What does the future hold for the UK after Brexit vote?

Much of the discussion about Brexit is centred on whether we should stay in the customs union, get a bespoke deal, keep passporting rights for financial services and how much control we could obtain over immigration given an obvious preference for staying in the single market amongst 90% of those polled.

Look, these are all interesting, principled arguments but what evidence is there that rational outcomes are achieved by the current setup of the EU (which we are equally responsible for but only until Article 50 expires, of course)?

Opposition parties are shouting for more scrutiny of the strategy but this likely overestimates the power of the UK parliament to affect the negotiations. Isn’t it more likely that events will take over given that governments in France (2017) and Germany (2017) are up for reelection and Matteo Renzi is facing a referendum that he says will decide his future position as PM (2016)?

It’s predictable that opposition MPs want to hear more about the negotiating strategy — otherwise there won’t be much to complain about when the Tories muck it up.

But setting out a negotiating position, if genuine, is really asking for a hiding, a point which has been made repeatedly and loudly by the government.

Given the EU’s political dead hand and their unwillingness to engage, I believe our most likely negotiating position will boil down to some temporary “stabilisation” controls on financial services, with the Europeans eventually getting slightly the better of us in the long-run, meaning a small number of firms will move elsewhere inside Europe (as well as a small number moving to America). Something like the current arrangements will need to last, for European stability as well as our own, for at least five to ten years. I would not bet heavily against those controls being in place in fifteen years.

“Stabilisation” might be the watchword from the Tories as they try to ‘steady the boat’ domestically. The government doesn’t like the certainty created by Keynesian multipliers to get GDP and wage growth moving and much prefer to sit on their hands while the Bank of England runs out of ammunition, its credibility exhausting day by day. Their alternative will be to lighten the load on those making private investment decisions with repetitive tax giveaways.

Likely, a weak negotiating team will dither through the Article 50 period of negotiations until some old Labour soon-to-be retiree floats the idea of aborting the whole thing and the EU will agree that a wholesale reversal of the process is in everyone’s best interests (putting aside the preference of 52% of us who voted to leave, of course).

Faced with that sort of choice, all parties except the Lib Dems will want it to look like they are fully engaged in ensuring the best deal possible for Brexit, knowing full well that a general election in 2020 (this will probably be called a smidgen early to accommodate this massive ruse) will be the only way to decide who gets the honour of serving this steaming turd to the public.

I expect the ‘negotiations’ to be fought entirely under the watchful gaze of the media in the end. All of this pressure and the desire not to be seen to be giving an inch will lead to an impasse for at least the two years of Article 50.

A choice will then be presented in the 2019/20 general election for hard Brexit plus financial stability measures (Tories and Labour) and not Brexit but a second referendum (Lib Dems). So, much will depend on Labour’s ability to illustrate the outcome as a disaster of the Tories’ making.

A change in the Labour leadership would certainly help in this. It is too obvious that the leadership were covertly in favour of Leave. A sensible change would be for Corbyn to give his blessing to the challenger (preferably a woman) as early as possible and negotiate his exit.

To find a candidate with economic credibility and a defiantly interventionist (domestic and international) approach who meets Corbyn’s approval will not be easy. Rachel Reeves, Sadiq Khan and Yvette Cooper strike me as early frontrunners.

Tory economic policy will be the focus of much attention between tomorrow and the next general election. For Labour’s sake I hope today’s polling showing Tory credibility on the economy ahead of Labour’s by 31 points is a high watermark. The advantage could certainly not grow by much. My expectation is that it will be a much closer race than this polling suggests. The only question in my mind will be whether May can see the drift in time and decides to call it early.

The tension between George Osborne’s austerity and Hammond’s lack of a mandate for serious investment is the reason I can believe it. Without serious investment, the UK is going to descend into deep trouble during the course of Article 50 and the only mandate Philip has is the handmedown one he has inherited from George. It looks increasingly unfashionable. A budget for the JAMs might briefly capture the imagination but gives his opposition a Universal Credit of ammunition to work with. Don’t be surprised to see deficits and national debt back on the front pages but it is Labour’s turn to groan on about fiscal rectitude in this election cycle — Tory economic policy has left the poorest poorer and the debt continues to rise. Hitting the big red button of investment will only damage his credibility. Expect ‘Box Office Phil’ to be more like a rerun of the 2010–2015 series.

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