On Thursday 26 January the Institute for Policy Research (IPR) hosted a lecture by Lord Kerr of Kinlochard, former Ambassador to the European Union and author of Article 50. ‘Brexit: Will Divorce be Damaging, and Could it be Amicable?’ addressed the issues Britain faces as it negotiates its withdrawal from the EU. A sold-out audience heard Lord Kerr’s expert analysis of current negotiations, future challenges and the ultimate result of the Brexit process.
The lecture began with an introduction from IPR Director Professor Nick Pearce, who highlighted the timeliness of the address with reference to the Supreme Court’s ruling – delivered on 24 January – and Theresa May’s Brexit bill, published earlier that morning. Reflecting on Lord Kerr’s previous appointments, including his time as Permanent Secretary at the Foreign Office and British Ambassador to Washington, Professor Pearce said: “There is no better person to address us on these issues than Lord Kerr”.
The author of Article 50 began his speech recalling the highlights of his career as falling within a ‘golden period’; “the two policies most important to us were high on the EU agenda”, he recalled – “the single market […] and EU enlargement to the east after the Berlin Wall came down”. Britain’s good standing in Brussels was complementary to her strength in Washington, he explained, and being seen to be strong in both further enhanced her standing in Tokyo and Canberra – but somewhere along the line, things went wrong.
“Will the divorce be damaging?” he asked, addressing the question of the lecture. “Yes, I’m afraid my answer is that it will be damaging, certainly politically and, at least for quite a considerable time, economically […] It will be damaging internationally and I think it will be damaging domestically in the sense that the risks to the 1707 Union with the Scots will clearly go on rising.” The life peer expressed some admiration for Theresa May’s bravado as demonstrated in her Lancaster House speech, but ultimately found her outlook over-optimistic.
He raised three conceptual problems with May’s position on Brexit. Firstly, being stronger in Europe made Britain stronger in the wider world, not weaker; our allies attempted to persuade us to stay in the EU before the referendum because we were more useful when we had influence in Brussels, Lord Kerr suggested. Secondly, the life peer said that for the life of him, he could see no reason why leaving the EU’s single market would increase British trading opportunities. “Why should the wider world be keener on opening their markets to us when our market for them is shrinking from 500 million to 65 million?” he asked. Finally, he revealed that he found Theresa May’s expectation to ‘have her cake and eat it too’ misplaced. “When the negotiations start”, he predicted, “they will start with a bang – and they will be very, very hostile.”
“Article 50 is about withdrawal. Article 50 is about paying the bills, dividing the property. Article 50 is a simple divorce”, Lord Kerr asserted. “It’s nothing about the future relationship with the country that’s left. It’s a money negotiation. All money negotiations are bad tempered.” He emphasised the importance of building a framework for Britain’s future relationship with the EU now, recommending a comprehensive raft of collaborations in areas from energy and the environment to intelligence and defence. He also cautioned Theresa May not to be too forward in her overtures to the US as she meets with new President Donald Trump this week; “our values and policies are closer to European views than to Trump’s tweets”, he said. Further, he criticised Trump as a protectionist, noting that protectionists often masquerade as free traders.
One of the former ambassador’s key warnings was that trade negotiations will take longer to wrap up than most people might expect. While the ‘divorce’ of Article 50 may be resolved within two years, he foresees a further period of three or even four years without firm trade agreements and, altogether, as much as ten years in economic limbo. “I believe we face a decade of uncertainty and disruption”, he confessed.
In a final flourish the author of Article 50 outlined five possible scenarios for Britain’s future:
- In scenario one, everything goes according to plan: Britain leaves the EU as planned in 2019, having also negotiated a substantial framework agreement to cover the period in which new trade deals will be negotiated. The probability of this outcome he rated at 25 per cent.
- Scenario two sees Britain leaving in 2019, as planned, but with a weak framework agreement that leaves us more vulnerable in the years that follow; it is the most likely scenario at 30 per cent.
- Under scenario three, negotiations go into extra time and the Government misses its proposed deadline. The likelihood of this was estimated at 10 per cent.
- A deadlock on the division of money under Article 50 that leads to Britain leaving the EU with no deal at all characterises scenario four. Brussels and the UK would have no recourse but to law, and we might face legal chaos and significant economic disruption. The chance of this occurring is 25-30 per cent, Lord Kerr estimates.
- Scenario five is the contingency that by 2019, public opinion on Brexit has changed. Having looked into the abyss and turned away, as Lord Kerr put it, Britain would leave the EU only to immediately rejoin it.