Author : Harsh V. Pant

Originally Published 2018-09-19 12:06:56 Published on Sep 19, 2018
The Brexit challenge

Politics in the United Kingdom is in turmoil as the Theresa May government struggles with its plan to seek a post-Brexit deal with the European Union (EU). In a typical British fashion, knives are already out for May who is in the line of fire from her own party backbenchers seeking a better plan than the one she is proposing. She has to protect her own chair in 10 Downing Street even as she has to deliver on one of the most momentous decisions any British government is being forced to make in recent memory. Everyone has a stake in its success but few want to help her out. With the UK due to leave the EU on 29 March 2019, challenges are mounting for May, for the Tories, for Westminster and for the UK in general.

About 50 members of the European Research Group (ERG) a pro-Brexit lobby which is strongly against Theresa May's plans for trading arrangements with the EU met last week and discussed openly how to oust the Prime Minister from office. Meanwhile, another group, the Economists for Free Trade has suggested in a recent report that UK had “nothing to fear” from a “clean break” from the EU and using World Trade Organisation rules. In fact, it is being suggested that this could give an £80bn boost to the tax base and cut prices by 8%.

These claims are, of course, not being taken seriously by many and especially by British Prime Minister’s supporters. Her Chancellor, Philip Hammond has responded by terming the economic assumptions behind the above analysis as “not sustainable.” The Governor of the Bank of England Mark Carney has already given his verdict that not only has the present Brexit process has had negative effects on the British economy but that a Brexit deal where there is no formal agreement between Britain and the European Union would make those effects worse.

May’s supporters are urging the MPs to unite behind the PM and are strongly supporting May’s Chequers blueprint for future relations with the EU as the only reasonable solution to the present crisis. As part of this plan, the UK will strike a trade deal with the EU for after the UK leaves in 2019. It underscores the need for a “friction-free movement of goods” with no customs or regulatory checks between the UK and EU on the island of Ireland, in order to avoid a hard border there.

Despite their bravado, even those who want to see the back of May, recognise the challenges the UK would face in these critical weeks of the Brexit negotiations if the UK started to try to change the prime minister. But the Tory critics want to conroinue to keep the pressure on May in the hope that she might just change her mind last minute. There are some like Boris Johnson who clearly has his own political ambitions in mind as he take on May day in and day out.

Away from the Tories, even the Labour Party seems to be in turmoil with its leader, Jeremy Corbyn, tentatively behind Brexit but others such as London mayor Sadiq Khan calling for a second EU referendum and criticising the government's handling of Brexit negotiations with the EU in such a manner that the nation now faced a stark choice between a "bad deal" or "no deal".

Prime Minister May has been resolute so far making it clear that the government would not back another referendum, arguing “to ask the question all over again would be a gross betrayal of our democracy - and a betrayal of that trust.” She has also been defending her plan much more vigorously now than in the initial few weeks when it had emerged.

As Britain struggles with its future relationship with the EU, its outreach to nations like India is growing in order to seek out new avenues for economic relationships. The UK Minister for Investment Graham Stuart was in India recently and he suggested that Brexit could augur well for trade ties between India and the EU as the two nations would find it easier to conclude a free trade pact without the involvement of the entire panoply of EU member states.

The economic relationship between the UK and India certainly remains a robust one. With bilateral trade of $13 billion and India being the third largest investor and the second largest international job creator in the UK, there is no reason to be diffident about this bilateral engagement. The UK is India’s fourth largest inward investor and the Indian diaspora in the UK of around 1.5 million is not only one of the largest ethnic minority communities but also one of the most productive, contributing around 6 percent to the country’s GDP. The UK remains the first destination for Indian companies who invest in Europe and the largest European destination to invest in India since 2010. While the two nations can look forward to a potential FTA, the negotiations can only proceed once the UK has put its own house in order. India will also be looking for concessions on Indian skilled labour accessing UK markets.

The challenge for the UK at the moment is to sort out its own internal deliberations on the future of its trajectory with the EU. New Delhi will assess its own future with the UK in light of the choices London makes with Brussels.

This commentary originally appeared in DNA.

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Harsh V. Pant

Harsh V. Pant

Professor Harsh V. Pant is Vice President – Studies and Foreign Policy at Observer Research Foundation, New Delhi. He is a Professor of International Relations ...

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