A ‘no-deal’ Brexit will be devastating

The United Kingdom’s prime minister, Boris Johnson, reportedly broke into song when he was told the Brexit talks with the European Union had stalled last week.

Colleagues heard him singing the Australian folk song, “Waltzing Matilda,” in anticipation of a no-deal outcome, where Britain reverts to an Australian-style relationship with the EU, with both sides placing tariffs on specific imports (for example wine, meat or automobiles).

While there has been tension between Paris and Berlin over how hard to push the UK in this last, crucial stage of negotiations over fish quotas and an oversight body for any deal, there is little sense of any tension in Downing Street over the prospect of a sudden stop to trade and cross-border collaboration on January 1, when the UK formally leaves the EU.

Indeed, most people in Johnson’s government have ceased to fear no deal.

At the referendum on EU membership in 2016, British people voted to leave the EU for a variety of reasons; but the reason the Conservative right wing wanted to leave was in order to free the UK from EU standards on workers’ rights, consumer goods and the environment. Given that, the only way the EU can give Britain’s exporters access to its market is if there are penalties agreed in advance for divergence from these standards.

So, the point at issue is: does Britain leave the EU without a deal and face immediate tariffs on its exports, or does it agree to a mechanism for those tariffs to be imposed in future? Without a complete cave-in by Brussels, allowing the UK full access with no concomitant rules, there is no third option.

The economic cost of no deal to the UK would come quicker, and be higher, but in either case, the form of Brexit the UK government wants is “hard.” Boris Johnson’s negotiators and advisers calculate that the difference between a “thin deal” and no deal is not worth worrying over.

With the UK’s budget deficit on course to hit £394 billion ($524 billion) this year – compared to just the £19 billion forecast before COVID-19 hit – Johnson’s calculation must be that the economic hit from no deal can be swallowed up in the much bigger downturn, and resulting debt pile, created by the pandemic. The London School of Economics has estimated that a no-deal Brexit might reduce GDP by 8 percent over a decade: COVID-19 has reduced it by 9 percent in just six months.

Though this final stage of the talks has been dogged by the issue of fishing, which employs just 12,000 people in the UK, the real issue is equivalence and oversight: does the UK have to maintain standards in its goods-producing economy – for example, food and automobiles – that are equivalent to those in the EU, and what body arbitrates over any disputes?

So, as we go into the final phase, there is a real danger that no deal will happen.

The right-wing section of Johnson’s party – the 59-strong European Research Group (ERG) – has always wanted to see either a no-deal Brexit or a total climbdown by the EU. For them, and for their supporters in the party, many of whom were once members of the UK Independence Party (UKIP) or the Brexit Party, slamming the door as they leave the EU is just one objective.

The group has begun to formulate a wider policy platform: 28 MPs, for example, signed a letter attacking “Cultural Marxism,” a far-right trope that has been described as anti-Semitic by the Jewish Board of Deputies. The Tory right has become outspoken activists against the so-called “woke” agenda, some recently defending the right of football fans to boo during the moment when players “take the knee” in support of Black Lives Matter.

Support for Johnson’s government – in England and Wales at least – remains close to 40 percent in the opinion polls. With the Labour Party neck-and-neck, under the leadership of the culturally liberal Keir Starmer, the Conservative right knows that, once the Europe issue has been resolved, their strongest defensive terrain during the next three years will be a culture war over race, gender and “free speech,” modelled on that waged by the American right.

So, whether it’s no deal or a thin deal, the script is written: everything that goes wrong will be the fault of Europe and its socially liberal supporters in the centre and on the left.

The glitch in their plan has been the election of Joe Biden. When Brexit was originally conceived, those pushing it the hardest were certain Britain could do a trade deal with the United States in parallel, or even in advance of the one with the EU. Trump had swung a wrecking ball through the multilateral global order, starting a trade war with China, and Britain would emerge as a free agent into this new world of opportunity.

Instead, the UK faces a Biden administration that is hostile over the threat Brexit poses to peace in Northern Ireland, and which looks determined to engage with Europe before Britain in any trade negotiation.

While the last-minute drama plays out, we need to remember that both on finance and services, the UK has already checked out of the European Union – and will struggle hard to attract inward investment. It’s one thing to talk about becoming “Singapore on Thames,” a deregulated finance paradise. But Singapore works because it’s the West’s crossroads with Asia – and the Thames, if you look at a map, flows towards Europe.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.