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Britain amid COVID and the pain of the final exit talks

The allegations went like this. The now-defunct UK arm of the US political consultancy Cambridge Analytica employed a Russian-born computer whizz to make an app-based survey. The app was placed on Facebook. When 300,000 people used the app, data was secretly gathered on 87 million, mainly US, users. The political consultancy bought more data and boasted of models and analysis that could ‘change audience behaviour’. The Russians meddled in some way. Lo and behold, 1.8 million more UK voters opted to leave rather than stay in the EU in the 2016 referendum (to give a 52%-48% split), in defiance of the business, cultural, financial, political and technocratic elite.

Did this activity 'change behaviour'?

The Information Commissioner’s Office launched a probe. Over three years and armed with search warrants, the body that enforces data-protection laws in the UK examined 42 laptops and computers, 31 servers, 700,000 gigabytes of data, more than 300,000 documents, other material in paper form and still more data on cloud-storage devices.

And it found nothing.

Well, that’s one Brexit controversy resolved. But others need addressing even though the UK left the bloc on 31 January 2020, an action that ended the first phase of the post-vote saga. That period was essentially a rerun of the referendum.

‘Remainers’ sought to nullify the 2016 result while pushing for a ‘soft’ or token Brexit, where the UK effectively stayed under EU control within the common market.

‘Leavers’ pushed for a ‘hard’ Brexit, where the UK recouped its sovereignty and faced conditional access to the common market. They feigned calm about a ‘no-deal’ Brexit, a world of border controls, customs inspections, quotas and tariffs as the UK suddenly sat outside the common market (as countries such as Australia do), thus a likely economic blow epitomised by truck queues, shortages and rising prices.

Even after Brexit, options remain

The triumph of Prime Minister Boris Johnson’s Conservative party in the 2019 elections torpedoed the Remainer campaign. The UK left the EU and moved to the second part of the post-vote saga. That comprises an 11-month ‘transition’ phase during which the UK stays a member of the EU common market while Brussels and London settle on their future relationship. The options are a hard or no-deal Brexit.

Most of the details are agreed on how to manage EU-UK trade and security but three disputes prevent an agreement:

1. One is over fishing rights. The UK eyes restoring a distinct aquatic zone while the EU seeks to maintain a quota system across connecting waters.

2. The second quarrel is over state aid to companies.

3. The third is on how to resolve disputes. Other disputes of note that could flare up include the UK territory of Gibraltar, data protection and the status of the City of London.

These issues are almost distractions compared with the problem of Ireland, an EU member. No one has solved how Northern Ireland adheres to UK laws while staying within the EU customs union to ensure a frictionless border and political calm across Ireland. London’s latest proposal, the Internal Markets Bill, violates the Northern Ireland Protocol attached to the Withdrawal Agreement of 2019 that demands an invisible border across Ireland. The conundrum for London is that a seamless EU-UK border across Ireland splits the UK as an economic entity because Brussels won’t countenance an ex-member staying in the common market. It’s possible the impasse over which laws and legal system apply to Northern Ireland could lead to border barriers and political violence that could push the province to reunite with the south.

The EU has warned it will take legal action against the UK if the Internal Markets Bill becomes law. The threat is mixed up with the ambit claims, bluffs, brinkmanship, broken deadlines, fruitless summits, theatrics and ultimatums between Brussels and London that are reviving a more-pressing existential threat to the UK. The Brexit saga is fuelling support for Scotland to depart the UK to rejoin the EU.

An economic and political shock amid COVID

The year-end deadline could soon force decisions and a messy divorce is possible, though more out of miscalculation than desire. Some last-minute fudge that all hail as satisfactory and final is likely. But whatever the shape of any deal, Brexit will be an economic and political shock that will reverberate through the UK for years and could even break it.

Some caveats. Brexit is a secondary issue since the coronavirus escaped from China. Given the economic damage of the pandemic, a no-deal Brexit holds fewer concerns for many than before. Hard Brexit covers a range of outcomes that include a soft-enough exit that disappoints Leavers. Would Scotland really flee the UK and trigger the mayhem involved? Would Ireland unite after a century of partition? These were possibilities before the Brexit vote and could take years to occur.

Even so, the Irish problem appears unsolvable and Brexit has marked UK politics for the foreseeable future by making identity politics around Remainers versus Leavers the country’s biggest political tear. The latter manifests in issues from immigration and inequality to the environment and, ominously, in pushing component nations to leave a UK troubled by however visible or invisible is the border across Ireland.

All because of that vote in 2016 when enough UK voters, for some reason not linked to Cambridge Analytica, Facebook or Russia, defied the elite.

 

Michael Collins is an Investment Specialist at Magellan Asset Management, a sponsor of Firstlinks. This article is for general information purposes only, not investment advice. For the full version of this article and to view sources, go to: https://www.magellangroup.com.au/insights/.

For more articles and papers from Magellan, please click here.

 


 

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