The next best Brexit deal for business

Almost three and a half years after the Brexit referendum the uncertainty continues.

The next best Brexit deal for business

Almost three and a half years after the Brexit referendum the uncertainty continues. Almost everyone hopes that the UK general election will finally bring some stability to the process but there is very little confidence that it will.

Britain’s first-past-the-post system has traditionally produced majority governments even where they have failed to win the popular vote. This is being turned on its head by the polarisation of politics in the UK and rise of smaller parties with clearer Brexit positions.

Should one of the main two parties manage to achieve a majority this time around it is likely to be a thin one. There is a distinct possibility that again there will be a minority government, with a confidence and supply arrangement with one of the smaller parties, or a coalition government.

From an Irish perspective, there is a clear preferred outcome, but the risks are substantial. While the second withdrawal agreement was far from ideal for Ireland and the EU, it is not difficult to foresee a situation where many may wish that deal was still on offer.

The performance of the smaller parties will shape the composition of the next British government and the whether the king-makers are the Liberal Democrats, the Scottish National Party, or the Brexit Party will determine the direction of Brexit in the new year.

The Lib Dems and the SNP are unlikely to find common cause with the Tories, despite Boris Johnson’s obvious ability and commitment to his own survival.

The SNP will seek a rerun of the Scottish independence referendum as the price of its support and Labour may be willing to accept that if it can get a soft Brexit deal through parliament. Jeremy Corbyn is at best a reluctant remainer.

The worst outcome for Ireland, however, would be for the Tories to need the support of the Brexit Party for a majority. The opposition agreed to an election because a no-deal Brexit was off the table -- but it is only off the table until January 31.

The Brexit Party is unlikely to win many seats and may not win any. As with UKIP, it will struggle to translate success in the PR-style European elections into Westminster seats.

The real damage that could be done by the Brexit Party would be to damage the Tories and prevent them winning marginal seats.

The Brexit Party will do damage to Labour in Leave constituencies, though polls suggest the damage they will do to Conservative candidates will be far greater.

It remains the case that the optimal outcome for Ireland is for the UK to stop Brexit and remain within the EU.

There are election outcomes that make that still possible, despite the division it would cause in UK politics for many years. However, if there is to be a Brexit then the latest deal is the next best alternative.

The new deal was simply the old deal rejected by Theresa May because she needed the votes of the DUP. When Mr Johnson lost his majority, the DUP became surplus to requirements and the precious union became a little less precious.

If Brexit remains on track it would be disappointing if the new deal were not to be the basis on which the UK was to leave the EU. The lack of a hard border in Ireland, the continuation of the North within the EU customs union and the single market means there would be substantial opportunities to develop a stronger all-island economy.

The economies in both parts of the island would be drawn closer together and there would likely be faster convergence in business activity and economic conditions.

In addition, the attractiveness of EU markets for Northern businesses will come into very sharp focus should the substantial public transfers from Westminster be redirected to lagging English and Welsh regions post-Brexit.

The road to the next Brexit deadline on January 31 is likely to be just as bumpy as the one travelled so far.

In the scheme of things, we can hope that the deal agreed in October will not be one we come to regret losing.

- Dr Declan Jordan is senior lecturer in economics at Cork University Business School

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