markets. Any direct grants should be repaid, once businesses are back in profitability.
- Support the North with an aid package to make sure ordinary working people are not made to suffer the costs of Johnson’s anti-worker Brexit.
The Northern Executive has very little control over tax and spend policies and will be less able to provide the kinds of support that the Southern government is in a position to do. This is one reason an aid package should be organised, but there should also be a broad civil society campaign to make sure workers, farmers, fishermen and consumers are not made to pay the price of Johnson’s reckless experiment. This would include trade unions, industry representatives and political representatives fighting for a sizable Brexit fund to allow the North to adjust.
After months of bluster, Johnson has finally confirmed that Northern Ireland will remain in the Customs Union when Britain exists on January 1. This so-called Northern Ireland Protocol will shift the Customs Union into the Irish sea, thereby avoiding checks along the border and creating regulatory divergence between the North and Britain.
This should be warmly welcomed by socialists. The fact that Johnson has agreed to impose a customs border down the Irish sea has infuriated unionists, with Democratic Unionist MP, Sammy Wilson, denouncing the deal as poisonous.
Wilson recognises the dangerous precedent being set for the North and is equally aware that as Britain begins to diverge economically, it is also likely to diverge politically. Another way of saying this, is that English nationalism may inadvertently be hastening the demise of the United Kingdom.
Irish Times journalist, Chris Johns, takes up the potential irony of Brexit undermining the Union:
If English nationalists don’t belong in the EU, they don’t belong in any kind of political union. That includes the UK. English nationalism – the new raison d’être of the ruling Tory party – dictates that the union is over. The fact that Scotland also wants its independence merely adds to the argument. Wales and Northern Ireland should take notice… Northern Ireland, one foot in the EU and the other in the UK, is in an unsustainable place. The demise of the UK is an obvious vulnerability. Even if English nationalism takes an unexpected turn and self-immolates, being a bit in the UK and a bit somewhere else cannot last for long. Great turbulence is coming Ireland’s way, deal or no deal. (My emphasis)
Socialists everywhere should celebrate any weakening of the British state, but this doesn’t mean cheerleading Tory Brexit or accepting that workers should pay the turbulence costs. For progressives in Ireland the key tasks are threefold: defend workers interests in the immediate transition; argue for a border poll while laying out a socialist vision for a new Ireland on the other side of a unity referendum.
Time for a Border Poll
In 1914 James Connolly predicted that if Britain imposed a border through Ireland it would destroy the unity of the labour movement and delay social progress so long as it lasted. In the century since partition, Connolly’s words have proven tragically prophetic, as a Catholic and conservative Republic mirrored a loyalist and sectarian Northern Executive – each protecting their respective capitalists. In this process, workers became separated from their own class interests, and from each other, by religious and cultural divisions cultivated from above.
A hundred years on, we finally have the chance to bury these reactionary states in favour of 32 county socialism built from below. The first step in this journey is a poll on Irish unity, which is surely a democratic prerogative given the fact that 56% in the North voted Remain in 2016.
In 2016, the No-Campaign assured people that there was an ‘oven-ready’ Brexit deal waiting on the other side of the referendum. Johnson also promised an extra £350 million every week for a National Health Service that has since been chronically underfunded by the Tories right though the pandemic.
The fact that the Conservatives are hellbent on an anti-worker Brexit means it is essential that people on this island get to have their say – particularly as the Northern Protocol will mean there will be even less interest from politicians in London about what happens in the North.
Workers clearly have no interest in following Johnson, but many voters in the North will rightly look on the Southern state as a destination that they don’t fancy either.
For decades, the South has been one of the world’s major tax haven economies with extremely low taxes on the rich and extremely bad services for the rest of us. Most people can see that the southern healthcare system is overworked and underfunded, while 96% of primary schools remain in the hands of the Catholic bishops.
The only chance of actually winning a border poll is therefore to end the injustices that have blighted people across this island for far too long. This means offering a vision of society that actually cherishes every person who lives here equally; an economy that puts the resources that are produced by workers in the hands of those workers; an administration that moves from laggard to leader on climate change and a state that buries the divisions of the past by separating religion from our public institutions. This is the kind of Ireland that is actually worth fighting for – a 32 county socialist Ireland for the 21st century.