Starmer’s Deal Recognises The Impossibility Of Defying Gravity

The principles underpinning gravity are fairly easy to grasp. The more massive something is, the greater the pull it has on objects within its proximity. The bigger the object, the greater the pull, with truly massive objects dominating all other bodies in its vicinity, compelling them into orbit through sheer size.

In the field of global markets, economics is underpinned by a similar law. Bigger markets force smaller ones into their orbit through sheer mass, with proximity the clinching factor, which was why Switzerland struck a deal far more comprehensive with the European Union (which surrounds it) rather than with the also preponderantly massive economies of China and the United States (whose distance rendered them not of no importance, but of less importance than the European Union).

Size and proximity matter in economics, just as they do among the planets and the stars.

In one of my previous articles I discussed the ‘illusion of control’ as regards Brexit. The fundamental flaw at the heart of Brexit was the idea that the United Kingdom, a state of just under seventy million people and with a GDP of approximately three trillion dollars, would be able to negotiate on equal terms with the United States (nearly thirty trillion dollars), China (eighteen and a half trillion dollars) and, of course, the European Union (twenty trillion dollars). It has proven more important to maintain the fiction that Brexit Britain is a proud and equal negotiating partner when their comparative economic weakness places them at a perpetual disadvantage vis the major economic powerhouses of the world.

Ideologically, the previous Conservative (and Brexiteer) government could not admit that (at least on an economic basis), Brexit was not only a failure, but a fundamentally implausible idea. Remember, in economics, size and proximity matter, yet the Tories were ideologically trapped into trying to deal with everyone who wasn’t the European Union.

They signed a trade deal with Australia and New Zealand in 2022 which was then savaged by a former Conservative government minister…

“At the time the government estimated the Australia-UK Free Trade Agreement, signed on 17 December 2021, would unlock £10.4bn of additional trade while ending tariffs on all UK exports.

The deal also removed some visa rules. Young people are now able to work and travel in Australia for up to three years. UK architects, scientists, researchers, lawyers and accountants can also access work visas without being subject to Australia’s skilled occupation list.

Mr Eustice told the Commons that now he is on the backbenches he “no longer has to put such a positive gloss on what was agreed”.

Overall the UK “gave away far too much for far too little in return”, he told MPs.”

 They signed a trade deal with Japan in 2020…

“Britain and Japan have formally signed a trade agreement, marking the UK’s first big post-Brexit deal.

The deal, unveiled last month, means nearly all its exports to Japan will be tariff free while removing British tariffs on Japanese cars by 2026.

UK International Trade Secretary Liz Truss called it a “ground-breaking, British-shaped deal”.

But critics have said it will boost UK GDP by only 0.07%, a fraction of the trade that could be lost with the EU.”

 Late last year, the UK joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trading bloc of nations bordering the Pacific but as the BBC analysis said when they asked ‘what was in it for the UK?’

“The short-term gains are marginal.

The UK already had deals with the majority of these nations as part of its EU membership which have been carried over.

Since Brexit, the UK has added Australia and New Zealand to its trade deal tally.

It was just Brunei and Malaysia left that the UK didn’t have a deal with and between them those two account for less than 0.5% of the total of UK trade.

Even with some changes to the trading arrangements with other countries, the gains from the expanded accord is expected to be fairly small – around 0.08% of GDP over 10 years, according to the government’s best stab at an estimate, external.

However the Business and Trade Secretary likens CPTPP to a start-up, indicating the estimates do not account for the fact that some members – for example, Vietnam – are rapidly growing in importance in global trade.

Even so, by contrast, leaving the EU, the government’s independent forecasters reckon, will have reduced the UK’s growth by far more – perhaps 4% of our income, external.

In total, the CPTPP accounted for 8% of UK exports in 2019 – less than we sold to Germany.”

And only a few weeks ago, the United Kingdom clinched a trade deal with Trump’s protectionist United States, but it has been criticised as being ‘limited in scope’ and not removing the baseline 10% of tariffs President Trump implemented as part of his ‘liberation day’ economic blitzkrieg.

Again and again, trade deals sought with distant countries that, while they do have value in their own right, are small potatoes compared to European Union next door.

Size and proximity matter, and whether the United Kingdom likes it or not, they are permanently trapped within the orbit of the European Union. Attempting to ignore the European Union in trade matters for ideological reasons has proven economically costly for the United Kingdom, but it still isn’t politically costly, hence the tenuous steps that Keir Starmer and his Labour government have taken since they won office nearly a year ago.

Starmer was determined to do a better deal with Europe than his ideologically constrained Conservative predecessors were able to, but even though he was far more open to doing a better deal, he has been constrained politically. The right wing, pro-Brexit press in the United Kingdom have been vocally hostile to the prospect of a deal with the European Union (which by necessity would involve compromises with Brussels that mar the purity of the Brexit ideal). The Daily Express is characterising his deal as a ‘huge Brexit betrayal’. Starmer is of course acutely conscious of the Red Wall voters who backed Brexit, whom he won back last year to enter Downing Street, and who may not be flirting with the Reform Party and whom they maybe more likely to support if a ‘Brexit betrayal’ narrative takes shape.

As a personal aside of course, I would like to say that a ‘Brexit betrayal’ narrative is disingenuous to the point of insult. Brexit as an economic project is too fatally flawed to work as its most ardent proponents imagined, of an isle in splendid isolation to whom the rest of the planet must come in supplication for economic favour. To get away with that kind of behaviour you’d need an economy ten times the size and considerably more political skill than the last guy to try it. As happens when all fundamentalisms meet cold harsh reality, the story told is that it is not the fundamentalism that is at fault, it is that the fundamentalism was betrayed. Brexit’s impossible promises are therefore not fulfilled in this telling, not because they were impossible, but because someone who lacked the fortitude to stand up for the ‘vision’ of Brexit was in charge at the wrong moment. Nonsense of course, someone has to make the compromise in the real world and be scapegoated by the true believers. Starmer is the man who is making those compromises, and those true believers will never forgive him for it. It is the price of recognising reality that in economics, size and proximity matters and Starmer must hope that the benefits outweigh the political cost.

So, this morning a deal was reached between the European Union and the United Kingdom government. As I write this the full details haven’t been announced, but it seems the key points are a twelve-year-long agreement on EU fishing rights in UK waters, a youth mobility scheme and a reduction in checks on food exports to the European Union.

This last one is the one that should most interest us, because this is the aspect of the deal that most impacts on the Windsor Framework. Few argued Brexit was going to be good for Northern Ireland, and once it became a reality the fate of Northern Ireland became the greatest battlefield as negotiators attempted to resolve the legendary Brexit trilemma in which there were three primary demands from three primary constituencies and any combination of two of those demands could be delivered, but not all three meaning someone was going to be left out.

As we are all aware, northern Unionists lost that fight (unsurprising as they were by far the weakest of the three constituencies involved) and we ended up with the border in the Irish sea. This border has had a detrimental impact on aspects of our economy, as this report from the BBC makes clear where they speak with a business impacted by the customs rules.

“One food business in Belfast said the reset cannot come soon enough and that immediate measures are needed to help small firms.

BBC News NI first spoke to the owners of Arcadia Deli in 2020 before the sea border started to be implemented. They have faced continuous struggles with the processes needed to get products from GB.

Co-owner Laura Graham-Brown said that new sea border rules on parcels have made the situation much worse in the last month.

“Our partners in England have decided they are not supplying Northern Ireland until further notice until they can get some clarification on how to make it easier,” she said.

“That is our biggest distributor so it is starting to tell on our counter as it becomes increasingly empty.”

Relief for Laura Graham-Brown, and other impacted business owners, will be more than welcome of course and any boon to our economy is an unambiguous good thing. I had doubts that local Unionist leaders would welcome the new arrangements, and sadly I was proven right as their reactions came in throughout Monday, as reported by the Newsletter with the best response being the moribund UUP’s realism …

“DUP leader Gavin Robinson said that w​hile some progress has been made on trade and defence, the architecture of the Windsor Framework needs to go. The TUV leader (said) the deal still leaves the Irish Sea border in place and Northern Ireland “captured” by EU – while the UUP’s Steve Aiken said it is clear that the arrangements are “here to stay”.

Most people in the north, as opinion polling has showed, are in favour of the Windsor Framework even if more Unionists are increasingly sceptical of it. A border on the island of Ireland of any kind was anathema to northern nationalists, to the Irish government and thus the European Union itself. The Windsor Framework exists to allow the open border on the island to continue and the burden the Framework puts onto our local economy is therefore dependant on the trading relationship the United Kingdom government in London chooses to have with the European Union.

By accepting reality, and that size and proximity matter, Starmer’s reset will make the Framework less tangible, less intrusive, less impactful. This is not to say that everything is now hunky-dory. The BBC quoted response from business leaders here

“Business organisations have also been digesting the details of what the UK-EU agreement means for Northern Ireland.

Rain Newton-Smith, the chief executive of the Confederation of British Industry (CBI), said the SPS agreement “is a significant win which should facilitate smoother trade between Great Britain and Northern Ireland”.

The Northern Ireland Chamber of Commerce and Industry also welcomed the agreement but said it “would not solve all the challenges our members face”.

“We would like to see greater aspiration to tackle regulatory divergence more broadly, and to reduce the customs burden under the Windsor Framework,” said its chief executive Suzanne Wylie.

Tina McKenzie, from the Federation of Small Businesses, said the deal marked “genuine progress by untangling the rules for small exporters of plant and animal products”.

“Of course, this deal does not solve every challenge overnight, but it sets a very welcome new tone,” she added.”

There is always going to be some pain as a result of the divergence caused by Brexit (though the border in the Irish Sea is certainly far less disruptive than one cutting through the island of Ireland). But Brexit wasn’t so much an economic project as an identarian one, one that local Unionists aligned with. In her recent post on Slugger regarding Nigel Farage, Sarah Creighton wrote the following

“Every time I do a panel; there’s always a smart alec in the crowd. A man, usually. Without doubt he will say, “Yeah, but the British don’t care about you.” He thinks he’s the first person in the world to have this original thought.

Yes, I always say, yes we know. I don’t know a single protestant in Northern Ireland that doesn’t. My grandparents knew. My great grandparents knew before them.”

Whilst Sarah portrays the continual pointing out that the English would abandon northern Unionists in a heartbeat if it suited them as a kind of bone-wearying truth that doesn’t need to be repeated endlessly, the behaviour of Unionist leaders during the Brexit campaign put a different spin on it. After all, former British Prime Minister Theresa May recently confessed that she was mystified as why Unionists backed something so obviously damaging for them as Brexit.

The answer is that while Unionist leaders may be aware of that those in England care little for them, they are keen to rectify that by any means necessary through visible demonstrations of Britishness. And the Brexit campaign was an opportunity to stand alongside those who have self-anointed themselves as the gatekeepers of true Britishness by virtue of their unmatched patriotism, the Brexiteers, and receive validation. This is why Unionist leaders backed the Leave campaign in those long months before the vote when everyone thought Leave was going to lose.

The Windsor Framework and the protocol before it which were enabled and passed by a British Conservative government, and even the polling showing that a majority of Tory voters would have let Northern Ireland go entirely rather than compromise Brexit, were a nightmarish end to the entire process. Not only did Unionist leaders end up with the opposite of what they set out to achieve in that they successfully created divergence between Northern Ireland and Great Britain rather than between Northern Ireland and the Republic, but the Windsor Framework stands as a permanent, legal reminder that when push came to shove the old atavistic fears were realised…Britain did sell them down the river for its own interests.

It’s one thing to know they don’t care for you and quite another to have that written into an active instrument of law that impacts your life.

Hence the reduction of the Framework, maybe even to but a ghost of what it was, while welcome, will never be enough because it is the principle of the thing that seems to vex Unionist leaders. For the moment, they can do nothing but hope that a future Tory, Reform or Tory-Reform coalition government attempts to revisit the issue but the same calculus that dictates what Starmer is doing now will still be in place then, though we should all pray they do not and that we can avoid further disruption.

Size and proximity matter.

The United Kingdom as a whole needs a good deal with the European Union because it is the much smaller party and yet so close to the European market.

And a majority of a minority community in the smallest of the four constituent parts of the United Kingdom lacks the size and proximity to dictate events to their liking. This is the best we can hope for to mitigate Brexit, a quiet dissipation of restrictions and rules over time. Not the thunder and conflict the right promises, and on which they will lead the United Kingdom to a sticky conclusion as they have in the past when they ignore reality for ideological fantasy…