Deal or no deal

Two years to the date of publication of this article, the UK voted to exit the European Union. Since then, neither of Theresa May’s governments have achieved anything of note in moving the leaving process along. Now, just nine months before the supposed final cut off point for the British exit, this lack of progress is finally causing problems.

Britain’s problem currently is akin to a group project gone wrong. At the start of the project, the British government told all the big businesses and local councils that they were going to do most of the work, and that as long as they did a little bit they could tag their name on the finished result. Now however, these ‘project members’ have realised that the British government has not done the work they promised they would do to begin with, and have started to worry about getting into trouble when they have to hand in this unfinished work. So, with the deadline approaching, these other players are starting to point fingers and look for ways out.

The first of these players are Airbus and BMW. Both of these companies are major players in the British markets. Airbus have a number of bases in Britain through their subsidiary Airbus UK, who have over 10,000 highly skilled Brits in their employ. BMW meanwhile not only produce their own vehicles in our nation, but also produce the modern brand of the venerable Mini in British factories. Both of these companies however, are based in Europe; Airbus HQ is in Toulouse, while BMW’s origins are clear in its distinctly German full name: Bayerische Motoren Werke, which literally translates to Bavarian Motor Works. As such, their close ties to Britain, so long profitable, are in danger of becoming a serious problem. A Brexit without a Britain-Europe deal is a massive deal for corporations with fingers in both British and European pies. Suddenly, all their international trading between their subsidiary British branches will be subject to international rules on trade. This means tariffs, taxes, and a mess. These businesses do not want to deal with that, and this is why they have threatened to leave the UK. But how damaging would this actually be to the country?

In short, very. International businesses create important revenue, both directly from tax, and indirectly through the money circulated thanks to their extensive employment. The loss of these companies therefore would both cause unemployment and lower British government tax intakes. Furthermore, the likelihood of this all happening very quickly, essentially immediately after we leave the EU, would only worsen the crisis. This is not a small issue.

The clear solution therefore is to iron out a deal with the European Union, and quickly. However, this will be far easier said than done. Britain wants a simple, easy deal that sees them regain most of the benefits of being in the EU, but with greater control on certain issues, particularly migration. Europe meanwhile believes Britain should be somewhat punished for leaving, and certainly should not have a deal that is just the EU deal plus extras, as in that case why would anyone bother staying in the Union? The two sides are looking for extremely different things, and this is making compromise slow and unpromising. However, something must be done. It may not be pretty for the UK, but the alternative is surely worse. We are leaving the EU in nine months. We need a deal.