Sydney, Australia Correspondent
Australians have a particular stake in this question, and not the sentimental one. Britain is the country that left us behind once already, in 1973, when it joined the Common Market and gave up Commonwealth preference, and the Australian economy spent a decade reorienting toward Japan and then China as a result. We did rather well out of it in the end, which is a point the Leave campaign made frequently and the Remain campaign never answered. So when I am asked whether Britain is on a sustainable path to an orderly exit, I answer as someone from a country that has watched Britain make a large strategic choice before, and watched it work out, and watched it take ten years and a great deal of pain. The present process is not on a sustainable path. It is on a path that has one exit and a Prime Minister who has spent two years narrowing the options until that exit is the only one left, and I think the next six weeks will show whether narrowing was a strategy or merely a sequence.
Consider the agreement itself, which was published last Wednesday week and which I have read, or at least read the parts that matter, because the 585 pages are mostly the mechanics of unwinding forty-five years of law. The substance is this: a transition period to the end of 2020, during which Britain remains inside the customs union and single market with no vote; a financial settlement of around 39 billion pounds; reciprocal protection for citizens; and a backstop for the Irish border under which, if no trade agreement is reached by the end of transition, the whole of the United Kingdom stays in a customs arrangement with the EU and Northern Ireland stays in a deeper regulatory alignment, with no unilateral exit for Britain. That last provision is the one that cost Mrs. May two Cabinet ministers in a day, and it is the one that matters, because it means the United Kingdom could be held inside European trade rules indefinitely by a decision that is not its own. From a Brexiteer’s point of view, that is not leaving. From Dublin’s and Brussels’ point of view, it is the only way to honour the 1998 settlement without a border in Ireland. Both views are correct, which is why the problem has not been solved and why, I suspect, it cannot be solved by this agreement.
Now the arithmetic, which is what will decide the question. Mrs. May needs 320 votes in the Commons. She has a working majority of about thirteen with the Democratic Unionists, who have said they will vote against the backstop. The European Research Group on her own benches has somewhere between forty and eighty members who will vote against it. Labour will vote against it because its leadership has concluded that a government defeat is the route to an election. The Scottish Nationalists and Liberal Democrats will vote against it because they want a second referendum. The only votes in favour are the Conservative loyalists and whatever Labour MPs in Leave-voting northern seats can be persuaded that the alternative is worse. I have run the numbers several ways and cannot get the deal above about 260 without a shift that has not been visible. It will be defeated in December, and probably by a wide margin.
What happens then is the real question, and here Mrs. May’s formulation is instructive. She has said the choice is her deal, no deal, or no Brexit. That is accurate as a description of the legal position: the Article 50 clock expires on 29 March, a no-deal exit happens automatically unless something is agreed, and the only things that can stop it are an agreement, an extension that all twenty-seven members must approve, or a revocation that the European Court is currently considering whether Britain can do unilaterally. It is also a threat, aimed at both wings of her party at once: the Brexiteers are being told that defeating the deal risks no Brexit, and the Remainers that it risks no deal. The strategy depends on both groups blinking. On present evidence neither will, and the Prime Minister will then have to choose which of the two outcomes she prefers, which is a decision she has spent two years avoiding.
I want to say something about the economic side, because the question asks about disruption and the Australian experience is relevant. A no-deal exit would put tariffs and customs checks on roughly half of Britain’s trade overnight, with no infrastructure to process them. The Bank of England’s own scenarios run from a modest recession to a severe one. The pound has fallen about two percent since the deal was published and would fall much further on a no-deal outcome. Those are real costs, and they are front-loaded. The longer-run picture is more open than either side admits: a Britain outside the EU could, as Australia did, reorient toward faster-growing markets and strike its own trade agreements, and Canberra has already said it is ready to negotiate one. But that took Australia a decade and required a government that knew what it wanted. Britain does not currently have one of those.
So my answer is that the process is heading toward deeper disruption in the short term, because the agreement cannot pass and the alternatives to it are all worse for someone, and that the sustainability of the path depends on whether the next six weeks produce a decision or another deferral. The most likely outcome, in my view, is defeat in December, a crisis in January, and an extension of Article 50 that nobody wants and everybody accepts because the alternative is a cliff. That would be orderly in the sense that nothing falls off. It would not be sustainable, because it merely moves the cliff. Britain made a large strategic choice in 2016 and has spent two and a half years discovering that it had not decided what the choice meant. Until it decides, the path is not a path. It is a corridor with the lights going out behind it.
Wheeling, West Virginia Correspondent
I have been asked to comment on another country’s politics, which is a thing I try to do carefully, because I have spent a good part of my life being commented on by people from elsewhere who thought they understood this valley from a magazine article. So let me say what I actually know about Brexit, which is less than the professionals and more than the pundits, and let me say it from the only vantage point I have, which is a place that voted for something the experts said was foolish and has been told ever since that it should feel bad about it.
The Leave vote in 2016 came from places that look a great deal like Wheeling. The old industrial towns of the Midlands and the North, Sunderland and Stoke and Hartlepool, places that built things and then stopped, that watched their work go somewhere cheaper and were told it was progress, that were handed retraining programs and lectures and a new shopping center on the site of the old works. Those places voted to leave by margins that shocked London the way our margins shocked Washington, and for the same reason: nobody who mattered had asked them anything in thirty years, and when somebody finally did, they answered. I do not think the answer was primarily about the European Union. I think it was about being asked. The people who are now explaining that the voters did not understand what they voted for are making the same mistake our people made about us, which is to confuse not understanding with not agreeing.
Now, the question is whether the path is sustainable, and I will give the honest answer, which is that I do not think it is, and I do not think it was ever going to be, because the people who won the vote did not have a plan for what came after and the people who lost it have spent two years trying to prove that there could not be one. I have seen that dynamic before. A union wins a strike vote on a wave of anger and then sits down across from a company that has spent the whole strike preparing, and the union discovers that winning the vote and winning the contract are different jobs. That is where Britain is. The Prime Minister, who did not want to leave and has been trying to deliver it anyway, has come back with an agreement that keeps the country inside European trade rules until something better is negotiated, with no guaranteed way out, and the people who wanted to leave have looked at it and said, correctly, that it is not what they voted for. Two of her ministers quit over it inside twenty-four hours. The Northern Irish party that keeps her in office says it will vote no. The opposition will vote no because it wants an election. I cannot see how it passes.
What I can see is what happens to the people who voted to leave if it fails, and this is the part I want the readers of this forum to think about, because it is the part that will matter in ten years. If the agreement is defeated, the choices are to leave with nothing, which the business class and the Bank of England say would be a disaster, or to delay, or to hold another vote. The people who are now calling for a second referendum are, with a few exceptions, the same people who were certain the first one would go their way. They are not proposing to ask the question again because they think the voters have changed their minds. They are proposing it because they think the voters were wrong, and they want a chance to correct them. I have been on the receiving end of that attitude for forty years. It does not produce agreement. It produces the thing that happened in Sunderland in 2016, and it produces it harder the second time.
On the economics, I will say two things. The first is that the warnings about disruption are probably true. Half of Britain’s trade goes through Europe, the customs system to handle it outside the union does not exist, and the pound has already fallen on the agreement being published. A no-deal exit would hurt, and it would hurt the Leave-voting towns first, because that is where the car plants and the chemical works are. The second thing is that the warnings about disruption were also made in 2016, and the economy did not collapse, and the people who made them have spent two years explaining why they were not wrong, just early. The voters in the North noticed. When you have been told your whole life that the next change will ruin you and it mostly just makes things a little worse, you stop believing the people who say ruin.
So here is where I come out. Britain is not on a sustainable path, because the agreement cannot pass and every alternative to it breaks a promise to somebody. The most likely outcome is defeat, a delay, and a long period in which the country is half in and half out and everyone is angry. That is the disruption. But I would ask the people who are now certain the voters made a mistake to consider what it would mean to overturn the vote, and who would pay for it, and whether a country can be governed by people who have told half of it that its answer did not count. We tried that here. The bill came due in 2016. I would not recommend it to anyone.
Owatonna, Minnesota Correspondent
I spent a few years as a wine consultant, which is not as frivolous a credential for this question as it sounds, because the wine trade is one of the clearest windows into what Brexit actually means for a business. Britain imports nearly all the wine it drinks, most of it from France, Italy, and Spain, through a supply chain that has had no customs checks, no tariffs, and no paperwork for a quarter century. The importers I knew in London have spent the past two years trying to figure out what happens to a container of Bordeaux at Dover on March 30 if nothing is agreed, and the honest answer is that nobody knows, because the customs system to process it has not been built and the staff to run it have not been hired. Multiply that by every category of goods that crosses the Channel and you have the economic side of the question. The political side is whether anyone in Westminster is capable of agreeing on anything before the container arrives.
I will start with the agreement, because I think a great deal of the commentary is written by people who have not read it. The draft that Mrs. May brought back on November 14 does three things. It keeps Britain inside the European customs union and single market until the end of 2020, as a rule-taker with no vote, to give both sides time to negotiate the future relationship. It settles the financial obligations at roughly thirty-nine billion pounds. And it creates a backstop for the Irish border under which, if no future deal is reached, the whole United Kingdom stays in a customs arrangement with Europe and Northern Ireland stays in deeper regulatory alignment, and Britain cannot leave that arrangement without European consent. The first two provisions are what any orderly exit requires. The third is what blew up the Cabinet, because it means the country could be held inside European trade rules indefinitely by a decision made in Brussels, and the people who campaigned to leave did not campaign for that.
As a former financial planner I look at the agreement the way I would look at a retirement plan a client brought in from another adviser: it is not wrong, but it defers the hard decisions and it charges a fee for the deferral. The hard decision is what kind of relationship Britain wants with Europe, and the agreement does not make it; it buys two years to make it and attaches a penalty if the two years are wasted. That is the backstop. The problem is that the people who have to vote for the plan can see the penalty clearly and cannot see the future deal at all, and in my experience clients do not sign plans that are all fee and no return.
So the vote. I count the Commons the way I count a portfolio, which is by what can actually be sold. The government and its Northern Irish partners have a majority of about thirteen. The Northern Irish party has said no, which puts the government under water before the vote begins. Somewhere between forty and eighty Conservative Brexiteers have said no. The opposition has said no, not because the deal is bad in its view but because a defeat might produce an election. The nationalists and Liberals want another referendum and will vote no. Against all that, the government has its loyalists and the hope of a few dozen Labour members from Leave-voting seats who fear a no-deal exit more than they fear their own leadership. That is not a majority. It is not close to one. The deal will be defeated in December, and the only question is by how much.
What happens after that is where I think the question’s two options, orderly exit or deeper disruption, stop being alternatives and become stages. The Prime Minister’s own formula is that the choice is her deal, no deal, or no Brexit. If the deal fails, the legal default on March 29 is no deal, which the Bank of England says could mean a recession worse than 2008 and which the business community has spent two years warning against. The alternative is an extension of the Article 50 clock, which requires the unanimous consent of the other twenty-seven governments and which they would probably grant, but only for a purpose, and nobody in Britain can say what the purpose would be. A second referendum is the purpose the Remain side wants, and I will say as someone who has watched a lot of people try to re-run a decision they lost that it would not settle anything; it would produce a second result that half the country refuses to accept, and this time with evidence that results can be overturned.
I want to be fair to the case for leaving, because I think the American coverage has been uniformly contemptuous of it and the contempt is part of why the vote happened. Britain outside the European Union would be free to set its own tariffs, negotiate its own trade agreements, control its own immigration, and escape a regulatory system that it never fully consented to and that has drifted steadily toward political union over forty years. Those are real goods, and the people who voted for them were not stupid. The problem is not the destination. It is that the people who sold the destination had no map, and the people who opposed it have spent two years drawing maps that all lead back to where the country started.
So my answer is that Britain is heading toward deeper disruption in the near term, because the agreement cannot pass, and that the eventual path, which I think will be an extension and a very long argument, will be orderly only in the sense that nothing crashes on a particular Friday. The importers I knew will get their customs system eventually. It will take years, it will cost more than anyone said, and the wine will be more expensive. That is Brexit in miniature: a decision that was made in an afternoon and will take a decade to carry out, by a political class that has not yet decided whether it wants to.
Jacksonville, Florida Correspondent
I am going to answer this from the dock, because I think the dock is where Brexit is going to be decided, and almost nobody in the political coverage has been to one. The port of Dover handles something like ten thousand trucks a day, most of them rolling off ferries from Calais with no customs stop, because inside the European customs union there is nothing to stop them for. The entire British supply chain for food, auto parts, pharmaceuticals, and a thousand other things is built on the assumption that a truck leaving a warehouse in Lille will be in a warehouse in Kent six hours later. Take that assumption away on the morning of March 30 and you do not get a slowdown. You get the thing we call a stack, where the trucks back up onto the highway because the terminal cannot process them, and the stack does not clear until somebody builds the capacity to clear it. The British government has not built it. It has not hired the customs officers, it has not built the inspection lanes, and it has not written the software. I know this because the people who run Dover have been saying so in public for two years, and I read what port operators say the way other people read the box scores.
So that is the no-deal case, and it is the reason the agreement Mrs. May brought back on November 14 looks the way it does. The agreement keeps Britain inside the customs union through the end of 2020, which means the trucks keep rolling for twenty-one more months while somebody figures out what comes after. It settles the bill at around thirty-nine billion pounds. And it includes the backstop for the Irish border, under which, if nothing better is agreed by the end of 2020, the whole country stays in a customs arrangement and Northern Ireland stays in closer regulatory alignment, with no way for Britain to leave on its own. From where I sit, the backstop is the port operator’s dream and the politician’s nightmare: it guarantees the trucks keep moving and it guarantees nobody gets to say the country left.
I have been a dispatcher and a claims adjuster, and both jobs teach you to count what is actually in the yard rather than what is on the manifest. So let me count the votes, because that is the manifest for this agreement. Mrs. May has a majority of about thirteen, which depends on ten members from a Northern Irish party that has said it will vote against the backstop. The Brexit wing of her own party, somewhere between forty and eighty members, has said no. Two of her ministers quit over it the morning after the Cabinet signed off. The opposition will vote against because its leader wants an election and a defeat is the way to get one. The Scots and the Liberals want a second referendum. I cannot find three hundred and twenty votes in that yard, and neither can anyone else who is counting honestly. The deal fails in December.
Now what. The Prime Minister has said the choice is her deal, no deal, or no Brexit, and I think that is close to right, with one addition: there is also delay, which is what happens when a government cannot choose and the people on the other side of the table would rather extend than crash. The European side has every reason to grant an extension if Britain asks, because a stack at Dover is also a stack at Calais and Rotterdam, and the French and Dutch have built more capacity than the British but not enough. So the most likely path, in my view, is defeat, a crisis, an extension of the March deadline, and a long argument in which Britain stays half in and half out while it tries again. That is not orderly. It is also not a cliff. It is the thing a dispatcher does when the terminal cannot clear the backlog: you hold the ships offshore and you pray nobody notices the demurrage.
I want to say something about the people who voted for this, because I think the coverage I read treats them as a problem to be managed and I do not. The Leave vote came out of the parts of Britain that used to make things and now mostly do not, and it came out of them for the same reason our vote in 2016 came out of the same kind of places: a feeling that decisions were being made elsewhere by people who did not have to live with them. I understand that feeling and I do not think it was wrong. What I think was wrong, or at least unfinished, is that the people who won did not have a plan for the dock, and a vote without a plan for the dock is a vote for a stack. That is not an argument against leaving. It is an argument that leaving is a logistics problem before it is a political one, and the politicians on both sides have spent two years treating it as a political one.
On the economics, I will keep it short. The pound has fallen two percent since the deal was published and it will fall further if the deal fails. The Bank of England’s worst case for no deal is a recession deeper than 2008. The car plants in Sunderland and the chemical works on Teesside, which are in Leave-voting territory, are the first places a customs stack would shut down, because they run on just-in-time parts from the continent. The people who would pay for a disorderly exit are the people who voted for it, and I do not say that to score a point. I say it because it is the thing that should make the politicians who claim to speak for those people more careful than they have been.
So my answer is that Britain is not on a sustainable path, that the deal will be defeated, and that the most probable result is delay rather than disaster, which is orderly only if you do not look too closely at the yard. The real question is whether the extra time gets used to build the dock, which is to say the customs capacity and the trade agreements and the political consensus that an actual exit requires, or whether it gets used for another two years of the same argument. I have watched a lot of terminals promise capacity they did not deliver. I would not bet on this one, but I would like to be wrong, because the alternative is a stack that reaches a long way inland.
Gastonia, North Carolina Correspondent
A copy editor reads more foreign news than anyone else in the building, because it comes in on the wire after the day staff goes home and somebody has to make sure it fits. I have been reading Brexit stories at eleven o’clock at night for two and a half years, and I have noticed something about them that I think bears on the question. Every one of them, from every outlet, has been written by someone who already knew the answer. The British papers that supported Leave report every setback as a betrayal by the elites. The British papers that supported Remain report every setback as proof the voters were fools. The American coverage, almost without exception, runs the Remain version with a lighter accent. And none of them, in two and a half years, has run a story that said: here is what actually happens at a border crossing when the rules change, and here is who has built what to handle it. So I am going to try to answer the question without knowing the answer first, which is harder than it sounds.
Start with what is on the table, which I have read because it came across my desk in pieces for a week. The agreement that Mrs. May’s Cabinet approved on the fourteenth keeps Britain inside the European trading rules until the end of 2020 with no vote, pays a bill of about thirty-nine billion pounds, protects the citizens on both sides, and sets up a backstop for Ireland under which, if the two sides cannot agree on the future, the whole United Kingdom stays in a customs arrangement and Northern Ireland stays closer still, with no unilateral British exit. Two Cabinet ministers quit the next morning over the backstop. The Northern Irish party that gives the government its majority says it will vote against. Her own Brexit wing says it will vote against. The opposition says it will vote against because it wants an election. I do not need a political science degree to add that up. The deal does not have the votes.
Here is where I want to depart from the consensus, because I think the consensus is doing the thing I just described, which is reporting the story it expected. Everyone says the deal fails in December and then there is chaos. I am not sure. I have watched a lot of legislatures vote down a bill they intended to pass, in order to extract something, and then pass it the second time with a face-saving change. The British Parliament is not immune to that. If the deal is defeated by forty votes, Mrs. May goes back to Brussels, gets a paragraph added to the political declaration about the backstop being temporary, and brings it back in January with the clock closer to midnight and the alternatives looking worse. The Brexiteers who voted no the first time are then told that the choice is this deal or no Brexit, and the Remainers who voted no the first time are told the choice is this deal or no deal, and enough of both blink. That is not a prediction. It is a possibility that the coverage has ruled out, and I distrust things the coverage rules out.
Now the other possibility, which is the one most people are writing about, and which I think is also real. The deal fails badly, not by forty but by a hundred and fifty, and there is no paragraph from Brussels that fixes a margin like that. Then the Prime Minister’s own formula comes into play: her deal, no deal, or no Brexit. No deal means the trucks stop at Dover on March 30 with nobody to process them, the pound drops hard, and the Bank of England’s worst scenario starts to look like a forecast. No Brexit means a second referendum, which the people who want it describe as democracy and the people who do not describe as a do-over, and which, whatever it is, would be fought by the same two sides with the same contempt for each other and would settle nothing. In between those two is an extension of the deadline, which Europe would grant because a crash hurts them too, and which Britain would accept because the alternative is a crash, and which produces another year of exactly this.
I will say where my politics are, since the Boxe seems to want to know and I am, as I keep saying, all over the map. I understand why Britain voted to leave. The places that voted for it are places like Gaston County, which used to make textiles and now mostly makes warehouses, and which has been told for thirty years that the thing that hurt it was progress. When those places finally get asked a yes-or-no question, they say no, and they are not wrong to. I also understand why the people who have to carry out the decision are struggling, because the decision was made with a slogan and the execution requires a customs code, and the people who wrote the slogan have mostly left the room. The honest answer to whether the path is sustainable is that no path is sustainable when the people who chose the destination and the people who have to drive are not speaking.
So: deeper disruption, probably, in the next three months, because the deal as written cannot pass and every alternative has a wing of the country that will not accept it. But I would hold open the possibility that the disruption is the path, that the deal fails and comes back and squeaks through with the clock at five to midnight, because that is how legislatures work when the alternative is a cliff, and because the coverage that says it cannot happen is the same coverage that said the vote in 2016 could not happen. I was awake that night too. I remember what the wire looked like.
Dayton, Ohio Correspondent
I want to talk about Northern Ireland, because the entire agreement has come down to a border that is three hundred miles long, has about two hundred and seventy crossing points, and currently has no infrastructure on it at all, and because I think the border problem is a manufacturing problem that is being treated as a constitutional one. Twenty years ago that border had watchtowers and checkpoints and soldiers, and the peace agreement that removed them depended on the fact that both sides of it were inside the same European trading rules, so there was nothing to check. Brexit takes one side out. The question that has consumed two years of negotiation is how you take one side out without putting the checkpoints back, and the answer in the agreement Mrs. May brought home on the fourteenth is the backstop: if the two sides cannot agree on a future deal, the whole United Kingdom stays in a customs arrangement with Europe and Northern Ireland stays in closer regulatory alignment, and Britain cannot leave that arrangement unilaterally. That is the provision that cost her two Cabinet ministers and the support of the Northern Irish party that keeps her in office, and it is the reason the deal is in trouble.
Here is the engineering view of why. Every proposal that avoids both the backstop and a hard border relies on technology that does not exist in deployed form. The Brexiteers talk about trusted-trader schemes, number-plate recognition, and electronic declarations filed away from the border, and I have looked at those proposals the way I look at a vendor’s pitch for a new inspection line, and the honest assessment is that each component exists somewhere and the integrated system exists nowhere. Nobody runs a frictionless customs border between two different regulatory regimes anywhere in the world. Norway and Sweden have one of the best, and it has physical checkpoints. The people who say technology will solve the Irish border are describing a product that has not been built, on a timeline that ends in sixteen months, for a government that has not issued the specification. I run process launches for a living. That is not a plan. That is a slide.
So the backstop exists because the technology does not, and the vote in December is in trouble because the backstop exists. That is the loop, and I do not see how it gets broken. Count the votes the way I count a production schedule, by what is actually committed. The government’s majority is about thirteen and depends on ten Northern Irish members who have said no. The Brexit wing of her party, forty to eighty members, has said no. The opposition has said no for its own reasons. The nationalists and Liberals want a second referendum. I get the deal to somewhere around two hundred and sixty on a good day, against three hundred and twenty required. It fails.
What happens then is where I think the question’s framing, orderly exit versus deeper disruption, needs an engineer’s correction. Those are not two outcomes. They are a sequence, and the question is only what order they arrive in. The Prime Minister’s formula is her deal, no deal, or no Brexit, and I would add the fourth option that is actually the most likely, which is an extension of the deadline, because the alternative is a crash that neither side wants. A no-deal exit on March 29 means customs checks appear overnight on half of Britain’s trade with no capacity to process them; the car plants in the North that run on just-in-time parts from the continent, Nissan in Sunderland and Toyota in Derby and the whole supply chain behind them, would stop within days. I know what a stopped line costs. The business community knows, the Bank of England knows, and the Europeans know, because the same stack forms on their side. Everyone with a plant has an incentive to extend. Only the people without one have an incentive to crash.
I want to say something in defense of the people who voted to leave, because I have read the American coverage and it is contemptuous in a way that tells me the writers have not spent time in a town that lost its plant. The Leave vote came from the industrial towns of the Midlands and the North, and it came from the same place our 2016 vote came from in the Miami Valley: a sense that the decisions that closed the plants were made by people who were never going to have to live in the town afterward. That is a real grievance and it was answered with a real vote. What was not answered was the question of how you execute it, and that is the part I keep coming back to, because in my world the decision to launch a product is the easy part and the launch is where you find out whether anyone did the work. Nobody did the work. Not the Leave side, which had no plan for the border, and not the Remain side, which has spent two years proving there could not be one instead of helping build it.
On the economics I will add one thing the coverage misses. Even the orderly version of this, the agreement passing and the transition running through 2020, moves Britain from a rule-maker to a rule-taker for twenty-one months and then into a negotiation it has shown no sign of being ready for. The disruption is not an alternative to the orderly path. It is what the orderly path looks like from a factory floor, and it lasts for years.
So my answer is that the path is not sustainable in its current form, that the deal fails in December because the backstop is the price of an unbuilt technology and nobody wants to pay it, and that the most likely outcome is an extension that keeps the trucks moving while the argument continues. Whether the extra time gets used to build the thing that would actually solve the border, which is a specification, a system, and a trade agreement, or gets used for another round of the same fight, is the question nobody in Westminster has answered. I have seen a lot of launches delayed. The delay is never the problem. The problem is when nobody uses it.
Las Vegas, Nevada Correspondent
The British bookmakers, who are better at this than the British press, have had no-deal at roughly even money for a month and the Prime Minister surviving to the spring at somewhat worse than that, and I would take both of those lines over anything I have read in the newspapers, because the bookmakers lose money when they are wrong and the columnists do not. I mention them because the question asks whether the path is sustainable, and the honest answer is that nobody is sure, and the people who price uncertainty for a living are telling you the same thing: this is a coin flip with a lot of money on both sides, and the person flipping it has already said she does not like either outcome.
Let me describe the hand, because I think most of the commentary describes the players. Mrs. May has brought back an agreement that keeps Britain inside European trading rules until the end of 2020, settles the bill at thirty-nine billion pounds, and includes a backstop that could keep the country inside a customs arrangement indefinitely if no better deal is reached, with no unilateral exit. The backstop cost her two Cabinet ministers in a morning. The Northern Irish party that gives her a majority has said no. Her own Brexiteers, forty to eighty of them, have said no. The opposition says no because it wants an election. That is a losing hand on the first showing, and everyone at the table knows it, including her.
Here is what I think she is actually doing, and it is a play I have seen at a card table more than once. She is playing a hand she knows she will lose in order to set up the next one. Her formula, her deal or no deal or no Brexit, is not a description; it is a bet that if she loses the first vote by a manageable margin, both wings of her party will look at the alternatives and fold. The Brexiteers get told the alternative is a second referendum that reverses the whole thing. The Remainers get told the alternative is a crash on March 29 with no customs system at Dover. Each group is being invited to conclude that the other’s nightmare is more likely than its own, and to vote for the deal in January as the least bad option. It is a bluff with real cards behind it, and it might work. The problem with the play is that it requires the first defeat to be small enough to recover from, and I do not think it will be. A defeat by forty is a setup. A defeat by a hundred and fifty is the end of the hand, and the count I keep getting is closer to the second.
So what is the realistic distribution? I would put it this way, as someone who reads budget hearings for fun and has learned to distrust anyone who gives one answer. Perhaps a third chance the deal passes on a second attempt after a first defeat, with a cosmetic change from Brussels and a lot of people voting for something they said they hated. Perhaps a third chance of an extension of the March deadline, which Europe would grant because a crash at Dover is also a crash at Calais, and which would produce another year of this with the bookmakers reopening the lines. Perhaps a fifth chance of a leadership change that produces a harder Brexiteer who tries to renegotiate and finds Brussels will not, which lands somewhere between an extension and a crash. And the remainder, call it fifteen percent, a genuine no-deal exit, which the Bank of England has gamed out as worse than 2008 and which I would bet against only because everyone with money loses from it and people with money usually find a way.
I want to say something about the second referendum, because the people pushing it in London seem to think it is the orderly option and I think they have misread the table. A second vote would be fought by the same two sides with the same contempt for each other, and if Remain won by a few points, which the polls suggest it might, half the country would have been told that its answer in 2016 did not count. I have lived in a town that runs on people believing the game is fair. The moment they stop believing it, they stop playing, and in a country the thing they stop playing is politics. The orderly option is not the one that produces the least disruption next year. It is the one that produces a result that both sides can live with in ten years, and a do-over is not that.
From the business side, which is where I spend my days, I will add one observation. The pound has dropped two percent since the deal was published and the hotel bookings from Britain into Las Vegas, which are a real line in our revenue, have softened on the exchange rate. The British consumer has been quietly getting poorer for two years, since the vote took fifteen percent off the currency, and nobody in the political argument talks about it because it does not fit either side’s story. The Leave side does not want to admit a cost and the Remain side does not want to admit the cost has already been absorbed without a collapse. Both are true. The disruption is not coming. It has been arriving slowly since June 2016.
So my answer is that the path is not sustainable in its current form, that the deal loses the first vote, and that the most likely outcome from there is either a narrow win on the second try or an extension, with a crash as the tail risk and a leadership fight as the wild card. That is not an orderly process. It is also not the catastrophe the coverage keeps promising. It is a hand being played badly by people who did not want to be dealt in, and the house, which in this case is the European Union, is content to let it run, because the house always collects on the long game. The British voter placed a bet in 2016. The question of whether it was a good one will not be settled in December. It will be settled in a decade, and nobody at this table will be the one to settle it.
Cheyenne, Wyoming Correspondent
I will start with the number that everyone in Britain seems to want to argue about and almost nobody wants to explain, which is the thirty-nine billion pounds. That is the financial settlement in the agreement Mrs. May brought home on November 14, and it is described on one side as a ransom and on the other as an obligation, and as someone who has kept books for organizations that did not want to pay what they owed, I will tell you it is simply the second. It is Britain’s share of commitments the European Union made while Britain was a member and had a vote: pensions for officials, projects already approved, the current budget cycle through 2020. A member who leaves a partnership owes its share of the obligations incurred while it was a partner. The British government knows this, which is why the number has barely moved since last December, and the people calling it a ransom know it too, which is why they say it loudly and do not propose a different figure. I bring this up first because it tells you something about the whole process: the parts that are settled are the parts that are arithmetic, and the parts that are not settled are the parts that are politics, and the politics has been losing to the arithmetic for two years.
Now the parts that are politics. The agreement keeps Britain inside the European customs union and single market until the end of 2020, as what they call a rule-taker, meaning subject to the rules with no vote on them. And it has a backstop: if no future trade deal is reached by the end of that period, the whole United Kingdom stays in a customs arrangement with Europe and Northern Ireland stays in deeper regulatory alignment, and Britain cannot leave the arrangement without Europe’s consent. That provision is what made two Cabinet ministers quit the morning after the Cabinet approved the deal. It is what made the Northern Irish party that gives Mrs. May her majority say it will vote no. And it is what her own Brexit wing cannot swallow, because it means the country they voted to take out of Europe could be kept inside Europe’s trading rules by somebody else’s decision for as long as somebody else chooses.
I understand the objection, and I think it is a serious one. In my bookkeeping I have seen contracts with a clause that lets one party extend indefinitely and the other party only exit by consent, and the party without the exit always comes to regret it, no matter how friendly the relationship was when the ink was wet. The backstop is that kind of clause. The British negotiators accepted it because the alternative was a hard border in Ireland, which nobody wants and which the 1998 peace agreement was built to prevent, and because the technology that would make a soft border possible without the backstop does not exist. That is a real bind, and I do not think the people criticizing Mrs. May have a better answer. But a bind is a bind, and a Parliament asked to sign a contract with no exit clause is going to balk, and this one will.
So the vote. The government has a majority of about thirteen with its Northern Irish partners, who have said no. Forty to eighty of its own members have said no. The opposition has said no, for reasons that have more to do with wanting an election than with the deal. The Scots and the Liberals want a second vote. I keep books, so I count what is in the column and not what is promised, and the column does not reach three hundred and twenty. The deal fails in December. The only argument is the margin.
After that, Mrs. May’s own words apply: her deal, no deal, or no Brexit. I will add the option everyone expects and nobody admits, which is delay. No deal means Britain leaves on March 29 with no agreement, customs checks appear on half its trade overnight with no system to run them, the pound drops hard, and the Bank of England’s worst case starts to look like a forecast. No Brexit means a second referendum, which I will say something about in a moment. Delay means Britain asks the other twenty-seven governments for more time, which they would probably grant because a crash hurts them too, and which produces another year of this. The likeliest path, in my judgment, is defeat, a scramble, and a delay, and a delay is orderly only in the sense that nothing breaks on a particular Friday.
On the second referendum, I want to be plain, because I have a son in the Guard and I have thought a good deal about what it means to ask people to accept a decision they did not want. The people proposing a second vote are, nearly all of them, people who lost the first one. They are not asking because the voters have changed their minds; the polls have barely moved. They are asking because they think the voters were wrong. I have sat in church business meetings where the losing side demanded a re-vote on the grounds that the congregation had not understood the question, and I have watched what it does to a congregation, and it is not healing. A country that tells half its people their answer did not count has not solved its problem. It has made a new one, and the new one does not go away when the referendum does.
On the economics, the honest ledger is that the costs have already been arriving. The pound lost about fifteen percent after the 2016 vote and has not recovered. Investment has slowed. Companies have moved staff. The two percent drop since the deal was published is not the beginning of the disruption; it is the latest installment. A crash in March would be a large installment all at once, and a delay would be a long series of small ones, and either way the people who pay are the ones who voted to leave, because that is where the plants are. I do not say that to argue against their vote. I say it because a bookkeeper’s job is to tell the client what the decision costs, not whether it was right. So my answer is that the path is not sustainable as drawn, that the agreement fails because it contains a clause Parliament will not sign, and that the likeliest result is delay, which is not orderly but is not a cliff. The thirty-nine billion will be paid. The border question will not be solved by March. And the real question, which nobody in Westminster has answered, is what the country intends to do with the time it is about to buy. I have kept books for people who bought time and used it, and for people who bought time and wasted it, and the difference was never the time. It was whether anyone in the room had decided what they wanted.
