Keeping quiet is a strategy in itself
Brexit means Brexit, apparently, but it’s still extremely difficult to discern what a ‘good’ Brexit looks like.
The factors leading up to the EU referendum and those that contributed to its result are diverse. However, it takes little more than a cursory glance at the Leave campaign and to listen to various interviews with people who voted to leave to identify a key issue as immigration. There are supposedly too many people coming to the United Kingdom to work, so it follows that reducing immigration is a necessary component of a ‘successful’ Brexit.
One of the more concerning potential effects of Brexit is that British businesses will struggle: exports will fall and the United Kingdom will be unable to strike trade deals with countries outside the EU. So, a successful Brexit must see the UK export its goods to third countries. The UK may be good at a great many things but the quality of the goods it exports aren’t at the top of the list, so the country will need to remain attractive in other ways.
We have identified two key features, then, for a successful Brexit. The government must make the country unattractive to people who wish to go there to work but make their goods attractive to export. Is there any way these two birds could both be slain with a carefully thrown stone?
Theresa May and the Brexit department have received an abundance of criticism for the uncertain way that Brexit has been discussed, ‘Brexit means Brexit’, and ‘Red, white and blue Brexit’ to name but two of the emphatic sounding — but factually vacuous — statements made so far. The lack of certainty about a potential Brexit deal has seen the pound plummet to a 31-year low against the dollar. While May’s recent speech strongly hinted we would leave the Single Market, the government seems to continue to generate uncertainty. Is this because they don’t have a clue themselves?
Possibly. But maybe there’s another reason.
A weaker currency does not necessarily spell doom and gloom. It’s true things may start to seem more expensive at home, but in real terms it’s likely that they won’t have budged that much. The real benefit comes on the international place. The significantly weaker pound means that British goods are significantly cheaper to export, making them significantly more attractive to international buyers (everyone loves a sale, right?)
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So as the divorced, single and ready to mingle UK emerges onto the international plane, it has already removed a substantial barrier to any trade deals: price. Selling to nations with a stronger currency will improve demand for British goods and reinvigorate its market right when it needs it the most, and the weaker the currency becomes the more stronger currencies there are to play with. Of course, it can go too far the other way, but barring a major catastrophe the UK will still be some way off using stacks of money for children’s toys.
Well that’s one potential downfall of Brexit out of the way. British goods are now more attractive to other buyers. The next point to consider is how to appease the large number of people that saw immigration as a key reason for leaving the EU. One way would of course be to introduce strict border controls and this may very well work. But even with strict laws in place you will have a large number of people who want to immigrate here.
What if there was a way to make people not want to come to the UK, instead of simply telling people they can’t come in? I’m talking about economic immigrants, not asylum seekers, here as it’s axiomatic that asylum seekers do not come seeking their fortunes but come seeking safety.
The UK is a popular destination for economic migrants because of the strength of the pound. People can come, work and get paid in sterling and send money home where it will be worth more than doing the same job in that country.
But what if the pound was no longer such a strong currency? What if it was only marginally stronger or even weaker? A crucial benefit of coming to the UK to work would be lost. It would follow that by allowing the pound to fall to dramatically low levels against currencies such as the Euro, the attraction of coming to the UK to work has been lessened. Of course, once the UK has left the EU it will be able to control its borders but if the demand has decreased then the measures will surely need to be less draconian.
These are both perfectly realistic propositions and the falling pound has put the UK in just the position it needs to be in before commencing negotiations into trade agreements with the rest of the world. So, it wouldn’t be going too far to suggest that the government has been running this scheme all along. Not to mention that the Prime Minister has already shown she is a master of the waiting game, it’s what won her the job in the first place.
In doing this, the Prime Minister is giving us an excellent demonstration on how to negotiate — a valuable skill in the legal profession.
Exiting the EU is going to be one long negotiation, with various parties and a host of demands and concessions. In any negotiation, the top line, best possible result must be clear. In this context, this is — to quote May — to get “the best possible deal for UK companies to trade into the EU”. So, that’s what we’re aiming for.
But of course, the EU wants what’s best for itself, so it may not all be plain sailing. Another crucial part of negotiating is to know your best possible alternative to a beneficial outcome. In this case, the best possible alternative to negotiating a beneficial trade deal for the UK is to export somewhere else. A relatively strong currency makes this a tall order. The Brexit negotiations are currently at the ‘preparation’ phase. What the government has done in its reticence is drive our currency down and therefore increase the likelihood of us being able to trade with third countries. Suddenly, our bargaining position with the EU looks much stronger as our best alternative to exporting to it is now much more realistic.
Say what you will about this strategy, it may be frustrating, it may be confusing and it may not yield immediate results but it is certainly not stupid.
Perhaps Brexit really does mean Brexit. Or perhaps there’s a little more to it than that. Only time will tell. Until then we can rest assured that things might not be as out of control as they seem.
Luke Baxter is a chemistry graduate from the University of East Anglia who is currently studying the GDL.