Over the next two to three years, Brexit Britain will be at a crossroads twice: There will be a General Election (GE) before the end of 2024 and the Trade and Cooperation Agreement (TCA) with the EU – that Boris Johnson negotiated in haste – will become up for review in 2026. The outcome of both these events will be crucial in setting the country either on a path to recovery from over a decade of economic and political chaos and turmoil or could – instead – see it further decline.*

Can the next General Election stop illiberalism?

Regarding the first crossroads, who wins the next GE is an as high-stakes political issue as there can be. The Tory party is drifting ever further to the right – including – paradoxically in my view – most recently in reaction to the local elections, which did not lead to a rebalancing of the party to the centre-ground, where clearly the British public are, but to an attempt by the so-called NatCons to push it even further to the right. A defeat by current party leader Sunak in the next GE may very well push the party over the edge into US Tea Party territory. But even if Sunak were to win, the influence of the NatCons will not go away, suggesting that the hard right will continue to dictate Tory policies in case of another five years in power.

This would probably imply that the party would continue to undermine British democracy and quite possibly destroy it for good. No doubt, some readers will feel this is too alarmist a view. Yet, I have written this many times before: Anyone who has closely followed the developments in Turkey since 2003, in Hungary since 2010, and in Poland since 2015 will be shocked by the similarities of the Tories’ approach to democracy and that of Erdogan, Orbán, and Kaszynski.

Brexit was sold to the people as a moment of renewal and independence, that would lead to deregulation, lower taxes, more economic growth. Yet, as I wrote in my last blog, what we have seen so far is not more, but less freedom. The illiberal policies include the attack on the Electoral Commission, the independence of the judiciary (under the new Judicial Review and Courts Act), and the voter ID legislation, which senior Tories admit was an attempt at voter suppression.

Therefore, the next election is about more than whether we get more market- or state-centric economic policies or more liberal or conservative social policies. It is quite possibly about whether the illiberal tendencies will be allowed to continue and thus continues on its path towards Budapest-on-Thames.

Another piece in the illiberal Brexiter puzzle has made the headlines this week: The Public Order Act, which limits freedom of speech by giving police sheer unlimited power to crack down on people protesting and makes possible harsh penalties for very minor public order offences.

Green Party Baroness Jenny Jones introduced a so-called ‘fatal motion’ in the Lords, to try and stop a piece of secondary legislation related to the public order bill, which changes the definition of ‘a serious disruption’ to ‘anything more than minor’ thus further restricting the right to protest. Shockingly, Labour decided to abstain when the motion was put to the vote in the Lords this week. Emily Thornberry tweeted in defence of that decision suggesting it would be undemocratic to kill a bill in the unelected House of Lord. Yet, as Peter Stefanovic explains, this is a bad faith argument at best, as the fatal motion was directed against secondary legislation that tried to reintroduce into the bill elements that the House of Commons had voted against. While the Tories assault on British democracy is shocking, even more shocking is Labour’s complicity.

Still, Labour’s hesitance to stand up for democracy may change after the GE. It seems clear that the reason why Labour has decided to accept Tory legislation that restricts our rights to protest, is because the party has been scared into a state of paralysis by the Tory party and the right-wing press. Thornberry’s explanation that the Labour party is afraid of Tories blocking legislation in the Lords in return, shows just how vulnerable and weak Labour feel after 13 years in opposition.

More specifically, the illiberal anti-protest laws that the Tories have adopted are arguably mainly targeted at Just Stop Oil (JSO), Extinction Rebellion, and other environmental organisations protesting fossil fuels. Here, the emerging narrative that Labour is somehow captured by Just Stop Oil – a claim mainly based on the fact that green energy entrepreneur Dale Vince has donated to both JSO and the Labour party – seems a worry for Starmer. By refusing to commit to repealing this legislation, Labour clearly wants to avoid providing any further oxygen to that line of attack. It is to be hoped, that in case Labour were to form the next government, it would regain the confidence to stand up for the British people’s basic democratic rights. In the meantime, the British public has to rely on civil society organisations, like Liberty, who have launched legal action against Home Secretary Braverman’s attempt to reintroduce via secondary legislation, elements into the bill that the Commons rejected.

Trade and Corporation Agreement – Review, revision, or renegotiation?

Regarding the second crossroads, EU Commissioner Maros Šefčovič announced this week that the review will take place in 2026. Especially since Labour’s David Lammy recently stated that UK-EU relationships would be a Labour government’s top priority, interest as increased in the potential of this review to help craft a closer relationship and solve some of the problems with post-Brexit trade barriers. This seems a particularly urgent issue, as Stellantis – owner of Vauxhall amongst others – has warned that the TCA’s rules of origin (ROO) that will come into force in 2024 may mean UK production sites may close down. This may impress the urgency there is to reduce some of the many trade barriers Brexit has created.

However, Šefčovič’s speech at the EU-UK Forum annual conference this week has been interpreted as pouring cold water on any hopes that the TCA review could lead to reducing trade barriers. The written version of Šefčovič’s speech does not contain much to reach that conclusion. But reports of the delivered version of the speech, suggest that Šefčovič explicitly said “doesn’t constitute a commitment to reopen the TCA or to negotiate supplementary agreements.” Moreover, Stefan Fuehring, who heads the Commission’s TCA unit, was quoted as saying that changes to the deal would be a “very long shot” and that “[i]t’s a review, not a revision, not a renewal or even amendment of any sort.”

These pretty clear terms contrast with what other EU sources have recently suggested. Peter Holmes, at the Progressive Economics Forum meeting last weekend, referred to a well-informed, unnamed EU source, which essentially stated nothing was off the table in terms of what to include in the review.

Given that Brexit borders pose serious problems not only for UK exporters, but also EU ones, as was illustrated by a stark warning of the European car manufacturer association regarding the above-mentioned rules of origins to be introduced next year, I doubt the EU would say no to the opportunity to improve cross-border trade with the UK.

As such, I am sceptical that Šefčovič and Fuehring’s statements are the final word in terms of what a reviewed TCA could include. To be sure, the TCA will not get us SM membership ‘through the back door’ without adhering to the EU’s key conditions (regulatory alignment, ECJ jurisdiction), but equally, I would not write off the chances of using the TCA to solve some of the issues created by Johnson’s hard Brexit deal. The ROOs for instance, are part of the TCA and here the EU and the UK have a very clear and direct interest in finding solutions. This will not take the form of a wholesale solution like SM membership would be, but rather a more selective, possibly sectoral approach.

The road to Bern-on-Thames

Commentators regularly reject any notion of sectoral agreements with the EU as ‘fantasy,’ because such an approach would be rejected by the Commission as ‘cherry picking.’ I am less certain about this. For one, as Peter Holmes writes in a recent report for the PEF, some ‘cherry picking’ – in the form of limited free movement (to musicians for instance) and SPS alignment for instance – has been put on the table by the EU itself. For the other, the Swiss case shows that the EU may not like the sectoral approach, but it is still willing to accept it under the condition that institutional issues are in an overarching ‘institutional agreement.’

The UK will of course need to adhere to the EU’s conditions for access to the SM, which will mean conceding regulatory independence and choose closer (dynamic) alignment in exchange for a solution. If the UK were willing to do that, a sectoral, ‘cherry picking’ approach may be perfectly possible. I doubt Šefčovič’s and Fuehring’s remarks imply that such an arrangement is out of the question. They may be setting expectations and preparing the EU’s negotiating position; but ultimately, given pressure from EU exporters and the pragmatism that tends to prevail in EU negotiations with third countries, I very much doubt this is the final word.

Of course, if the Conservatives win the next GE, that is unlikely to happen. If Labour forms the next government, things may be different, as a Labour or Lab-LibDem government might set us on the path to Bern-on-Thames. Most observers have rightly pointed out that the first term of a Labour or coalition government will certainly not lead to a rejoining of the customs union or the single market, even less the EU. Yet, the TCA review could be used as a steppingstone towards a road map on the way to a new relationship with the EU. Here the process could be used to test the waters for a more cooperative, less conflictual political relationship and for specific solutions to some of the chronic problems hard Brexit is inflicting on both partners.

 

Lessons could be learned from the Swiss decades-long struggles making its relationship with the EU work. Importantly, some of the sticking points on which Switzerland has not made any progress despite trying hard for a decade or more, may indicate how realistic it is for the UK to expect any movement from the EU on these points.

Switzerland’s relationship with the EU famously follows a special model based on over 100 bilateral sectoral agreements that have been put in place since the Swiss voted ‘no’ to EEA membership in 1992 (see my previous post here). Based on a quite extensive unilateral regulatory alignment of Swiss law on EU law, this model has allowed Switzerland near full single market membership without becoming an EU member.

In recent years, the model has come under pressure, because the EU increasingly insists on an overall ‘framework agreement’ that would solve so-called ‘institutional questions’ including dispute settlement and the jurisdiction of the European Court of Justice. After seven years of negotiations of this framework agreement, the Swiss government decided in May 2021 to pull the plug on the negotiations, leaving the Swiss-EU relationship in tatters. The EU had taken increasingly robust steps to keep Switzerland in line regarding its commitments under the bilateral agreements. In 2019, the lack of progress with the institutional framework agreement led the EU not to renew the ‘recognition of equivalence’ from the Swiss Stock Exchange (SWX), effectively banning EU stock exchanges from trading in Swiss shares. Similarly, after the failure of the framework agreement, the EU also suspended Switzerland’s ‘associate country’ status to the Horizon science programme. With sectoral agreements not being updated any longer, the ‘bilateral way’ will become narrower, and narrower until it will be gone.

However, it is important to note that the EU is not rejecting the bilateral way per se, but rather wants to complement these sectoral agreements with an overarching institutional agreement. Had the Swiss government managed to find a politically feasible agreement on these issues, the sectoral approach would have continued.

The list of contentious issues that led to the failure of the framework agreement will not sound unfamiliar to people following the Brexit saga. They included the question of unilateral dynamic alignment with EU law, the conflict resolution mechanism including the role of the ECJ in it, free movement of EU citizens and their access to social insurances, state subsidies, and finally wage protection and labour market access for posted workers.

In March 2023, the Swiss government decided to formulate a new negotiation mandate for its chief negotiator, which is expected to be published at the end of June. There has been a lot of speculation about what that mandate will contain, and which political forces will back it. Two things, however, are interesting from a British perspective regarding the renegotiation of the TCA – namely the role of the ECJ and that of trade unions in making a deal possible.

Regarding the key sticking point of ECJ jurisdiction over EU law, the Swiss side rejects any ultimate ECJ jurisdiction which is seen as a loss of sovereignty and potentially undermining Swiss direct democracy – Foreign judges have been a red flag for the Swiss going back to the folk tales around Wilhelm Tell’s defiance of the Habsburg. Here, two interesting solutions have recently been brought into play by the cantonal governments [GER]: One is the argument that while none contests the ECJ’s ultimate jurisdiction over EU law, any provisions in a framework agreement between the EU and Switzerland would not constitute EU law per se, but bespoke rules that should not be directly subject to ECJ jurisdiction. Related to that, one possible solution would be that any ECJ ruling on EU-law related matters may not necessarily be binding for the joint committee that oversees the Swiss-EU bilateral agreements. Indeed, any FTA or similar agreement the EU signs establishes a body like the Partnership Council established between the UK and the EU in relation to the TCA. This council brings together representatives of the UK government and the EU commission. I previously argued that it constitutes a cunning way to remove ECJ jurisdiction by one step, which makes it possible for the UK to claim it managed to avoid ECJ jurisdiction. While that claim is false, there may be a possibility of using the PC to add further flexibility. In the Swiss case the suggestion is that ECJ rulings are not binding on the PC but have merely guiding character. This would turn such a body into a way of both sides claiming they got what they want, although it remains to be seen whether the EU would be willing to make such a very considerable concession.

The second interesting point with potential lessons for the UK emerging from the revival of Swiss negotiations with the EU is the role of trade unions. In a situation where the hard right – in the Swiss case the Swiss People’s Party – is intransigent and will never agree to any deal negotiated with the EU, the centrist, pro-Deal forces will have to rely on the left to get a majority for the deal and avoid a defeat in a popular referendum. The left – especially trade unions – have been part of an unholy alliance with the Eurosceptic far right in sinking the institutional agreement the first-time round. However, the unions are opposed not for ideological reasons but for very concrete reasons related to wage protection and labour standards [GER]. Here, the Swiss government has started exploring what concessions it could get from the EU to get the trade unions behind a deal. Šefčovič has signalled some willingness to soften the EU’s opposition to the so-called ‘collateral measures’ introduced at the same time as Free Movement of People to avoid social dumping by companies from lower wage countries. The EU has been critical of these measures – which, among other things, allow Swiss authorities in some instances to grant domestic workers preference over EU workers (the so-called ‘precedence of domestic employees [GER].’ Flexibility from the EU on this key issue, would not only make a deal potentially possible, but also would have positive consequences for working people in Switzerland. Moreover, the Swiss trade unions are keen on Switzerland to ‘cherry pick’ also those parts of EU legislation that would lead to higher worker protection than Switzerland currently has. These areas include flexible/part-time working for instance.

Hard-right ideological opposition to anything EU-related has hence opened a window of opportunity for the Swiss labour movement to push through progressive reforms. While the political situation in the UK is obviously different, the broad configuration of an ideologically blinded, intransigent hard-right objecting to any reproachment with the EU on grounds of principle, and a more pragmatic Eurosceptic wing of the left, is not dissimilar. The review of the TCA – or any future negotiations with the EU about a closer relationship – may turn into an opportunity for trade unions and those parts of labour that were seduced by the absurd case for Lexit to get some progressive reforms in exchange for their support for a reproachment. Given that the UK’s labour law is at the lower end of worker protection of what EU law allows for, there is a real opportunity for the pro-trade union wing of labour to halt the race to the bottom that Brexit has threatened workers with.

 

Britain is approaching another cross-roads in its post-Brexit history. Not least because the Tory party – and with it the country – may be facing a cathartic moment – as Chris Grey puts – now that former Prime Minister Johnson – one of the most toxic figures in British politics – has resigned from Parliament. A lot of damage to our institutions and trust in the public realm has already been done. But it is to be hoped that there are still enough time and reasonable political forces left in the country to choose the path that leads away from Budapest-on-Thames to something closer to a Bern-on-Thames.

*This post is an extended and updated version of a talk I gave at the Progressive Economics Forum 2023 at the University of Greenwich on June 10, 2023