Charlotte Street Partners



Fishing for a deal

Written by Alex Massie
17 December 2020

At last, after more than four years, an end is in sight. The United Kingdom’s slow withdrawal from continental Europe is all but complete. It remains to be seen if this departure is accompanied by a deal with the European Union or not but, for what little it may be worth, my suspicion is that a deal, of some form, will be agreed. Peace with honour; glory in our time. 
That will be one interpretation, anyway. Some pigs must be adorned with lipstick and Brexit is one such beast. For otherwise the British government might have to acknowledge its humiliation. All those promises of the easiest, win-win-win, trade agreement in history, all those suggestions German car makers would force Angela Merkel to sue for peace on London’s terms, all that bluster and bravado has proven just as illusory as it always promised to be. If there is a deal, it will be a thin one. 
But better the heel of a loaf than no loaf at all. In any case, the real impact of Brexit will not be felt immediately. Covid has helped overshadow the reality of Brexit but life is soon to become significantly more complicated for businesses and British citizens alike. Those stamps in your passport will bring home the reality of this new world. 
We should, I suspect, anticipate a sudden shock followed by a kind of economic slow puncture. The prospect of chaos at ports and the possibility of temporary food shortages is the stuff of nightmare headlines for the government because it is the kind of thing guaranteed to capture public attention. Brexit will become very real, very quickly. 
But in truth that is a storm which may be weathered. There would be disruption and anxiety and such a scenario would, I think, further entrench the already evident sense that even if Brexit might be a good idea in theory, in practice it is considerably more trouble than it is worth. 
The financial sector and its associated professional services, by comparison, employs around 160,000 people in Scotland alone and contributes around 10% of the country’s GVA. It is, by several orders of magnitude, more important than the fishing industry. And if this is true for Scotland it is doubly true for the United Kingdom as a whole. 
Indeed, an analysis published by The Times this week suggested that in a ‘low access’ to EU markets scenario, the UK’s financial services sector might lose as much as £20bn in revenue, shed more than 30,000 jobs and reduce its Gross Value Added by more than £10bn. Those are only the first-order impacts, however; the wider damage to the financial services ‘ecosystem’ could be double that. Even a ‘high access’ scenario comes at a cost, albeit a more manageable one. And that is a reminder that the Brexit negotiations are, in the end, less an intimation of future greatness than a kind of national salvage operation in which the urgent task is preserving as much as can be saved while recognising that not everything can be. The UK is in the unusual position of attempting to negotiate a trade deal that is less advantageous than the status quo. 
White collar folk sitting at a desk, however, pull on no heartstrings. They cannot compete with the stirring thought of manly men setting off for the ocean deep, there to harvest whatever they may find, the better to feed the nation. (Albeit, often, the nation in question is actually Spain or France.) The fisherfolk occupy a special place in this island country’s imagination. 
Much more so, curiously, than their land-based farming cousins even though the latter constitute a rather larger portion of the economy and, more significantly still, are heavily responsible for the shape and feel of a British countryside that, technical specifics being placed to one side, is in some sense a common inheritance open to all. But then the farmers are seen as whingeing subsidy junkies whereas the fishermen are unfairly treated by foreign bureaucrats and threatened by pillaging French and Spanish boats operating in waters better reserved to, well, to us. 
A reminder, then, if you needed it (though really you should not) that politics is a matter of emotion and the stories we tell just as much as it is a question of dispassionate analysis and reality-based policy. Brexit was always an atavistic matter more than it could ever be a rational vote for a different and improved kind of future. It called to a certain idea of Britain – and, if we are honest, a particular kind of England most specifically – more than it was based on any kind of cost-benefit analysis. 
So be it, of course, even if the past four years have been a weary trudge towards the recognition that even in a cake-filled world you cannot always get everything you desire. There has been some hard learning, albeit learning that has not penetrated every student. Large sections of the Conservative party remain in the ‘see no downside, hear no downside, speak no downside’ camp, despite the mounting evidence to the contrary. 
In dismal times, however, even defeat may, nay must, be reinterpreted as victory. Thus, any deal that is reached must, by definition, be considered a grand one. That it is certain to amount to much less than all that was originally promised matters very little. You are not encouraged to dwell upon such impertinent truths. To that end, Brexit is an unfalsifiable proposition (though not, one must allow, the only such constitutional dream of this kind evident in these islands). Whatever emerges from it must be for the best since contemplating the alternative might lead one to wonder whether the game is truly worth this, or any other, candle. 
But we are where we are, and it profits Remainers little to pin their hopes on disaster. For there is no turning back now; all the boats have been burned. Making the best of a sub-optimal situation is still better than indulging in fruitless schadenfreude. Because when all alternatives are exhausted, whatever remains, however unpalatable, is all that is left to swallow. 
Brexit, then, has been happening very slowly but it is, at last, on the brink of happening suddenly and in every direction. I doubt any sector of the British economy is suitably prepared for its impact but, if that is dispiriting, it is matched by the creeping realisation our politicians, over-matched as they may be, are nowhere close to being ready for the realities of this new world either. 
Happy Christmas.

About Beyond the Street and Alex Massie

We are all guilty of being too inwardly focused sometimes, especially as we navigate these changed times. It is all too easy to be caught up in the problems close to home, and for overarching trends to pass us by.

To remedy that short-sightedness, Charlotte Street Partners has enlisted the ingenuity and talent of the writer and commentator Alex Massie. As our new correspondent at large, Alex will look at the bigger picture for us each week. We have challenged him to come up with something a bit different: broad, lateral thinking, thematic insights and a more global perspective.

Alex is a freelance journalist and commentator based in Edinburgh. Not only is he Scotland editor of
The Spectator, but he also writes a political column for The Times and The Sunday Times. He features regularly on the BBC as a political commentator and has written in the past for The Telegraph, Politico, The Washington Post, the Los Angeles Times, The New York Times, the New Statesman, The Observer, and TIME magazine, among others. He was also the Washington correspondent for The Scotsman and assistant editor of Scotland on Sunday

We hope you enjoy his work – and do feel free to forward this email on to colleagues and friends you think might be interested. They can subscribe to Beyond the Street and our other regular briefings here

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