Rishi Sunak must detoxify Brexit to save himself

At least two major tectonic shifts have rendered the old Tory Brexit playbook — maximalist demands, and ratcheting up tension — pointless. The first is Vladimir Putin’s invasion of Ukraine. Johnson’s view of post-Brexit growth rested on a weaker, sclerotic Europe and a more nimble, free-trading UK that built closer trade ties with China. It also figured on a security pivot toward the Asia-Pacific region, which was captured in the 2021 Integrated Review that the government is now rapidly rewriting.

Russia’s aggression and China’s increasing isolation have changed everything. The UK may not be dependent on Russian gas, but the rapid rise in energy and other prices, and preparations for potential blackouts, underscores the degree to which the UK and European economies are tied and the importance of political and security co-operation.

Then there is the fact that the bond markets are now part of every government decision impacting the economy, thanks to the fallout from the September 23 mini-budget under Liz Truss’ government. Having promised economic stability and a pathway toward growth, Sunak cannot afford to roil markets with talks of ripping up an international agreement the UK signed only three years ago.

The Protocol Bill now being debated in the House of Lords would do just that. Although technical talks with the EU to resolve differences over the Protocol apparently made some progress under Truss, compromise isn’t guaranteed, and the EU has made clear it would pursue retaliatory measures if the Bill were adopted into law. A trade war would surely get the attention of the bond vigilantes.

There are signs that the new reality has dawned on even the most uncompromising of Brexiteers. At the Party conference in Birmingham, Steve Baker shocked fellow Conservatives and many in Dublin and Brussels with a mea culpa: “It’s with humility that I want to accept and acknowledge that I and others did not always behave in a way which encouraged Ireland and the European Union to trust us to accept that they have legitimate interests, legitimate interests that we’re willing to respect, because they do and we are willing to respect them,” he said. “And I am sorry about that because relations with Ireland are not where they should be and we will need to work extremely hard to improve them and I know that we are doing so.”

Timing is everything in politics. The Brexit vote came after a long period of austerity and wage stagnation, and at a time when Britons had been alarmed by the huge influx of immigrants into Germany in particular. In the 2019 election, Johnson capitalised on both weariness with Brexit uncertainty and wariness of socialist leader Jeremy Corbyn.

Baker’s comments — treated with suspicion in some quarters — at least reflect that we are in very different times now. The Conservative Party has probably maxed out any political benefit it can get from fighting the Brexit culture wars. There are also costs to having another intra-party brawl over the issue when they are staring over the electoral cliff-edge.

Where will Sunak pitch his tent? As a leadership candidate in the summer, Sunak released a video featuring boxes of EU legislation being put in the shredder in a promise to review or repeal all remaining EU law in his first 100 days. In his first speech in Downing Street, he made a Gove-ite promise of an economy “that embraces the opportunities of Brexit.”

But lately there are signals of a more pragmatic approach. The government no longer seems in a rush to scrap 2,400 retained EU laws, which would only add to uncertainty for businesses. Plans for a summit with French President Emmanuel Macron — like Sunak, another young leader and former banker — suggests greater realisation of the importance of cross-Channel co-operation on issues from energy to immigration and security.

That’s not to say a compromise solution to Northern Ireland is in the bag. There are plenty of red lines to work out. Even with Baker’s apology, there is determination to press the UK’s case that the Protocol needs to be changed. With new elections now likely in Northern Ireland, and the threat of violence never far, it also remains to be seen how any UK-EU agreement will impact the institutional gridlock there and whether the government is prepared to both make compromises and ensure they stick when the inevitable backlash comes.

It would be wrong to blame all Britain’s current economic troubles on Brexit, but on nearly every important economic measure — from growth to trade to business sentiment and investment spending — Britain’s EU exit has added mind-boggling complexity, bureaucracy and cost. The problem has been admitting it.

Sunak doesn’t seem ready to go that far. While he may not be able to change the raw reality of Brexit, if he can detoxify it and take the heat out of Brexit as a cultural issue, he can perhaps make way for a real debate over how to mitigate the consequences.

That will prove a test of his much-vaunted pragmatism, but also his ability to manage his own party on an issue that has tripped up a long list of predecessors.

Therese Raphael is a columnist for Bloomberg Opinion covering health care and British politics. Views are personal, and do not represent the stand of this publication.

Credit: Bloomberg